ICHRAs allow companies to compensate employees for insurance purchased in individual markets and may help clinical laboratories reduce patient bad debt
Both employees and their employers are frustrated with current options for health coverage. Now, a recent report from the HRA Council suggests that more employers are turning to Health Reimbursement Arrangements (HRA) as an alternative to traditional group insurance coverage to cope with the increasing cost of employee health benefits. This will be of interest to clinical laboratories that must collect copays/deductibles from patients. Health insurance arrangements that make it easier for patients to pay help labs reduce patient bad debt.
According to its website, HRA Council is “dedicated to improving and expanding health coverage options for millions of workers by giving employers better ways to offer workers health insurance.”
The non-partisan advocacy organization, which consists of insurers, brokers, employers, and other stakeholders, estimates that only 500,000 workers are currently covered by these plans nationwide. That number of workers represents a 29% increase since 2023, with most of the growth coming from large employers.
Under HRA arrangements, employers provide non-taxed financial assistance to workers who then obtain coverage for themselves and/or their families in the insurance marketplace.
One type of plan, known as the Qualified Small Employer HRA (QSEHRA), was established as part of the 21st Century Cures Act, which Congress passed in 2016. QSEHRAs, however, are available only to businesses with 50 or fewer full-time (or equivalent) employees. Most of the recent growth has come from Individual Coverage HRAs (ICHRA), established under regulations issued by the Trump Administration in 2019.
In contrast to QSEHRAs, ICHRA plans are available to companies of any size, HRA Council notes.
“It’s a way to offer coverage to more diverse employee groups than ever before and set a budget that controls costs for the companies,” HRA Council Executive Director Robin Paoli told KFF Health News.
“ICHRAs are bringing a fresh new approach for employers who need a new or different solution to enable providing health benefits to their employees,” said Andrew Reeves (above), senior vice president and general manager, Gravie ICHRA, in the HRA Council report. Gravie is one of the health benefits companies allied with HRA Council. “Through the defined contribution approach that ICHRA brings, employers are now able to set their budget and enable employees to make their own individual decisions on the coverage they need for themselves and their families. ICHRAs are delivering an approach to employee benefits that is both stable yet at the same time flexible for the individual,” he added. These types of alternatives to traditional employer-sponsored health plans may also help clinical laboratories and anatomic pathology groups reduce patient bad debt. (Photo copyright: LinkedIn.)
How ICHRA Plans Work
As explained by HRA Council, “an ICHRA allows the employer to allocate to each employee a specific amount of money to spend on ACA [Affordable Care Act]-compliant individual health insurance plans. Employees then purchase their own plans, and the employer reimburses them up to the allocated amount.”
The rule allows employers to define up to 11 classes of workers and offer different benefit packages to each. These benefits can be based on characteristics such as:
geography,
whether the worker is employed full-time, part-time, or seasonally,
whether the worker is paid a salary or hourly wage, and
Employers can choose to offer ICHRAs to some classes and traditional group plans to others. Within each class of employee, employers also can vary compensation based on age—up to a 3-to-1 ratio—since older workers will generally pay higher premiums than younger ones.
For example, the HRA Council explains, “if an employer offers its 26-year-old employee $300 per month, it could only offer the oldest employee up to $900 per month.”
However, some consumer advocates have pointed to potential downsides of these plans, KFF Health News reported.
The rule, they concede, provides guardrails to prevent companies from moving only their sicker employees—the ones most costly to cover—to the individual market. For example, employers must offer the HRAs to entire classes of workers, and the rule prevents them from defining classes that contain only a small number of employees.
However, the authors contend that employers can still target HRAs to classes more likely to be sick while offering group coverage to other classes. In general, they argue, employers with sicker workforces will be most attracted to HRAs. As these workers enter individual insurance markets premiums could rise, particularly “in states that today have individual markets with a relatively low-cost mix of enrollees,” the authors wrote.
Although the rule allows companies to vary compensation based on age, older workers will still pay more for insurance unless the contribution covers the entire cost of the premium. This would likely make the HRAs “less attractive to employers by making it harder for employers to avoid leaving some workers worse off,” the authors noted.
The Brookings authors also observed that workers who accept the contributions are ineligible for premium tax credits enabled by the Affordable Care Act.
KFF Health News noted other potential downsides as well. “Plans sold on the individual market often have smaller provider networks and higher deductibles than employer-sponsored coverage. Premiums are often higher than for comparable group coverage.”
