Sep 13, 2017 | Coding, Billing, and Collections, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing
While multiple studies show reference pricing is an effective approach to reduce the cost of testing and procedures, medical laboratories and consumers alike must continue to focus on quality to ensure positive outcomes
The Dark Report in its September 2016 issue highlighted how reference pricing is positioned to become one of the biggest contributors to price erosion medical laboratories and pathology groups have faced in more than a decade. The issue featured details of a 2016 study published in JAMA Internal Medicine outlining how Safeway’s use of reference pricing for clinical laboratory tests decreased laboratory spending for itself and employees by 32% between 2011 and 2013—a total savings of more than $2.5-million.
That issue of The Dark Report also highlights a similar use of reference pricing by CalPERS (California Public Retirement System) that involved hip and knee replacement surgeries. CalPERS saw a 30% reduction in the cost of these surgeries after 12 months.
These highly publicized efforts have fueled interest in how reference pricing might work for other businesses, insurers, and the US government. The 2014 Protecting Access to Medicare Act (PAMA) is already collecting private payer rates paid to laboratories for tests. This data will then be used to create new rate-based fee schedules in 2018.
Speaking with Joseph Burns, Managing Editor of The Dark Report, about the outcome and potential rise of reference pricing, study author James C. Robinson, PhD, of University of California Berkeley noted that, “Any discussion about how to contain inappropriate healthcare utilization is challenging. By contrast, significant price variation is the low-hanging fruit. Employers would much rather save money by having patients travel to cheaper clinical labs than get into some esoteric discussion about whether a clinical procedure is appropriate or not.”
Quality is Key to Both Avoiding Price Erosion and Improving Patient Outcomes
There’s no question that reference pricing has forever changed the landscape of clinical laboratory pricing. Paired with increased pricing transparency and easier access to pricing information through platforms such as Castlight Health, Healthcare Blue Book, and Change Healthcare Corporation, consumers and businesses can quickly compare prices across a range of service providers.
However, in April, Leah Binder, President and CEO of The Leapfrog Group, published an article in Forbes that highlights the potential downsides to price shopping for laboratory testing and medical care.
“Differences among providers in quality can eliminate any cost advantages,” stated Binder in the Forbes article. “Some purchasers assume they can get around this problem by targeting reference pricing only for procedures that don’t vary in quality. When quality is all the same, decisions can pivot on price alone. Unfortunately, no such procedures exist. Extreme variation is the hallmark of our healthcare system.”
As reference pricing continues to force more consumers to shoulder a portion of medical laboratory testing costs, prices for more expensive laboratories are likely to continue eroding unless they can convince consumers that their services are higher quality or produce better results. (Graphic copyright: California Public Retirement System.)
Binder cites a study in Spine Journal’s April 2017 issue regarding diagnostic error rates for magnetic resonance imaging (MRI). The study involved a 63-year-old woman seeking relief from low back pain. Over a three-week span, she received 10 different scans. These scans resulted in 49 different findings. Of these findings, none were repeated across all 10 scan reports provided to her physician.
“As a result,” the study’s authors concluded, “where a patient obtains his or her MRI examination, and which radiologist interprets the examination, may have a direct impact on radiological diagnosis, subsequent choice of treatment, and clinical outcome.”
Binder reinforced this, stating, “Purchasers should still pursue reference pricing and try to incorporate considerations of utilization and quality to the extent they have the data. Never assume any procedure is like a commodity—largely the same quality everywhere.”
High-Cost Medical Laboratories Likely to Face a Decision Between Volume or Price Erosion
A 2016 study by Health Care Cost Institute found the average pricing of 240 common medical services varied by as much as 200% between states. Within states, prices fluctuated as much as 300%.
Thus, for pathology groups and medical laboratories in the upper percentiles for their region, referencing pricing is likely to impact volume. Even if adoption of reference pricing by payers or self-insured business groups remains stable, price cuts due to PAMA loom on the horizon. As reported by Dark Daily in December 2016, price cuts to the Part B clinical laboratory fee schedule could add up to $400 million in reduced Medicare payments in 2018 alone.
