Change Is Coming for the Healthcare Industry Print
Written by Source from: Medpagetoday.com/PublicHealthPolicy/PracticeManagement   
Tuesday, 18 January 2011 14:38

A potential decline in physician office visits, record spending on health information technology, a total redesign of insurance markets, and the creation of accountable care organizations are among the health industry trends in store for 2011, according to a PriceWaterhouseCoopers report.

The report authors used an online survey of 1,000 U.S. adults to assess consumer perspectives on health reform, healthcare usage, and payment for healthcare. Those surveyed represented a cross-section of the population in terms of insurance status, age, gender, income, and geography. The survey results were incorporated into the analysis given in the report.

High Deductibles = Fewer Office Visits

Health insurance deductibles for people in employer-sponsored plans rose an average of 77% between 2003 and 2009, while premiums for family coverage increased by 41%, the Commonwealth Fund recently reported. And that trend will continue in 2011, according to the report, by the Health Research Institute at PriceWaterhouseCoopers (PwC), a large accounting and consulting firm.

In 2010, the most common plan had deductibles ranging from $400 to $999, according to PwC.

As deductibles rise, patients will forgo medical care to avoid paying out-of-pocket costs. Couple the rising deductibles with the struggling economy, and patients are even more likely to skip doctors visits.

"With more employees being squeezed with high-deductible plans and coinsurance, their increased cost sensitivity will push them to make hard decisions on how often to go to the doctor or what prescriptions to fill,"the report authors said.

The first group to be affected will be doctors and drug companies, because consumers' first-dollar spending in health plans tends to be on office visits and medication. Fewer office visits will eventually trickle down and effect other medical services, such as lab tests and imaging scans, the study authors said.

Health IT

Health information technology (HIT) spending is likely to hit record highs in 2011 as providers beef up their HIT capabilities to comply with new government regulations, according to the report.

Starting in 2011, hospitals and physicians can start collecting money for "meaningful use" of electronic health records (EHRs). The money comes from the 2009 economic stimulus bill, which authorized $19 billion to upgrade the nation's HIT capabilities and to provide incentive payments through Medicare and Medicaid to clinicians and hospitals when they use electronic health records.

Stage one of meaningful use is that physicians be able to provide patients with paper copies of their health records, which would be a "sea change for patients," the authors said.

Redefining Insurance

The primary foci of the insurance industry in 2011 will be the medical loss ratio (MLR) -- which mandates the proportion of an insurer's revenue that must be spent on patient care as opposed to administrative expenses -- as well as the new health insurance exchanges.

The Affordable Care Act (ACA) requires that, starting in 2011, insurers covering large groups must spend at least 85 cents per dollar of revenue on medical care or "activities that improve healthcare quality" (for small group and individual plans, they must spend 80 cents per dollar).

Beginning in the second quarter of 2011, the federal government will provide grants to help establish insurance exchanges, and debate will intensify over what defines a qualified health insurer. According to the report, 13.8 million people are expected to enroll in health insurance exchanges in 2014.

ACOs

The healthcare reform law will create a new care model, called an accountable care organization (ACO), which already has insiders buzzing.

Loosely defined, an ACO will be a group of providers that works together to treat a set number of patients, and splits the payments it receives for the care provided. Under the ACA, the government will begin offering providers the option of forming ACOs with the hope that the setup will improve patient care and save money. Starting in 2012, Medicare will pay ACOs using a "shared savings" design which pays bonuses based on meeting certain quality and cost-saving benchmarks.

In other words, if providers in an ACO can reduce the cost growth of Medicare in their communities, they will receive cash rewards.

The report authors warn that one of the biggest risks for ACOs will be managing a patient population and trying to keep the population healthy and enrolled in the ACO.

When PwC asked survey respondents how likely they would be to stay within an ACO, half said they would always stay with a hospital or group of physicians if they knew that group was accountable for their care.

"Providing incentives for patients to be a part of this accountability model could be the difference between profits and losses for an ACO," the report authors said.


Last Updated on Tuesday, 18 January 2011 14:51