HCW Benefits Blog

Contributor:
Ellen Tucker, CMCE, Consultant
Hill, Chesson & Woody

As we begin 2011, healthcare organizations face a growing number of challenges due to healthcare reform. PricewaterhouseCoopers has released its annual list of the top 6 issues for the healthcare industry, including providers, insurers, pharmaceutical and life sciences companies, and employers.

1. Booming Business in Health Insurance Technology.

Challenges surrounding technology in 2011 include the fact that:

A. Providers must have the capability to provide patients with electronic copies of their health records upon request, per the requirements of “meaningful use,” in order to qualify for federal stimulus funds this year.

B. A new claims coding system must be implemented to add 5 times the number of current diagnosis and inpatient codes that providers use to bill for services, as well as an electronic transaction format that requires more than 1,300 system modifications.

C. Manufacturers, healthcare facilities and importers of medical devices will have to report adverse events, like death, injuries and malfunctions, through a federal electronic gateway.

2. Gearing Up to Redefine Health Insurance – From MLRs to Insurance Exchanges

A. Beginning in 2012, health insurance companies must start to report their medical loss ratios (MLR – the percentage of the insurance premium dollars allocated to providing care) and provide rebates if they do not spend enough on medical services.

B. The federal government will provide grants to set up health benefit exchanges, which are online insurance marketplaces that must be available in 2014.

3. Accountable Care Organizations (ACOs) – Is This the Next Big Thing or Not?

A. Health reform creates a new type of healthcare model called accountable care organizations (ACO), which may include physicians, hospitals, insurers and vendors in systems that share risks and rewards for patient outcomes.

B. Success of ACOs is dependent upon keeping patients in the ACO system for all their care and convincing them to stay healthy.

4. Nowhere Else to Cost Shift – Consumers Could Continue to Reduce Utilization. 

Consumers may reduce utilization due to higher deductible levels on their health plan.

5. Mergers & Acquisitions – Deals Will Bond the Familiar and Unfamiliar as Organizations Look to Fill Strategic Gaps.

Physicians are aligning with hospitals. Hospitals are merging with other hospitals and health systems. Private equity funds may purchase healthcare providers and hospitals.

6. Follow-Me Healthcare – Patients Look to Health Organizations that are Always On.

Consumers will mostly search for healthcare information from third-party media and information service companies, such as WebMD and Dr. Oz.

Consumer Response
Consumers were surveyed regarding some of these reform issues, and some of the key responses are as follows:

• While the success of accountable health organizations is based on consumers staying within these systems, only half responded that they would stay within an ACO for all of their care.
• Although health insurance exchanges are one of the key aspects of healthcare reform, less than half of respondents know what a health insurance exchange is and how it affects them.
• Almost three-fourths of consumers were willing to trade employer-sponsored medical insurance in exchange for higher pay, although they did not know the amount of the employer-paid insurance premium.
• Although a key component of healthcare reform involves the creation of electronic medical records, most consumers do not access their medical records in this manner.
• While healthcare mergers are expected, many consumers think that these mergers will increase costs and waiting times.

Why This is Important for Employers
Healthcare reform and associated changes in the healthcare delivery system have a direct impact on employer-sponsored medical benefits. These impacts take the form of cost increases, employee access and utilization, and compliance concerns, to mention a few.

Employers should seize the moment to bring some calm to an otherwise unstable environment for employees. Some ways to accomplish this include:

1. Provide additional employee communication around the best ways to use their benefit plan
2. Keep employees abreast of any changes that occur with regard to the options they have for alternate avenues of securing healthcare coverage
3. Be completely transparent about the overall cost and subsidy of the medical plan
4. Communicate the steps an employer and employees should take to manage this expense

Taking the lead on this discussion with employees will put employers in a position to derive more value from their employee benefit budget, ultimately maximizing this occupational magnet for increased employee engagement.

HCW Viewpoint
Some of the predictions from the PricewaterhouseCoopers survey will be accurate, while others will not be. One thing is certain — the market will not sit still. The market will explore many new and old concepts to adapt and find formulas that meet the changing needs of our society. As a result, the landscape of healthcare is going to get more complicated, and the work associated to remain current on the issues and solutions will continue to rise.

The medical provider landscape will change. The compliance issues you face will change. The way health insurance is financed and delivered will change. And, perhaps most importantly, the way your organization derives value from this component of your P&L budgets will also change.

Those employers who are handling these changes strategically will develop competitive advantages from them as they recruit and retain the employees they need, while meeting the overall goals and objectives of their organization. Other employers will not pay as much attention and, as a result, they will find that this becomes another obstacle to the success of their company.

Revisit the purpose of your benefit plan. How does it fit into your overall strategy for having engaged employees? Get the leadership of your organization on the same page and proactively pursue a course of action that will better position your company to compete in this changing environment.

HCW will continue to track these issues throughout 2011, as well as additional emerging information regarding healthcare reform. For more information on this topic, contact an HCW consultant.