How the Payer Landscape is Shifting as the COVID-19 Pandemic Unfolds

How are payers and other stakeholders responding as the COVID-19 pandemic wave approaches its apex? We reached out to our usual stellar panel of experts and asked for their analysis regarding payer support, cost considerations and their likely impact on claims, potential clinician and equipment shortages, employer issues, and more. 

With regards to payer support, “I am hearing that most insurers are paying for any valid coronavirus test without copayment,” said Gary Owens, MD, president of Gary Owens Associates in Ocean View, DE. 

F Randy Vogenberg, PhD, RPh, principal at the Institute for Integrated Healthcare in Greenville, SC, added, “Payers are relaxing various utilization management actions—such as prior authorizations and refill limits—during the crisis.” 

Larry Hsu, MD, medical director at the Hawaii Medical Service Association, a Honolulu-based nonprofit health insurer, offered confirmation. “We are waiving the cost to test patients. Also, as long as a physician orders the test, it will be processed—there is no need for prior authorization.” Additionally, “We have reached out to local labs and are working with our state’s health department to make sure that the tests are available.”

Aetna is waiving copays, noted Edmund J Pezalla, MD, founder and CEO at Enlightenment Bioconsult in Hartford, CT. A medical director who requested anonymity noted that UnitedHealthcare and others have “simplified and eased the process of transitioning members from acute care to post-acute care settings to eliminate any delays in getting patients to the most appropriate site of care needed.” This is particularly important given the challenges of transferring patients from skilled nursing facilities during stay-at-home mandates. UnitedHealthcare is also trying, through sourcing and advance preparations, to make sure clinicians have access to personal protective equipment (PPE). Plus, in an effort to minimize the need for PPE and healthcare practitioner administered testing and potential exposure to the virus, UnitedHealthcare has “assisted in the development and study of a self-administered nasal swab technique for identifying the virus, which data shows works as well as the health care professional administered testing.” 

Telehealth Moves to the Fore

Whether motivated to minimize negative market changes or show compassion—or a combination of both—these moves “are the right thing for commercial and Medicare programs to do,” explained Dr Vogenberg. “Allowing unfettered coverage when following CDC [Centers for Disease Control] guidance and access to testing makes sense.”

To ensure that proper focus is going to the crisis at hand, said Dr Pezalla, “hospitals are not performing the usual very expensive elective and semi-elective therapies, which frees up funds for paying for COVID treatment.” Dr Vogenberg pointed out that organizations are utilizing telehealth measures to manage routine care and screening, thus keeping people out of the emergency room. “Payers are expanding telehealth coverage and encouraging its use to scale healthcare capacity to deal with the surge.” Once again, Dr Hsu offered confirmation. “We are working with hospitals and outpatient centers to keep ICU beds and even general medical beds open by avoiding any elective procedures and/or admissions.” 

Arthur Shinn, PharmD, president, Managed Pharmacy Consultants in Lake Worth, FL, said he thinks services such as telehealth have the potential to become standard once the crisis abates. “Payers are now reimbursing for telehealth services at the same rates as office visits. Why would this not continue in the future?” Additionally, Dr Shinn said he has seen an increase in mail order pharmacy use, and similarly thinks this shift has the potential to become the norm. “One PBM reports that its mail order business is up 300%. Necessity is truly the mother of invention.” 

Absorbing Patient Costs

Early on in the crisis, reports emerged about COVID-positive patients who faced high medical bills. These appear to have occurred before the Trump administration intervened. “Copayments for services related to testing, treating, and otherwise managing COVID-19 are being waived, as announced during the March 29 White House briefing,” noted Dr Owens, referring to the CARES Act passed by Congress and signed into law by President Trump. Additionally, said Dr Hsu, “payers are already looking at other solutions to help with high medical bills associated with COVID-19. For patients with high deductible plans, payers may end up paying part of the deductible to ease the financial burden. Also, at this time, payers are not promoting the purchase of high deductible plans because of the potential of high costs during the crisis.” 

Provider organizations and health systems are accepting patients regardless of coverage or ability to pay, explained Dr Vogenberg. They will “sort out the economics after the crisis subsides.” He added that “the CARES Act will provide some economic balancing to include medical related debt, but it’s still too early to tell how effective Congressional intervention will be or how long it will last. We are in uncharted waters that will most likely continue into the summer at least.”

It’s natural to wonder how long payers will continue to afford taking on costs they typically wouldn’t during normal times. Dr Owens pointed out that “most payers will have the ability and resources to do so because they are not spending the money on elective services. However, there will be a time when the insurers may face a cash issue.” He went on to explain the potential ramifications: “Sadly, many covered lives will either permanently or temporarily lose their jobs and coverage, decreasing top-line revenue for the insurers at the time when cost for coronavirus and elective treatments begin to reemerge [next fall/winter]. I am not sure what the exact impact will be, but insurers must be prepared for it.”