This is particularly troublesome for hospital laboratory outreach programs, where Medicare patients commonly represent 40% to 70% of outreach lab volumes. The combination of reduced volume and reduced Medicare pricing could have dire financial consequences.
It will remain essential for medical laboratories to differentiate their services from those of lower-cost competitors to avoid volume and price erosion. Continuing to optimize test utilization, improving laboratory efficiency, and emphasizing the value of services rendered will help to further strengthen lab positions and reduce the impact of coming change.
—Jon Stone
Related Information:
Price Shopping Could Cut Employer Health Costs by 20%, but There’s a Catch
Variability in Diagnostic Error Rates of 10 MRI Centers Performing Lumbar Spine MRI Examinations on the Same Patient Within a 3-week Period
The Striking Variation of Commercial Healthcare Prices
Some States Pay Twice the Price for Health Care, Finds New Report
Association of Reference Pricing for Diagnostic Laboratory Testing with Changes in Patient Choices, Prices, and Total Spending for Diagnostic Tests
Coming PAMA Price Cuts to Medicare Clinical Lab Fees Expected to Be Heavy Financial Blow to Hospital Laboratory Outreach Programs
Volume XXIII No. 12 – September 6, 2016
Consumers Now Use Medical Cost Websites to Price Shop for Clinical Pathology Laboratory Tests and Other Medical Procedures
Sep 11, 2017 | Instruments & Equipment, Laboratory Instruments & Laboratory Equipment, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing
National Health Service estimates 73% of 65-million urine specimens collected annually in the UK are contaminated
Wanting to know why so many female patients that present with urinary tract infections (UTIs) require repeat appointments, Dr. Vincent Forte, a family GP and forensic physician who worked for the National Health Service (NHS) for 26 years, began investigating. He determined that the standard urine specimen collection cup is primarily the cause of poor-quality medical laboratory test results.
Forte realized that the method of collecting the specimens was largely to blame, with the required “start-aim-start” midstream collection technique required by traditional polypropylene specimen cups at the root of the problem.
That realization led to the development of a unique “midstream” urine collection device that eliminates the problem of first-void urine contaminating samples, according to a blog post on the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) website written by Forte Medical of London’s Founding Director and Chief Executive Officer Giovanna Forte, Vincent Forte’s sister.
65-million Specimens Deemed Unreliable
Healthcare professionals, whether working in clinical laboratories and anatomic pathology groups or hospitals and out-patient clinics, often are among the first to notice when gaps in the quality or integrity of medical laboratory test results exist. However, in this case, it was a general practice physician rather than a medical laboratorian or in vitro diagnostics (IVD) manufacturer that set out to solve the problem of poor urine specimen collection, which The Daily Telegraph reports results in 73% of the 65-million urine specimens collected annually by the NHS being unreliable. That’s 47.5-million unreliable medical laboratory specimens collected and tested yearly in the United Kingdom.
Accurate Urine Collection Brings Billions in Savings
Vincent Forte concluded that the quality gap in urine specimen collection for his female patients was preventing accurate first-time analysis, diagnosis, and targeted treatment. In 2001, he set out to re-engineer urine collection cups. His first design—“a simple flushable paper funnel, which rejected first-flow urine, collected midstream, and ejected the remainder”—established the underlying design principle behind the patented Peezy Midstream product, Giovanna Forte stated in the RSA blog post.
Giovanna Forte noted that the first version of the device, marketed in 2010, was a “funnel formed by flat-sheet film, with a unique container-acceptor,” with overflow duct and incorporating a compressed sponge that rejects the first 8-10 ml of urine. While the product was well received, Forte says the selling price was too expensive to meet the NHS requirement for cost savings. By 2012, the product evolved into an injected-modeled design, which cut production costs by 50%. By 2014, the ergonomically designed funnel was improved to incorporate the two most common urine collection tubes.
In a Forte Medical presentation, Giovanna Forte predicted that accurate urine collection could result in a £1.2-billion (US $1.56-billion) savings to the NHS.
A Design Week article described the testing process for developing the midstream specimen collection device as “similar to launching a website in beta,” with initial testing resulting in changes such as the creation of a flatter, rounder handle to make the product easier to hold.
