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New Trend or Passing Fad?
Telehealth Services

This blog is the SECOND in a new series regarding the ‘unintentional consequences’ of the COVID-19 pandemic. As our lives have been abruptly altered due to social distancing requirements – both at home and in the workplace – unplanned ‘disruption’ of previous normal activities could permanently replace sacred elements once believed to be unyielding to any change. But COVID-19 just may have dictated new approaches to how we live and work.

Thanks to the COVID-19 pandemic, social distancing and stay-at-home orders during the past two months have made it difficult to have a face-to-face meeting with our doctor(s).

But necessity is indeed the mother of invention, and thankfully, telehealth – using email, video conferencing, online patient portals and other technologies – was already being used by some providers to aid in the delivery of patient care, typically to the benefit of rural patients.

Telehealth has been around for quite some time – at least a few decades. But its relatively steady growth trajectory has been refueled by the COVID-19 virus, prompting enhanced usage that we have not seen before. Patients, both young and old, have found a new method to safely seek care. Cleveland Clinic, as one example, has reported that demand for virtual visits is up more than 1,000 percent since the start of the pandemic.

For the sake of simplicity, I will be using the term telehealth interchangeably with telemedicine. According to HealthIT.gov, telehealth is different from the term, telemedicine, “because it refers to a broader scope of remote healthcare services than telemedicine.” Telemedicine refers to remote clinical services, while telehealth goes beyond clinical services to also include non-clinical services, such as provider training, administrative meetings and continuing medical education. Any reference to telehealth, therefore, also includes telemedicine.

Prior to the pandemic, telehealth usage wasn’t widely adopted in healthcare for many reasons. To understand the push-pull of telehealth, we must first understand the perspectives from patients and their healthcare providers.

Patient Perspective

For patients, telehealth can provide value and benefits for many key reasons, including:

  1. Less time in the doctor’s waiting room.
  2. No need to take time off of work.
  3. No transportation time or parking hassles.
  4. Reduced risk of obtaining infection while at doctor’s office.
  5. Eliminate child or elder care issues.
  6. More affordable.
  7. Access to specialists.

Telehealth, it must be noted, is not the panacea for every health-related scenario. A medical emergency or a difficult case to diagnose will still require a visit to the doctor or hospital. Telehealth can include physical exams, but depending on procedures performed (e.g. blood drawing, biopsy, X-ray, strep test) the process is more limited. But for wellness-related interactions, such as common office visits and mental health consultations, telehealth can be an efficient interaction process. A sample telehealth consent form offered up by the Agency for Healthcare Research and Quality provides easy-to-understand insight for patients who pursue telehealth services.

Physician Perspective

Physicians and hospitals, on the other hand, are a different story – at least prior to the pandemic. Generally, in the pre-COVID past, providers did not receive higher pay when using telehealth care, and most of the time, they received less pay for telehealth care when compared to in-office care.

With telehealth services, doctors would have to do essentially the same amount of work regarding time spent with the patient and documentation requirements, all while learning a new workflow to interact and treat patients. For this, the doctor is paid less for their time – something that few of us would want to experience in our own jobs.

Telehealth usage prior to the pandemic, therefore, struggled to quickly trend upward largely due to lack of payment parity with face-to-face office meetings. Without payment parity, telehealth did not see the growth gains that it currently has found under the current pandemic environment.

The value equation must also work for the health provider as it does for the patient.

Telehealth and the COVID-19 ‘Experiment’

With the advent of the virus epidemic, telehealth became an overnight ‘sensation’ for a few key reasons. To help providers experience telehealth as a value equation, Medicare is now paying for most visits and many private payers* waive virtual visit copayments, including Wellmark in Iowa. As of March 6, Medicare and some commercial insurers have said they will pay the same rate for video calls as for office visits.

*Some insurers have subsequently found, due to software problems, they are unable to immediately eliminate telehealth copays and cost sharing for millions of members. Additionally, carriers need consent from their self-insured clients to implement these policies.

