Payers’ Response to COVID-19

In these dark and uncertain times, we seek light and predictability — even if that means a new normal.

The events of September 11, 2001, changed the way we travel, embroiled us in wars, and scarred the psyche of the nation. The COVID-19 crisis is still unfolding, but it’s not too soon to discuss payers’ response to COVID-19 — some surely fleeting and some possibly enduring.

Today

Like others in so many industries, payers have risen to the occasion and provided relief to providers and members during the COVID-19 crisis.

For providers, payers have reimbursed telehealth visits as if they were in-person visits and have relaxed quality-reporting requirements. Some payers are streamlining credentialing processes, and there is even some talk of suspending downside risk recoupment.

For members, payers have waived prior authorization and cost sharing for COVID-19 testing and treatment and have waived cost sharing for telehealth services. To help ensure that members have enough medication, payers have allowed early refills, encouraged 90-day supplies, and offered free prescription delivery. Some payers have also provided additional resources to help people avoid loneliness.

Some payers have provided volunteer support to community organizations that serve vulnerable populations. And several payers have offered incentives to employees who are licensed healthcare professionals to provide direct patient care.

As employers, payers are working through operational issues while most of their employees work from home. And payers are people too, with families, friends, and neighbors who may need extra support during these difficult times — be it emotional support or help with shopping or schoolwork. This leaves even less time to meet with manufacturers about their new products or data.

All of this is short-term crisis management. Few of these actions are likely to endure.

Tomorrow

The health economics of COVID-19 are not yet clear — especially given the prospect of a second peak during colder months. Yet we can make a few reasonable predictions.

Health care spending rises each year. Even after the “Great Recession” of December 2007 to June 2009, the growth in per-capita national health expenditures rose, albeit at a slower pace. The question is not whether health care spending will increase following COVID-19, but by how much. Rest assured, payers’ actuaries are busily trying to figure out the extent to which premiums will increase as a result of COVID-19.

Because of the economic downturn, some smaller employers will drop coverage. Others that currently offer coverage will lay off employees or go out of business. Loss of jobs and health care coverage will surely increase the number of Medicaid beneficiaries, as well as the number of uninsured and underinsured individuals. States and the federal government will have to pay for these new Medicaid beneficiaries at a time they can least afford it — when tax revenues are down. Hospitals will likely deliver more uncompensated care as the uninsured use emergency departments for primary care. All of this will put more pressure on private payers to increase hospital reimbursement, fueling a rise in commercial insurance premiums.

When COVID-19 vaccines ultimately become available, there will likely be no cost to patients for whom the CDC recommends immunization. But no out-of-pocket cost to patients does not mean these immunizations are cost-free. Public and private payers will have to foot the bill — all the while, shouldering the expense of elective procedures that were delayed during the COVID-19 crisis.

The COVID-19 crisis will also likely accelerate the closing of the American formulary. Prior to the COVID-19 outbreak, coverage of high-cost breakthroughs was partially driving the exclusion of other products. Now, employers that need to tighten their belts in response to COVID-19-related losses will increasingly turn to managed and closed formularies.

Bottom line, payers will increase premiums and, responding to demand from plan sponsors, increase restrictions.

To infinity and beyond

It’s hard to look beyond short-term crisis management and medium-term premium hikes and coverage restrictions. But there are some potential trends worth watching.

For many years, payers have been encouraging mail-order prescriptions and home care. It will be interesting to see if any behavioral shifts stick resulting from the current physical distancing practices. How providers and patients interact, and the way patients get drugs, may forever be altered to some degree.

Over the last few years, there’s been a lot of talk about social determinants of health — collectively, an underlying driver of substantial health care expenditures. Food insecurity, transportation issues, and inadequate housing, are oft-cited drivers, as are the impacts of social isolation and loneliness. COVID-19-related stress, anxiety, depression, and inadequate nutrition, exercise, and sleep stemming from loneliness, job loss, and the death of loved ones provide payers and plan sponsors an opportunity to be part of the solution. But how?

In a perfect world, it would start with payers and providers collaborating to identify who needs what, then referring the right people to the right social services. This, however, does not address the undersupply of social services, and simply referring more people in need outside the system will surely mean that more people will fall through the cracks. As it is, social service organizations are underfunded and struggle to do the best they can with limited resources.

Some payers began building relationships with social service organizations and invested in their infrastructure before the COVID-19 outbreak, armed with evidence that these investments were a cost-effective approach to reducing short-term health care costs. However, investments with long-term returns are most likely made and sustained by payers only if they are mandated, funded, and measured. Investments in population health suffer from a diffusion of responsibility across stakeholders. Lasting change, then, will require coordination and collaboration between government, employers, payers and hospitals.

Telehealth also holds some promise, but investments are needed to realize its full potential. The same technology that connects isolated members with health care providers could also connect them with exercise classes, group counseling, and other programs that improve their health, while connecting lonely members to friends, family, and groups. Payers and providers can help identify the members who would benefit the most from telehealth, but these members also need high-speed internet connections, the right devices, and comfort using them. Here, too, the investment may be worth it and require a societal response to solve the last mile problem of telehealth.

The short-term response by payers is a glimmer of hope of greater long-term changes to come from payers and other stakeholders, public and private. Light should emerge from all this darkness.