“Within the NHS, I was allowed to attend clinics where evaluations were taking place and speak directly to the patients. This allowed me to find out what they thought of everything from instructions for use to the collection system itself,” Vincent Forte stated in the Design Week article. “All the information was fed back into our design engineers, who proposed an improved product made more simply at a lower price.”
The patented Peezy Midstream urine collection system rejects the first (often contaminated) 8-10 ml of urine, isolating and capturing the important midstream and rejecting the rest of the urine into the toilet. The product claims 98.5% accurate urine specimen collection and would improve the accuracy and reliability of the medical laboratory tests performed on urine samples collected with this device. (Photo copyright: Forte Medical.)
Today, Forte Medical offers two midstream urine collection devices used by both men and women:
1. Peezy Midstream PE40, which collects urine into a traditional 30ml universal container; and
2. Peezy Midstream PE50, which collects urine into a lab-friendly 10ml primary tube designed to fit in laboratory analyzers.
“This simple solution … took 10 years and £2.6-million [US $3.38-million] to get right. It was achieved not by a multinational with deep pockets, but by a startup funded largely by friends, family, and a handful of angel investors, along with the goodwill of design and manufacturing partners,” Vincent Forte stated in the RSA blog post.
Specimen Capture Methods Lead to Careless Infection Control
In an article published on News Medical, an online, open-access medical information provider, Giovanna Forte points out another flaw in traditional urine collection systems.
“Thrusting one’s hands willingly into our own urine is hardly common practice. That we are expected to do so in order to capture an important specimen essential to diagnosis hardly chimes with the concept of modern medicine and leads to pretty shabby infection control by any standards,” she stated.
The Peezy Midstream is a Medicines and Healthcare Products Regulatory Agency (MHRA) approved product in the UK, and is FDA listed in the United States. As a Class 1 “Container, Specimen Mailer and Storage, Non-Sterile” device, the Peezy Midstream is “510(k) exempt” and did not require FDA review before being marketed in this country.
Still to come are clinical trials and papers in peer-reviewed medical journals that support the function of this medical device to improve patient care. It is notable, though, that the National Health System in the UK is collaborating with Forte Medical in certain ways to determine how the device can improve patient care. Dark Daily would like to hear from any medical laboratories in the UK and USA that are using this device when urine specimens are collected.
—Andrea Downing Peck
Related Information:
Liquid Gold: Urine Is the Unsung Hero of Modern Medicine and Health Economy
Peezy Mid-Stream Urine (MSU) Usability Study Results Report
What Is a Mid-Stream Urine Sample and Why Do Healthcare Professionals Request Them?
The Peezy: The Tale of an Award-Winning, Rapid-Prototyped, User-Developed Design
How Design Integrity Can Save Lies in Essential Basic Medicine
Sep 8, 2017 | Laboratory Hiring & Human Resources, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology
Gen Z values differ from previous generations’ values and medical laboratory managers should know in advance how members of this generation are likely to view their new workplaces
Medical laboratories managers and pathology group stakeholders have long been concerned about the looming retirement of Baby Boomers working in America’s clinical laboratories. With more and more members of this age group leaving the workforce, and with the following Gen X and Gen Y workers moving into positions vacated by Boomers, the next generation of workers—Generation Z (Gen Z)—is arriving to fill the gap.
This newest, youngest generation brings unique attributes and values to the clinical laboratory industry. Laboratory managers, pathologists, and business leaders need to understand those characteristics to work with them effectively.
Gen Z Values Reflect the Turbulent Times We Live In
With the addition of this newest age group in corporate America, there are now four distinct generations simultaneously working in the marketplace:
1. Baby Boomers (born early- to mid-1940s to early-1960s;
2. Generation X (born mid-1960s to early-1980s);
3. Generation Y (Millennials: born mid-1980s to early-1990s); and
4. Generation Z (Centennials: born mid-1990s to the mid-2000s).
A poll conducted by Ernst and Young LLP (EY) of London for the US Oil and Gas industry found that members of Gen Z have “fairly traditional” career priorities, however their values have been shaped by the nation’s struggles.
