Top 10 Disruptive Trends to Watch For in Managed Care

There is growing evidence that social determinants of health (SDoH) have a negative effect on health outcomes. SDoH are “the conditions in which people are born, grow, live, work, and age,” and they play an important role in a patient’s overall health status.
This is considered by many to be the top disruptive trend impacting the managed care space today.
Lindsey Morris, director of data science and analytics for Nashville, Tennessee.-based axialHealthcare, a pain management and opioid data firm, says managed care is well-positioned to tackle SDoH by implementing population health risk management strategies that address social factors contributing to excess spending, unnecessary use of healthcare services, and worsened patient outcomes.
“However, barriers to MCO visibility into SDoH in healthcare claims, like lack of provider reimbursement for inquiring about SDoH, non-standardized SDoH screening tools across organizations, and limited evidence that SDoH screening improves outcomes, will need to be addressed,” she says.
Fortunately, a recent CMS decision allows Medicare Advantage plans to allocate their SDoH expenses as a medical cost. This means plans will be better positioned to help members overcome foundational barriers to care.
The 2019 Medicare Advantage and Part D Call Letter released by CMS also indicates how the federal government has shifted the regulatory calculation of medical loss ratio (MLR) from administrative to medical costs.
“This new rule will enable managed care plans to be innovative in how they work with their consumer populations,” says Jason Rose, CEO of AdhereHealth, a Franklin, Tennessee, healthcare technology company. “In the year ahead, Medicare Advantage plans will augment an array of current programs and community outreach services to better address the most basic needs of their at-risk populations.”
For example, medication adherence is a predominant problem for consumers, however it is often SDoH that cause these barriers to better care in the first place. If consumers don’t have food in their refrigerators, it is more challenging to engage them on the importance of medications for better health. If consumers don’t have access or funding for transportation to their doctors or pharmacies, how can they get the care needed?
“This disruptive change to managed care will positively support momentum toward critical areas of need, such as medication adherence,” Rose says. “Medication adherence issues cause $300 billion dollars of annual unnecessary medical expense, about 10% of the nation’s healthcare spend. With the SDoH rule change, health plans can improve their medication adherence strategies to capture value-based care reimbursement for Medicare Advantage Star Ratings and Medicaid Pay for Performance (P4P).”
Trey Sutten, CEO of Cardinal Innovations Healthcare, Charlotte, North Carolina, notes people’s living situation have a tremendous influence on their overall health and well-being, but it’s not something people typically or historically have connected with healthcare.
“Social determinants of health are taking a while to catch on with managed care leaders because supporting them is challenging due to cost and regulatory barriers,” he says. “However, that is changing because they have such a significant impact on health outcomes, which makes social determinants a disruptive trend to watch.”
Cardinal Innovations Healthcare has leaned in on this trend, addressing housing in the community through its Transitions to Community Living Initiative, and have seen how partnering with community resources has helped to achieve both health and cost benefits for members living with mental illness who want to live independently.
“We’ve moved about 850 members from adult care facilities into independent housing and are piloting additional program elements based on the success we’ve seen,” Sutten says. “Members love this whole-person approach, and the numbers prove its positive impact: we’ve seen a 42% reduction in crisis service events, and a 71% reduction in crisis services costs.”
He believes adopting this type of approach industry-wide will impact how we structure managed care programs to lead with ways to support and address social determinants for members.
Here are nine other disruptive trends to keep an eye on:
1. Need for cost control.
DeWayne Wilson, chief financial officer for Arlington, Texas-based Texas Health Aetna, notes the most disruptive trend in healthcare that will impact managed care in the year ahead will be the continuing need for cost control measures.
“These measures will require providers and payers to further explore and launch new collaboration models to address price transparency, as well as rate settings tied to outcomes and improvements distributed across all stakeholders,” he says. “This will include a significant focus on increased utilization of specialized networks, such as regional centers of excellence that have proven value for outcomes or spend, and greater integration of virtual primary care and telemedicine into health benefit design.”