Dr Shinn said he expects to see “a potentially very large increase in pharmacy costs, not only from utilization, but from lack of management due to suspended prior authorization.” 

Of course, the moratorium on elective and semi-elective procedures will eventually end, noted Dr Pezalla. “When hospitals go back to more usual operations, we may see a surge in procedures such as hip replacements. For now, payers are continuing to pay claims as they come in, but eventually they could prioritize claims from certain providers if they feel that they need to.” 

The New Normal

The claims landscape remains a “huge unanswered question,” said Dr Vogenberg. He does not think an answer will come until this summer at the earliest. “No one really knows to what extent operational strategies will change going forward and what the financial ramifications will be. The complexities require more time to sort through in an effort to determine our new normal.” 

While no one knows for sure, hints are emerging about the magnitude of COVID-19-related costs and how they might need to be dealt with once the immediate health crisis is under control. According to a document posted on the website of Covered California, a state-backed service that helps Californians secure health insurance coverage, the potential impact nationally on commercial plans alone—“absent decisive federal action”—could be substantial. Specifically:  

Nationwide costs for COVID-19 testing, treatment, and care are projected to range between $34 billion and $251 billion. 

Potential costs would range between 2% and more than 21% of premium “if the full first-year costs of the epidemic had been priced into the premium.”

The analysis goes on to note that “if carriers must recoup 2020 costs, price for the same level of costs next year, and protect their solvency, 2021 premium increases to individuals and employers from COVID-19 alone could range from 4% to more than 40%.” 

A Clinician Shortage?

There are reports from Italy that clinicians are making gut-wrenching decisions about who receives critical treatment in the midst of ventilator shortages in that country. As of the writing of this article in early April, there has yet to be a need for such decisions in the US—but providers are preparing for what might be necessary. 

The medical director who requested anonymity said that he is not aware of any discussions for plan involvement in such decisions, nor should they be. Critical decisions need to be made about how to efficiently and ethically allocate available ventilators to health care facilities and the CDC has provided important guidance. These tough choices, should they be necessary, will fall to hospitals, clinicians, and government agencies, said Dr Vogenberg. Dr Owens added, “Hopefully, those decisions will be few and temporary as the supply of ventilators increases and allocations are managed appropriately.” He expressed hope that temporary hospitals being built in a number of urban areas will successfully serve as a safety valve. But he quickly added, “There may be a point [at the top of the curve] where we don’t have enough physicians, nurses, and other clinicians. We can’t engage a factory to make new health care workers.”

As for the impact on employer plans, Dr Owens said he has “seen some early estimates that employers can expect up to a 7% increase” in costs for 2021 plans. Noted Dr Pezalla: “Frankly, right now most employers are more concerned about the viability of their business and the need to service debt.” He added that “the self-insured have reinsurance/stop-loss to cover just this sort of thing.” 

Eventually, Dr Vogenberg explained, employers will start to think about how affordable health insurance will be next year. “Current plan designs and financial structures are not equipped to address this type of crisis.” 

Seldom-Imagined Considerations

COVID-19—a once-in-several generations occurrence—is prompting a number of seldom-imagined questions and considerations. For instance, what impact will canceled wellness visits and routine testing eventually have on the system? 

“A potential tsunami of visits in communities for health care services will likely lead to billing issues down the road,” noted Dr Vogenberg. Dr Owens said he is thinking about patients with chronic illnesses who are not receiving care. “We need to be prepared for the consequences of those who experience treatment lapses.” 

Meanwhile, Melissa Andel, vice president of health policy at Applied Policy in Washington, DC, said she wonders about declines in accidental death and injury rates while stay-at-home mandates are in place. This gives rise to other considerations. “I know that many localities are reporting a drop in crime rates. I would think that issues such as drunk driving are declining, as well. On the other hand, there are concerns about an increase in domestic violence incidents as well as negative impacts of self-isolation on mental health. Overall, I would think that we will see a drop in deaths from [non-COVID] causes due to overall changes in activity.”

In the end, payers and other stakeholders are no different than anyone else enduring this historic pandemic. As the medical director who requested anonymity noted: “There is a growing need to support employees in a substantial way during this crisis by enhancing communication, transitioning to telecommuting capabilities, providing ongoing support, and offering financial and other benefit assistance.”  

It appears that coming together as one—even as we sit in isolation—has never been more important.