Many states have relaxed, or deregulated, more stringent requirements for telehealth usage, including Iowa.  The Federation of State Medical Boards provides an updated listing of all states and their telehealth practices regarding COVID-19.

Stay-at-home orders offered legal risks if doctor offices and clinics stayed open and did not adopt telehealth services. Avoidance of legal risks and in-office infection, coupled with payment parity has made telehealth a tool for many health providers to finally embrace.

Going Forward

The value equation for both patients and doctors will be interesting to watch. When the virus finally simmers down and social distancing requirements are greatly relaxed, how will doctors react when their patients can safely return to visiting the doctor? Will the value equation for the doctor shrink from the heightened COVID period or will doctors look more long term on valuing physical distance for their own health, including staff members, and accept telehealth in the future?

Now that the genie is out of the bottle, will patients demand more telehealth services? Perhaps the patient experience during the COVID period will push patients to seek telehealth services elsewhere should their doctor reduce or eliminate the telehealth options in place during the pandemic.

How telehealth services are reimbursed from payers will certainly predict the future for telehealth. Will telehealth reimbursement to providers become more marginalized whereby payment parity is no longer being practiced by key payers? Perhaps payment parity becomes more prominent and, as a result, unleashes additional sophisticated telehealth services than what is provided today? Clearly, the opportunities are just as great as the barriers. The barriers can be difficult to accessing telehealth, such as absence of technology, digital literacy and reliable internet coverage.

The future of telehealth services looks extremely bright, but it will largely be dependent on how physicians view the value proposition of delivering this service to their patients. The COVID-19 pandemic may have provided the fortuitous nudge for telehealth to become a mainstream model of delivering healthcare to Americans. This will be a trend worth following!

Next Week’s Discussion:  Reliance on Drugs from Foreign Countries

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COVID-19: What Will Happen to Future Private Health Insurance Premiums?

As of April 6, COVID-19 cases have surpassed 1.35 million globally, with more than 75,000 fatalities…and counting. The U.S. accounted for 367,000 infections and almost 11,000 deaths. The world economy is spiraling disastrously downward with no clear consensus when the bottom will be reached.

While watching the evening news recently, my wife asked me how insurance companies will remain financially sound if the scenarios of COVID-19 cases and fatalities reach doomsday projections. This is a logical, yet difficult, question worth some exploration.

In the U.S., most healthcare is privately provided – except for the elderly (Medicare) and for the poor (Medicaid). The key issue in the U.S. and most countries is to enable rapid testing of people in vulnerable populations, such as the elderly and individuals with health conditions who may have compromised immune systems.

Overview on Treatment Cost, etc.

Most countries, thanks to government-directed health systems, will provide free testing and treatment, but in the U.S., when appropriate tests are available, it is largely dependent on whether each private insurer (and self-insured employers) will cover COVID-19 testing and treatment. However, the Families First Coronavirus Response Act that was recently passed by Congress mandates that Medicare, Medicaid, other government plans, and most private plans cover the entire COVID-19 testing.  It must be noted that ‘surprise’ billing issues could develop under some scenarios.  There are no curative treatments for the COVID-19 virus itself, so the treatment mentioned in this blog addresses the complications from COVID-19-related illnesses.

According to the Peterson-Kaiser Family Foundation Health System Tracker, the potential costs of COVID-19 treatment for Americans covered by employer health plans will vary greatly by location and insurance plans – in addition to complications and comorbidities. The average hospital stay for admissions due to pneumonia, a relatively similar comparison to treating COVID-19, with or without complications or comorbidities is 3.2 days – with a median total cost of treatment being about $13,000. Patients with respiratory conditions who require a ventilator (requiring less than 96 hours) will average 5.8 days – with a median cost of over $34,223. Finally, patients on ventilators for more than 96 hours will average 22.6 days – with a total median cost of over $88,000.

It is important to note that the actual number of patients and the medical efforts required will ultimately determine the true medical costs, both in Iowa and across the country. Medical costs in Iowa tend to dip below national average costs mentioned earlier.