“When asked which three considerations are the most important in selecting a future career, both Millennials and Generation Z, as whole, prioritized salary (56%), good work-life balance (49%), job stability (37%), and on-the-job happiness (37%),” the EY survey reported.
Even though they are often clumped together with Millennials (Gen Y), recent research shows that the two generations are vastly different.
“Gen Z employees bring unique values, expectations, and perspectives to their jobs,” Paul McDonald, Senior Executive Director at staffing firm Robert Half, stated in a news release. “They’ve grown up in economically turbulent times, and many of their characteristics and motivations reflect that.”
Move over Baby Boomers! You no longer are the largest proportion of the population of the United States. According to the US Census Bureau, Generation Z (AKA, iGen and Post Millennials) make up about 25% of the US population or approximately 70-million people. However, it is estimated that by 2021, Gen Z will total 40% of all consumers in the US and account for one-fifth of the workforce. This youngest generation is now entering the clinical laboratory workforce in growing numbers. (Graphic copyright: Oklahoma Minerals.)
Though Millennials represent the largest portion of the workforce in America, Gen Z is the largest population of people overall and it’s growing. The oldest members will have reached the age of 21 in 2016-2017. Many will be graduating from college and seeking employment opportunities.
Gen Z Members are Technically Savvy; Seek Job Security/Stability
Members of Gen Z are familiar and fluent with computers, technology, and the Web. Therefore, business websites and social media presence are things they will examine when researching companies for job opportunities. Living in a world of perpetual updates and real-time communications makes them quick at processing information. Centennials also tend to be first-rate multitaskers, capable of focusing while numerous distractions occur around them.
“This group of professionals has grown up with technology available to them around the clock and is accustomed to constant learning,” McDonald stated in the Robert Half news release. “Companies with a solid understanding of this generation’s values and preferences will be well prepared to create work environments that attract a new generation of employees and maximize their potential.”
Stability and job security seem to be more important for Gen Z than it is for Gen Y. A recent study by staffing firm Adecco found that 70% of Gen Z prefer a stable work environment over one that offers passion, but little security.
“They saw their grandparents have to go back to work or their parents have struggles during the financial crisis,” noted McDonald in a MarketWatch article. “They want to work for companies long-term in their career.”
Where millennials are known to change jobs frequently, a 2015 study conducted by Robert Half found that centennials plan to work for only four companies in their entire careers. The same study also found that Generation Z prefer to work in business office environments instead of working remotely.
Centennials are also more interested in the values and fairness of their bosses and the company mission statements. Equal pay, promotions, and accolades need to be equitable across all genders, races, and other differences. Generation Z is also entrepreneurial and creative and they desire to interact with people in person.
“Be prepared to spend time with them face to face,” McDonald stated. “They want to be mentored and coached. If you coach them, you’re going to retain them.”
Gen Z Politics are Mixed
Generation Z also differs from Millennials in the political arena. In a New York Post column, Jeff Brauer, Professor of Political Science at Keystone College in La Plume, Penn., indicated that Generation Z is liberal on some issues while being conservative on other issues.
“Politically, Generation Z is liberal-moderate with social issues like support for marriage, equality, and civil rights, and moderate-conservative with fiscal and security issues,” Brauer stated. “While many are not connected to the two major parties and lean independent, Gen Z’s inclinations generally fit moderate Republicans.”
Brauer’s research found that members of Gen Z tend to value economic stability and security higher than the previous generation because they have grown up in an era peppered with terror threats, a shaky economy, and mass school shootings.
“This generation is different, and they are about to have a profound impact on commerce, politics, and trends,” stated Brauer in the NY Post column. “If politicians and business leaders aren’t paying attention yet, they better, because [Centennials] are about to change the world.”
As Generation Z comes of age, more of them will be working in the medical professions. Clinical laboratories and anatomic pathology groups would be well advised to prepare their businesses by adjusting leadership, adapting recruiting efforts, and shifting marketing to attract Centennials and remain relevant and successful in the future.