Such digital platforms will continue to bridge the gap in current information exchange, patient navigation and price transparency. Consumerism as a guiding principle, he adds, will continue to influence where and from whom healthcare is purchased.
“Plan sponsors, patients, and providers continue to seek information and education on the balance of quality and value of network providers in order to make informed decisions about healthcare options,” Wilson says. “Providers satisfied with the old-school approach [that value is driven by doing more in a fee-for-service environment] will not be able to compete in the future marketplace that demands transparency and improvement in value.”
2. Predictive analytics.
Morris says MCOs strive to find efficiencies—reducing spend by better managing use of health services—and predictive analytics can help meet these goals by identifying high-risk patients and enabling provider intervention prior to high-cost, high-risk events.
“Applying AI, or more specifically machine learning and predictive analytics, to population health management has enormous potential to change the game for managed care organizations,” she says.
An example is the opioid epidemic. Although this crisis affects the entire nation, studies have shown it has an immense impact on the Medicaid population, driving up healthcare costs that the state has to shoulder.
“Through an assessment of claims data from one Medicaid population, we measured the difference in per member per month (PMPM) spend between two types of patients: those identified as in need of screening for opioid use disorder (OUD) and those diagnosed and placed in quality outpatient treatment,” Morris says.
The results were significant: $2,225 PMPM for patients recommended for OUD screening versus $500 PMPM for patients receiving treatment—an over $1,800 difference in PMPM spend.
“This considerable cost variability shows how implementing a program that leverages predictive analytics to identify patients with the highest risk of developing OUD and enables providers to intervene early has a big impact on clinical and financial outcomes,” Morris says.
3. Mergers.
Andrew Demetriou, managing director of Emeryville, California-based global consulting firm Berkeley Research Group, LLC, says the most disruptive factor that he sees for managed care is the restructuring of the managed care industry through mergers and integration with intermediaries and provider entities.
“As managed care companies extend into areas such a retail pharmacies (Aetna/CVS) and acquire physician provider networks, they are seeking a more comprehensive healthcare solution to employers and the public,” he says. “However, the merger activity will trigger enhanced government scrutiny, with the FTC and Justice Department becoming more active in pre-merger review and litigation to block certain deals or to extract concessions in terms of mandatory divestiture or restrictions on expansion of acquired businesses.”
That was seen in the recent agreement concerning the merger of Optum and DaVita Medical Group. Because some of these transactions constitute horizontal expansion into new markets and changes in relationships among entities that have not historically been competitors, Demetriou notes traditional antitrust doctrines may not strictly apply, and yet federal and state antitrust regulators may feel political and public pressure to oppose transactions nonetheless.
4. Drug pricing transparency.
Flaviu Simihaian, CEO of Troy Medicare, a Charlotte, North, Carolina-based Medicare Advantage plan, notes there is already a proposal from the HHS to ban drug rebates from protection under the Anti-Kickback Safe Harbor rule as early as January 2020.
“What this means is that there will be more drug pricing transparency and less room for profiting by middlemen and PBMs,” he says. “On the other hand, current rebate savings may be passed to consumers in the form of higher drug prices, or managed care organizations will have to increase premiums to account for the difference. This has caused so much panic among managed care organizations and their PBM that after numerous complaints, CMS came out and assured payers that the government will pay 95% of any additional costs if the rule goes into effect.”
He also notes new high-cost therapies is something to keep an eye one. For instance, this summer, the FDA approved Novartis’ $2.1 million gene therapy for spinal muscular atrophy.
“As more and more new therapies are approved that cost several million dollars per treatment, the cost structure of managed care will change dramatically,” Simihaian says. “This will either trickle down to premiums and reinsurance, or it may create carve-outs as we have today with ESRD.”
5. Medication adherence.
AdhereHealth’s Rose says medication adherence will become a focal point for improving health outcomes in the years’ ahead.
“Whether it be Amazon’s acquisition of PillPack for multi-dose sorting packaging direct to consumer or outcomes-based contracting (OBC) for big pharma to take risks with health plans directly, medication adherence will be elevated as one of the top priorities for managed care organizations,” he says.