As of April 5, a research center at the University of Washington estimated that 420 Iowans will die of COVID-19 by August 4. This figure is based on a moving target of assumptions, as it will be greatly dependent on a number of variables such as stay-at-home adherence by Iowans practicing social distancing, number of Iowans affected by the virus, healthcare workforce capacity and availability of medical supplies, adequate number of ventilators, etc. Just three days earlier (April 2), this Iowa estimate was 1,488 fatalities. Facts and assumptions are clearly very fluid at this time. The number of Iowa residents testing positive in the upcoming weeks is expected to peak in late April or early May. The Iowa Department of Public Health provides the latest update on the COVID-19 cases, including the number of Iowans currently hospitalized, discharged and recovering, never hospitalized and deceased.

The majority of people with COVID-19 can be managed at home, but as the cases in China have demonstrated, about 15 percent required hospitalization and another five percent ended up in critical care.

Postponed Medical Visits and Elective Surgeries

Hoping to free up more hospital beds and staff to deal with the COVID-19 surge of patients, many Iowa and U.S. hospitals have postponed elective surgeries and procedures. It is important to note that these ‘elective’ procedures cover many different areas, and in some cases, are still considered urgent, such as cancer, organ transplants and heart conditions, while other procedures, like joint replacements, are not considered to be a medical ‘priority.’ Elective surgery is any surgery that is scheduled.

Certain types of elective surgeries may be postponed for a long time – such as hip and knee replacements – but sometime later this year, or in 2021, there will be a pent-up demand for those types of surgeries. In fact, some procedures could develop into more serious medical conditions, including compromised mental well-being of having prolonged pain and discomfort.

Insurance Companies – Wellmark Blue Cross and Blue Shield of Iowa

On March 20, Wellmark Blue Cross and Blue Shield of Iowa, the state’s largest private insurance company, indicated that it is offering virtual healthcare visits for all appropriate medical and behavioral health visits at no cost to members until June 16. Additionally, Wellmark is covering diagnostic testing for COVID-19 at no cost-share to members. Early refills of prescription drugs are also permitted.

Wellmark then announced on April 1 they will retroactively waive members’ cost-share related to the treatment of COVID-19 – including copays, coinsurance and deductibles – when members seek care from an in-network provider, effective February 4 through at least June 16. By eliminating cost barriers to their fully-insured business and Medicare Supplement members, the desire is to ensure members seek the necessary testing and care regarding COVID-19. Self-funded employers that are administered through Wellmark will decide separately whether to replicate Wellmark’s policy or implement something different.

What Will COVID-19 Mean to Future Private Premium Costs?

How the COVID-19 medical costs will impact private Iowa medical insurance premiums is unknown at this time. Insurance companies, such as Wellmark, establish a ‘reserve’ for claims that are incurred but not yet paid. Additionally, certain statutory requirements for reserves are set aside to help cover unique medical situations that we are currently experiencing. If the COVID-19 claims erode the reserves, insurers may actually have a legal obligation to increase rates to build up those reserves for the next ‘emergency’ sometime later. This is a sound actuarial practice.

Insurers may need to price their 2021 premium rates upward to anticipate a surge in elective surgeries because people have delayed less urgent medical services. On the other hand, the decrease of elective procedures this year may help insurers financially weather the COVID-19 medical costs; their reserves may hopefully be stronger than expected when heading into 2021. A new report from Covered California, the Affordable Care Act marketplace in that state, projects that commercial carriers and employers could face between a $34 billion to $251 billion bill for COVID-19 testing and treatment in 2020, requiring insurers to increase premiums between four percent to 40 percent. Whether the federal government would help mitigate premium growth due to this pandemic is too soon to speculate.

All of this will largely depend on controlling the pandemic as soon as possible. If insurers have to dig deep into their capital reserves, then all bets are off on just how much higher health insurance premiums will need to be in 2021.

