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The Impact of COVID-19 on the Health Insurance Industry

Summary

On April 9, Avalere experts came together to discuss the impact of COVID-19 on the health insurance industry.

The webinar featured:

  • Fred Bentley, Managing Director, Health Plans and Providers
  • Matt Kazan, Principal, Policy
  • Thomas Kornfield, Senior Consultant, Policy
  • Michael Lutz, Senior Consultant, Health Plans and Providers

The discussion focused on the following topics:

  • The COVID-19 regulatory environment and challenges
  • Medicare Advantage (MA) developments and the 2021 rate announcement
  • 2020 election impacts on the industry

As COVID-19 creates unprecedented challenges for the US healthcare system, health plan leaders must adapt quickly to a transformed health insurance landscape while keeping an eye on normal business requirements to ensure they are prepared for a post-COVID-19 world.

The COVID-19 Environment and Challenges

The recent stimulus bill passed by Congress was more focused on providers than health plans, but a fourth bill with additional measures is currently being considered that would include greater resources for small businesses and more financial support for healthcare providers. The specific health plan effects of the stimulus bill include a temporary pause on Medicare sequester cuts and rate increases for certain fee-for-service providers, but it is unclear if Congress will make changes to MA or other policies that directly impact plans. For now, this crisis is likely to cause a spike in Medicaid enrollment with a decrease in employer-sponsored insurance because of the number of people now out of work, while Medicare enrollment might also increase through disability and enrollees leaving the workforce. In day-to-day operations, however, health plans and providers must now quickly shift into providing expanded telehealth services and switch non-essential personnel into remote working situations. The healthcare industry is also facing significant cost increases from treating more ICU patients afflicted by COVID-19, which will likely continue into the summer and fall. At the same time, elective surgeries are changing revenue streams.

MA Developments and 2021 Rate Announcement

The new Center for Medicare & Medicaid Studies (CMS) 2021 Final Rate Notice was most notable in its lack of specific COVID-19 policies, which would be addressed in a future document. Administratively, however, the CMS is postponing data collection activities on quality measures while relaxing program audits and rule enforcement to allow for greater plan flexibility. Even though there has been relief from things like the suspensions of HEDIS and the Health Outcomes survey to focus on member health, the bid process is still moving forward, and the CMS and health plans are focusing on expanding the use of telehealth services.

Telehealth was incorporated into Medicare in prior legislation, but the CMS has been encouraging its use in recent weeks as plans are trying to maximize their telehealth capabilities to keep carrying out non-COVID-19 related business, like regular physician visits.

Other changes include waiving or reducing cost-sharing for diagnosing COVID-19 and relaxing rules for refilling Part D prescriptions and program audits. The CMS is also suspending many quality and reporting programs like HEDIS, but this crisis could still affect plans risk scores and star ratings for next year in other ways.

The Rate Notice contained limited information about how COVID-19 would specifically affect plans, however, and instead the specific effects of its impact on health plans will likely be addressed in a future document.

Thinking ahead, new flexibilities that the CMS has temporarily granted in coding and fee for service also mean that there could be confusion about reimbursement in the future, as these rates are based on changing diagnostic codes. Possible policy changes in Medicaid and the private market in future legislation could include increasing enrollment with tools like increasing ACA subsidies and federal Medicaid fund matching or creating a special enrollment period. However, it is unclear whether SSBCI supplemental MA benefits can apply to COVID-19 patients even as the virus is exacerbating current disparities in social determinants of health.

2020 Election Impacts on the Industry

Before the pandemic, the biggest questions for health plans were possible changes to prescription drug policies. But as the virus has created major disruptions in the healthcare system, improving public health infrastructure will likely be at the forefront of the presidential administration in 2021. Congress has been able to act quickly during this emergency, similar to the crises of 2001 and 2009 in that new legislation could also lead to more permanent policy changes, but other policy actions have been delayed indefinitely.

Listen to the archived webinar.

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Check out our COVID-19 Intel Center.

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