6. State government Intervention.
This is specifically for medication-assisted treatment (MAT) availability. Signed into law in October 2018, the SUPPORT (Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities) Act mandates state Medicaid programs to cover all three FDA-approved MAT drugs (buprenorphine, naltrexone, methadone), as well as behavioral therapy services from October 2020 to September 2025.
Elizabeth Ann Stringer, chief science officer for axialHealthcare, says managed care organizations are making progress in expanding coverage, but many barriers still exist, including a lack of providers offering MAT, shortage of behavioral health coaches, an influx of cash-only clinics due to cumbersome reimbursement processes and low reimbursement rates, and even a lack of provider awareness and buy-in on MAT’s potential.
“To meet this mandate, MCOs will need to collaborate with organizations to develop innovative strategies that build quality MAT networks, advance universal clinical guidelines for MAT, and leverage technology to increase access in rural areas,” she says.
7. Shifting providers.
Another disrupter Texas Health Aetna’s Wilson sees is an increase in shifting hospital-based services to other types of providers.
For example, online retailers like CVS are playing a bigger role to leverage community-based resources, access points and data (pharma, purchasing, etc.) to deliver more complex care, as well as provide ancillary services and products directly to consumers at lower costs.
“Also look for increased participation in virtual groups and practice support services,” he says. “Such services will enable independent practices to adopt and thrive in this dynamic and competitive healthcare market.”
Paul Thompson, general manager for DXC Technology’s commercial healthcare payer segment, in Tyson, Virginia, says this is a topic that is impactful for any payer, be it government or commercial.
“Payment innovation is an encompassing trend already in the marketplace and continuing to accelerate,” he says. “What you are going to see is payers and providers working much more collaboratively and closer together and that’s going to drive the need to share information, almost on a real-time basis.”
The most important part, he says, is to identify the business model that’s going to support it.
“It’s not a matter of simply overlaying technology on existing process, it’s examining good design thinking,” he says. “What are the requirement and needs of your end user and how are you meeting the needs of the provider from a plan perspective, and the needs of a member. Then finding supporting technology to enable that process to be successful.”
9. Data-driven engagement.
Donna Martin, senior vice president of global healthcare at Hinduja Global Solutions, a Lisle, Illinois-based company, which handles process management for healthcare companies, believes one of the most disruptive healthcare trends right now is the idea of moving toward more proactive, data-driven engagement with individuals.
“For years, we’ve seen reactive, symptomatic support, but today’s shift to proactive, insightful managed care support is driving more effective outcomes, success with at-home management and sustainable results,” she says. “We are beginning to recognize, because we now have the data to review with some insight, that SDoH is the disruptor to help both providers and payers move away from cost-determinations of care to a realistic, manageable environment where the patient’s wellness needs are more clearly understood.”
Soon, healthcare companies will have the ability to intervene, diagnose, treat disease, and prevent the more serious outcomes that have been the result of patient and provider negligence, as well as the artificial barriers set up by all parties to prevent abuse of the care system.
“This is something to watch because this is a big shift from how we’ve supported individuals requiring managed care in the past—and it requires top-down support for organizations to make these philosophical, technological, and operational changes,” Martin says.
Historically, the managed care system has been all about managed cost, in an attempt to control unnecessary outlays based on bad decisions by both patients and providers. But having the real and clean data that describes the patient’s home environment—their own genetics, their personal behavior (eating habits, substance abuse, and so on), their social situation (support groups, discrimination, gender bias), their physical environment (housing conditions, location), and availability of health services—allows the caregiver to build a realistic plan that accommodates each of these issues.
“Through the use of analytics and AI and by providing better individualized support, we can gain a better understanding of the motivation behind individual behavior,” Martin says. “Many individuals suffering from chronic conditions require data-driven coaching, knowledge, and community support resources in order to maintain an optimized lifestyle. This proactively engaged support, provided by professional support organizations working as a multi-faceted concierge extension of the managed care organizations, drives proven success in outcomes.”
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