As one insurance professional mentioned to me last week, “Reserve adequacy is a function of rate adequacy.” In other words, rates will need to be adjusted upward to ensure the claims and reserves are adequate for future emergencies.

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Did Iowa Mess Up Its Individual Health Insurance Market?

The individual health insurance market in most every state is, at best, precarious. Iowa is no exception – a conclusion reached recently by national consultant, Wakely Consulting Group, one of many organizations that I collaborated with in 2012 when analyzing the Iowa population for implementing a state-based health insurance marketplace. Their report, “Analysis of Alternative Policy Decisions in Iowa’s Individual Market,” sheds light on how a concoction of earlier decisions can undermine fragile markets. In short, the individual health market is a tangled mess.

The Affordable Care Act (ACA) established state-based marketplaces that allowed Americans without employer health coverage to purchase health insurance regardless of preexisting conditions. Such sanctioned ACA plans would also provide minimum essential standard-of-benefits.

The premium paid by those qualified to enroll in these plans varies, primarily based on factors of age, tobacco use, family size and geography. Other factors – such as pre-existing conditions, health status, claims history, duration of coverage, gender, occupation, and small employer size and industry – cannot be used to impact insurance premiums. Individuals earning a certain amount of income (100-400 percent of poverty), can receive subsidies to pay for their coverage, while others above this threshold must pay the full premium themselves.

The whole idea of insurance risk is to cover as many insureds as possible, safeguarding that there will be enough ‘good’ risks to help offset those considered to be ‘bad’ risks. When the Iowa marketplace was launched in 2014, Iowa had four insurers competing in the individual marketplace. Today, Medica is the only insurer that sells ACA-compliant health plans in Iowa. To sustain its business in Iowa, Medica had to increase the premiums in 2018 by 50 percent – which did not impact those receiving premium subsidies but slammed those who earn above the subsidy limit.

On top of this, the state’s largest insurance company – Wellmark Blue Cross and Blue Shield – maintained a large block of pre-ACA grandfathered plans (policies in effect before March 2010) and grandmothered health plans (policies written after 2010 enactment but before 2014) within its block of individual health business. The state of Iowa allowed Iowa carriers to maintain both blocks of business outside the sanctioned ACA marketplace.  According to the Wakely report, “Iowa’s ACA individual market in 2015 represented approximately 40 percent of the total non-group market…while the other 60 percent were covered under the two transitional plans.”

From its analysis, Wakely’s conclusion is that had Iowa NOT allowed for grandfathered and grandmothered plans (an option for each state to decide), the enrollment in the ACA-compliant plans would have increased by 55,000-85,000, while the change in premiums would have dropped by 8-18 percent. Had this happened, I’m sure there would have been new ‘winners’ and ‘losers’ on the amount of premiums individuals would be required to pay.

Lessons Learned?

The likely lessons learned from Iowa, according to Wakely and The Commonwealth Fund, is that further segmentation of the individual market between healthy and unhealthy enrollees wreaks havoc for those who do not receive subsidies that offset massive premium growth. Adopting policies to expand the risk pool and maintain a balance between healthy and unhealthy enrollees, using state-level reinsurance programs can be beneficial to state-based marketplaces.

As mentioned in the Commonwealth Fund analysis, “…premiums in the state’s (Iowa) individual market are already among the highest in the country, with an average annual marketplace plan premium in excess of $10,000 in 2018.” The middle-class consumers – entrepreneurs, independent consultants, farmers, and early retirees – who earn too much to quality for subsidies become ‘losers’ in the insurance risk game.

Granted, with the advent of new association health plans and short-term medical plans that can legally shed many ACA requirements and theoretically become more cost competitive, many of the healthier middle-class insureds may qualify for these plans – but what about those with pre-existing conditions?

The policies we generally make in healthcare are too often made from situational circumstances that cause knee-jerk reactions that may appear to be expedient, but ultimately exacerbate an already complex problem.

Scottish writer, Walter Scott, put it quite succinctly:

O, what a tangled web we weave…when first we practice to deceive.

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