—JP Schlingman
Related Information:
The Secrets to Hiring and Managing Gen Z
Why the Generation After Millennials Will Vote Republican
Move Over Millennials, Members of Generation Z are Ready to Work
Eight Key Differences Between Gen Z and Millennials
Gen Z White Paper: The State of Gen Z 2017 National Research Study
What is Generation Z, and What Does It Want?
Gen Z Nothing Like Millennials, Prof Warns Liberals
Generation Z is Entering the Workforce: What does This Mean for Management?
Births: Provisional Data for 2016
The Six Living Generations in America
Wisdom of Hiring Across the Six Living Generations in America and the World
Generation Z: Five Surprising Insights
Sep 6, 2017 | Laboratory Management and Operations, Laboratory News, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement, Management & Operations
Challenges getting paid likely to continue as high deductibles make patients responsible for paying much more of their healthcare bills
Rising out-of-pocket costs for healthcare consumers is translating into increasing amounts of red ink for hospitals and healthcare providers struggling to collect bills from patients with high-deductible health plans (HDHPs). Clinical laboratories and pathology groups are unlikely to be immune from these challenges, as increasing numbers of patients with smaller healthcare debts also are failing to pay their bills in full.
That’s according to a recent TransUnion Healthcare analysis of patient data from across the country. It revealed that 99% of hospital bills of $3,000 or more were not paid in full by the end 2016. For bills under $500, more than two-thirds of patients (68%) didn’t pay the full balance by year’s end (an increase from 53% in 2015 and 49% in 2014). The study also revealed that the percentage of patients that have made partial payments toward their hospital bills has fallen dramatically from nearly 90% in 2015 to 77% in 2016.
Increased Patient Responsibility Causing Decrease in Patient Payments
“The shift in healthcare payments has been taking place for well over a decade, but we are seeing more pronounced changes in how hospital bills are paid during just the last few years,” Jonathan Wilk, Principal for Healthcare Revenue Cycle Management at TransUnion (NYSE:TRU), said in a statement.
Millions of Americans are in high-deductible health plans. And, as the graphic above illustrates, that number has been increasing since the ACA was signed into law in 2010. (Graphic copyright: Reuters.)
While the Affordable Care Act (ACA) has increased the number of Americans receiving medical coverage through Medicaid or commercial insurance, TransUnion noted in its statement that hospitals still wrote off roughly $35.7 billion in bad debt in 2015. By 2020, TransUnion predicts that figure will continue to rise, with an estimated 95% of patients unable to pay their healthcare bills in full by the start of the next decade.
“Higher deductibles and the increase in patient responsibility are causing a decrease in patient payments to providers for patient care services rendered. While uncompensated care has declined, it appears to be primarily due to the increased number of individuals with Medicaid and commercial insurance coverage,” John Yount, Vice President for Healthcare Products at TransUnion, said in the TransUnion statement.
Collecting Patients’ Out-of-Pocket Costs Upfront
According to Reuters, hospitals in states that did not expand Medicaid under Obamacare have witnessed a more than 14% increase in unpaid bills as the number of people using health plans with high out-of-pocket costs increased. For hospitals in those states, HDHPs are impacting their bottom lines.
“It feels like a sucker punch,” declared Chief Executive Officer John Henderson of Childress Regional Medical Center, Texas Panhandle Region, in a Bloomberg Business article. “When someone has a really high deductible, effectively they’re still uninsured, and most people in Childress don’t have $5,000 lying around to pay their bills.”
A recent report from payment network InstaMed found that 72% of healthcare providers reported an increase in patient financial responsibility in 2016, a trend that coincides with a rise in the average deductible for a single worker to $1,478, more than double the $735 total in 2010.
In response to the increase in patient responsibility, hospitals and other providers are turning to new tactics for collecting money directly from patients, including estimating patients’ out-of-pocket payments and collecting those amounts upfront.
Hospital Systems Offer Patients Payment Options
Venanzio Arquilla is the Managing Director of the healthcare practice at The Claro Group, a financial management consultancy in Chicago. In an interview with Crain’s Chicago Business, he stated that hospitals are working overtime to get money from patients, particularly at the point of service.