In addition, ICHRAs can create administrative headaches that have prompted some employers to return to group plans. “Instead of a company paying one group health plan premium, dozens of individual health insurers may need to be paid,” KFF Health News reported. “And employees who’ve never shopped for a plan before need help figuring out what coverage works for them and signing up.”
One Employer’s Example
KFF Health News highlighted one organization that appears to be happy with its newly adopted ICHRA: Lycoming College in Williamsport, Penn. The school, which provides health benefits for 400 faculty, staff, and family members, saved $1.4 million in healthcare costs in the first year after implementing the plan. “Employees saved an average of $1,200 each in premiums,” KFF noted.
Prior to the transition, one employee with a family of five paid $411 per month for a plan that had a $5,600 annual deductible. Under the ICHRA, he pays $790 per month with no deductible.
“It’s nice to have the choice to balance the high deductible versus the higher premium,” he told KFF Health News. Before, “it was tough to budget for that deductible.”
Which is where the benefit to clinical laboratories comes back in. Making it easier and affordable for patients to pay their co-pays and deductibles also means more patients showing up at labs for doctor ordered tests and blood draws.
PwC’s list of 12 factors that will shape the healthcare landscape in 2018 calls attention to many new innovations Dark Daily has reported on that will impact how medical laboratories perform their tests
PwC’s Health Research Institute (HRI) issued its annual report, detailing the 12 factors expected to impact the healthcare industry the most in 2018. Dark Daily culled items from the list that will most likely impact clinical laboratories and anatomic pathology groups. They include:
How clinical laboratory leaders respond to these items could, in part, be determined by new technologies.
AI Is Everywhere, Including in the Medical Laboratory
Artificial intelligence is becoming highly popular in the healthcare industry. According to an article in Healthcare IT News, business executives who were polled want to “automate tasks such as routine paperwork (82%), scheduling (79%), timesheet entry (78%), and accounting (69%) with AI tools.” However, only about 20% of the executives surveyed have the technology in place to use AI effectively. The majority—about 75%—plan to invest in AI over the next three years—whether they are ready or not.
One such example of how AI could impact clinical laboratories was demonstrated by a recent advancement in microscope imaging. Researchers at the University of Waterloo (UW) developed a new spectral light fusion microscope that captures images in full color and is far less expensive than microscopes currently on the market.
“In medicine, we know that pathology is the gold standard in helping to analyze and diagnose patients, but that standard is difficult to come by in areas that can’t afford it,” Alexander Wong, PhD, one of the UW researchers, told CLP.
“The newly developed microscope has no lens and uses artificial intelligence and mathematical models of light to develop 3D images at a large scale. To get the same effect using current technologies—using a machine that costs several hundred thousand dollars—a technician is required to ‘stitch together’ multiple images from traditional microscopes,” CLP noted.
Healthcare Intermediaries Could Become Involved with Clinical Laboratory Data
Pricing is one of the biggest concerns for patients and government entities. This is a particular concern for the pharmaceutical sector. PwC’s report notes that “stock values for five of the largest intermediaries in the pharmacy supply chain have slumped in the last two years as demands for lower costs and better outcomes have intensified.”
Thus, according to PwC, pressure may come to bear on intermediaries such as Pharmacy Benefit Managers (PBMs) and wholesalers, to “prove value and success in creating efficiencies or risk losing their place in the supply chain.”
Similar pressures to lower costs and improve efficiency are at work in the clinical laboratory industry as well. Dark Daily reported on one such cost-cutting measure that involves shifting healthcare payments toward digital assets using blockchains. The technology digitally links trusted payers and providers with patient data, including medical laboratory test results. (See, “Blockchain Technology Could Impact How Clinical Laboratories and Pathology Groups Exchange Lab Test Data,” September 29, 2017.)
PwC’s latest report predicts 12 forces that will continue to impact healthcare, including clinical laboratories and anatomic pathology groups, in 2018. Click on the image of the cover above to access an online version of the report. (Photo copyright: PwC/Issuu.)
The Opioid Crisis Remains at the Forefront
Healthcare will continue to feel the impact of the opioid crisis, according to the PwC report. Medical laboratories will continue to be involved in the diagnosis and treatment of opioid addition, which has garnered the full attention of the federal government and has become a multi-million-dollar industry.
Security Remains a Concern
Cybersecurity will continue to impact every facet of healthcare in 2018. Healthcare IT News reported, “While 95% of provider executives believe their organization is protected against cybersecurity attacks, only 36% have access management policies and just 34% have a cybersecurity audit process.”
