How COVID-19 Is Changing The Cost of Health Care

Primary care has always been the first line of defense in caring for patients and offering the most value for our health system overall. However, its effectiveness has suffered over time, due, in part, to a lack of care coordination, health care access for patients, and misaligned payment incentives. And although this worldwide pandemic has only further highlighted our current system’s flaws, The Alliance believes there’s good news on the horizon.

As Cheryl DeMars, CEO of The Alliance explained in an interview with InBusiness Madison: “I think [the pandemic] is accelerating the pace at which the public is embracing alternative modes of care delivery.”

New Payment Methods

Patients suffering from common, chronic symptoms may not see their physician due to post-pandemic restrictions limiting their access, their physician not having sufficient ability to test for COVID-19, or they may forego treatment altogether due to fear of contracting the novel virus at their physician’s office. In fact, nearly half of adults (48%) have postponed or skipped medical care due to the coronavirus outbreak.

As fewer patients seek primary care, their providers lose billable hours that are crucial to their fee-for-service payment models. Additionally, more than a third of hospital income is generated via “shoppable” procedures, which are being delayed or cancelled by patients and even the hospitals themselves.

These issues are casting a bright light on the need for change – specifically, a move toward global payments and an integrated care model that focuses on the quality of care, and one that aligns financial incentives for both the patient and provider. The National Alliance of Healthcare Purchaser Coalitions (NAHPC) coined the term for this performance-driven integrated health care strategy, “Advanced Primary Care.”

Telehealth – Our New “Normal”

The Advanced Primary Care model emphasizes value over volume and improves access for patients with options like same-day, virtual appointments. An emergency declaration made on March 13 relaxed various federal rules that prohibited the Centers for Medicare and Medicaid from utilizing these virtual appointments, and this newfound access to telehealth has played an important role for patients with common, chronic illnesses that need to check in with their doctor regularly.

DeMars believes these new regulations have come to stay. “If people get comfortable with a different way to receive health care services, particularly if their experience is positive, this won’t be just a change that’s limited to the current crisis,” she said.

The Future Cost of COVID-19

Although employers can look forward to value-based care and value-based insurance benefits becoming more predominant in the future, ultimately saving them money on their health plans, they might be wondering what the pandemic is going to cost them in the shorter term.

On its face, the cost of COVID-19 is quite staggering; private insurers pay as much as $20,000 for pneumonia treatment, and more than $80,000 if the patient requires a ventilator, according to Health Systems Tracker. And because the cost of coronavirus testing is expected to increase as it becomes more widely available (and insurers are required by law to cover those costs), that could mean insurers might overprice their 2021 health plans to offset those costs. Medicare’s spending could also increase with new costs for telemedicine and COVID-19 testing and treatment as the elderly are inherently at a higher risk for infection.

However, because 37% of private insurance spending on hospital admissions stems from non-emergency surgical procedures, 2021 should see a higher volume of these procedures and help offset some of those costs for insurers. Overall though, employers can expect their health plans to increase in the coming years.

Self-Funding Smart

For self-funded employers, health costs will be impacted differently; while they may see a decrease in spend this year due to the lack of elective procedures, the incidence of COVID-19 testing, the number of cases in their workforce, and the severity of those cases will determine the long-term effects. They will not, however, see the same increasing insurance prices because they own their own plan.

We are here to help. If you need The Alliance to help you make sense of your data, including how to plan for the future, please reach out to your Account Executive.