Patients are aware of the risks and are often skeptical of health information technology (HIT), Dark Daily reported in June of last year. Clinical laboratories must work together with providers and healthcare organizations to audit their security measures. Recognizing the importance of the topic, the National Independent Laboratory Association (NILA) has named cybersecurity for laboratory information systems (LIS) a focus area.
Patient Experience a Priority
Although there have been significant improvements in the area of administrative tasks, there is still an enormous demand for a better patient experience, including in clinical laboratories. Healthcare providers want patients to make changes for the better that ultimately improve outcomes and the patient experience is one path toward that goal.
As they follow healthcare reform guidelines to increase quality while lowering costs, state governments will continue to ramp up pressure on healthcare providers and third parties in the area of pricing. Rather than simply requiring organizations to report on pricing, states are moving towards legislating price controls, as Dark Daily reported in February.
Social Factors Affect Healthcare Access
The transition to value-based care makes the fact that patients’ socioeconomic statuses matter when it comes to their health. “The most important part of getting good results is not the knowledge of the doctors, not the treatment, not the drug. It’s the logistics, the social support, the ability to arrange babysitting,” David Berg, MD, co-founder of Redirect Health told PwC.
One such transition that is helping patients gain access to healthcare involves microhospitals and their adoption of telemedicine technologies, which Dark Daily reported on in March.
“Right now, they seem to be popping up in large urban and suburban metro areas,” Priya Bathija, Vice President, Value Initiative American Hospital Association, told NPR. “We really think they have the potential to help in vulnerable communities that have a lack of access.”
“Physician decision-support software utilizes medical laboratory test data as a significant part of a full dataset used to guide caregivers,” Dark Daily noted. “Thus, if the FDA makes it easier for developers to get regulatory clearance for these types of products, that could positively impact medical labs’ ability to service their client physicians.”
Healthcare Delivery During and Following Natural Disasters
PwC predicts the long-term physical results, financial limitations, and supply chain disruptions following natural disasters will continue to affect healthcare in 2018. The devastation can prevent many people from receiving adequate, timely healthcare.
PwC’s report is an important reminder of from where the clinical laboratory/anatomic pathology industry has come, and to where it is headed. Sharp industry leaders will pay attention to the predictions contained therein.
Softened FDA regulation of both clinical-decision-support and patient-decision-support software applications could present opportunities for clinical laboratory developers of such tools
Physician decision-support software utilizes medical laboratory test data as a significant part of a full dataset used to guide caregivers. Thus, if the FDA makes it easier for developers to get regulatory clearance for these types of products, that could positively impact medical labs’ ability to service their client physicians.
Additionally, clinical pathologists have unique training in diagnosing diseases and understanding the capabilities and limitations of medical laboratory tests in supporting how physicians diagnose disease and make treatment decisions. Thus, actions by the FDA to make it easier for developers of software algorithms that can incorporate clinical laboratory data and anatomic pathology images with the goal of improving diagnoses, decisions to treat, and monitoring of patients have the potential to bring great benefit to the nation’s medical laboratories.
FDA Clarifies Role in Regulating CDS/PDS Applications
The new guidelines clarified items specified in the 21st Century Cures Act, which was enacted by Congress in December of 2016. This Act authorized $6.3 billion in funding for the discovery, development, and delivery of advanced, state-of-the art medical cures.
“Today, we’re announcing three new guidances—two draft and one final—that address, in part, important provisions of the 21st Century Cures Act, that offer additional clarity about where the FDA sees its role in digital health, and importantly, where we don’t see a need for FDA involvement,” FDA commissioner Scott Gottlieb, MD, Commissioner of Food and Drugs, noted in a statement. “We’ve taken the instructions Congress gave us under the Cures Act and [we] are building on these provisions to make sure that we’re adopting the full spirit of the goals we were entrusted with by Congress.”
Helping Doctors’ Decision-Making
The first guideline concerns clinical decision support systems that are designed to help doctors make data-driven decisions about patient care. The new guidelines make it easier for software developers to get regulatory clearance, which, the FDA hopes, will spark innovation and makes regulation more efficient.
“CDS has many uses, including helping providers, and ultimately patients, identify the most appropriate treatment plan for their disease or condition,” Gottlieb said in the FDA’s statement. “For example, such software can include programs that compare patient-specific signs, symptoms, or results with available clinical guidelines to recommend diagnostic tests, investigations or therapy.
“This type of technology has the potential to enable providers and patients to fully leverage digital tools to improve decision making,” Gottlieb continued. “We want to encourage developers to create, adapt, and expand the functionalities of their software to aid providers in diagnosing and treating old and new medical maladies.”
Identifying Digital Health Applications That Receive/Don’t Receive FDA Oversight
The second guideline discusses and delineates which digital health applications are considered low risk and, thus, will not fall under FDA regulations.
Products that are not intended to be used for the diagnosis, cure, mitigation, prevention, or treatment of a condition will not be regulated by the FDA. These technologies are not considered medical devices and may include gadgets such as weight management and mindfulness tools. They can provide value to consumers and the healthcare industry while posing a low risk to patients.
“Similarly, the CDS draft guidance also proposes to not enforce regulatory requirements for lower-risk decision support software that’s intended to be used by patients or caregivers—known as patient-decision-support software (PDS)—when such software allows a patient or a caregiver to independently review the basis of the treatment recommendation,” Gottlieb noted in the statement.
Scott Gottlieb, MD (above), FDA Commissioner of Food and Drugs, noted in a statement, “We believe our proposals for regulating CDS and PDS not only fulfill the provisions of the Cures Act, but also strike the right balance between ensuring patient safety and promoting innovation. Clinical laboratories may find opportunities to work with CDS/PDS developers and support their client physicians. (Photo copyright: FDA.)
However, products that are intended to be used for the diagnosis, cure, mitigation, prevention, or treatment of a condition are considered medical devices and will fall under FDA regulations.
“The FDA will continue to enforce oversight of software programs that are intended to process or analyze medical images, signals from in vitro diagnostic devices, or patterns acquired from a processor like an electrocardiogram that use analytical functionalities to make treatment recommendations, as these remain medical devices under the Cures Act,” noted Gottlieb.
Items such as mobile apps that are utilized to maintain and encourage a healthy lifestyle are not deemed to be medical devices and will fall outside FDA regulations. The guidelines also defined that Office of the National Coordinator for Health Information Technology (ONC)-certified electronic health record (EHR) systems are not medical devices and, thus, will not be regulated by the FDA.
Software-as-a-Medical Device Gets FDA Oversight
The third guidance document deals with the assessment of the safety, performance, and effectiveness of Software as a Medical Device (SaMD).
“This final guidance provides globally recognized principles for analyzing and assessing SaMD, based on the overall risk of the product. The agency’s adoption of these principles provides us with an initial framework when further developing our own specific regulatory approaches and expectations for regulatory oversight and is another important piece in our overarching policy framework for digital health,” Gottlieb noted in the statement.
SaMD is defined by the International Medical Device Regulators Forum (IMDRF) as “software intended to be used for one or more medical purposes that perform these purposes without being part of a hardware medical device.”
Gottlieb noted that the three important guidance documents being issued would continue to expand the FDA’s efforts to encourage innovation in the ever-changing field of digital health. “Our aim is to provide more clarity on, and innovative changes to, our risk-based approach to digital health products, so that innovators know where they stand relative to the FDA’s regulatory framework. Our interpretation of the Cures Act is creating a bright line to define those areas where we do not require premarket review,” he concluded.
What remains to be seen is how the new FDA regulations will impact clinical laboratories and anatomic pathology groups. With the expanding interest in artificial intelligence (AI) and self-learning software systems, healthcare futurists are predicting a rosy future for informatics products that incorporate these technologies. Hopefully, with these new guidelines in place, innovative clinical laboratories will have the opportunity to develop new digital products for their clients.
One new federal law forbids health IT vendors and providers from deliberately blocking information-sharing with competing EHR systems
Several years deep into its effort to get physicians and hospitals to use electronic health record (EHR) systems, the federal government has yet to come up with a way to improve interoperability—the ability of EHRs to interface and communicate with other systems.
Stage one and stage two Meaningful Use guidelines have failed to successfully address the barriers preventing interoperability. Of course, clinical laboratories and pathology groups encounter this problem daily. That’s because they must build interfaces between their laboratory information systems (LIS) and the EHRs of their client physicians. The cost of creating workable LIS-to-EHR interfaces continues to be a huge burden on medical laboratories and that is why they support improved interoperability. But labs also contribute to the lack of interoperability when they enact restrictions on how lab test data can be shared with other providers and competing labs who are serving the same physicians and patients. (more…)