“Hospitals have gotten much more aggressive in trying to collect at time of service, because their ability to collect on self-pay amounts decreases significantly when the patient leaves the building,” Arquilla noted. “You can’t say, ‘Give me your credit card’ to someone in the emergency room bleeding from a gunshot wound, but you can to someone going in for an elective procedure.”
Revenue loss due to unpaid medical bills among states that complied with Medicaid Expansion under the ACA has increase so dramatically, some hospitals are now offering patients prepayment discounts and no-interest loans to ensure payments. Clinical laboratories and anatomic pathology groups should develop strategies to respond to the increase collections from patients at the time of service. (Graphic copyright: Reuters.)
Richard Gundling, a Senior Vice President at the Healthcare Financial Management Association (HFMA), told Kaiser Health News that an estimated 75% of healthcare and hospital systems now ask for payment at the time services are provided. To soften the blow, some healthcare systems are providing patients with a range of payment options, from prepayment discounts to no-interest loans.
Novant Health, headquartered in North Carolina, is among those healthcare systems offering patients new payment strategies. Offering no interest loans to patients has enabled Novant to lower its patient default rate from 32% to 12%.
“To remain financially stable, we had to do something,” April York, Senior Director of Patient Finance at Novant Health, told Reuters. “Patients needed longer to pay. They needed a variety of options.”
Providers Must Adapt to New Patient Procedures
“Doctors need to understand the landscape has changed. A doctor’s primary concern use
to be whether a patient had insurance. Now, it’s the type of insurance,” Devon M. Herrick, PhD, a Senior Fellow at the National Center for Policy Analysis (NCPA) in Dallas, told Medical Economics.
While clinical laboratories and anatomic pathology groups traditionally have not collected money directly from patients, Herrick says healthcare providers must accept that the rules of the game have changed. “Patients are more cost-conscious now. That means patients will question their physicians about costs for procedures,” he adds.
Dark Daily has advised clinical laboratories in the past to develop tools and workflow processes for collecting payments upfront from patients with high-deductible health plans (See, “Growth in High Deductible Health Plans Cause Savvy Clinical Labs and Pathology Groups to Collect Full Payment at Time of Service,” Dark Daily, July 28, 2014). Not doing so can amount to millions of dollars in lost revenue to the medical laboratory industry.
—Andrea Downing Peck
Related Information:
Bad Debt Is the Pain Hospitals Can’t Heal as Patients Don’t Pay
Out of More Pockets
Patients May be the New Payers, But Two in Three Do Not Pay Their Hospital Bills in Full
Feel Like the Hospital Is Shaking You Down Over that Bill? It Probably Is
The Seventh Annual Trends in Healthcare Payments Report Is Here
Doctors and Hospitals Say, ‘Show Me the Money’ before Treating Patients
Ballooning Bills: More US Hospitals Pushing Patients to Pay before Care
Growth in High Deductible Health Plans Cause Savvy Clinical Labs and Pathology Groups to Collect Full Payment at Time of Service
Higher Annual Deductibles and Co-Payments Cause Hospitals to Intensify Efforts to Collect Directly from Patients; Medical Laboratories Now Feel Similar Financial Squeeze
Because of Sizeable Deductibles, More Patients Owe More Money to Clinical Pathology Laboratories, Spurring Labs to Get Smarter about Collecting from Patients
Sep 1, 2017 | Laboratory Management and Operations, Laboratory News, Laboratory Pathology, Laboratory Testing, Managed Care Contracts & Payer Reimbursement
Price transparency trend is altering decision-making in many aspects of healthcare and providing lesson for medical laboratory executives
Medical laboratory executives are well aware that price transparency is an increasingly powerful trend in healthcare. Now, as consumers increasingly opt for lower-cost options when making healthcare decisions, the 2010 Affordable Care Act (ACA) provides a notable example of this new reality, with consumers making cost, not choice, their top concern when selecting health plans through the federal health insurance marketplace exchanges.
A recent New York Times article reported that millions of people purchasing insurance in ACA marketplaces are motivated by how little they can pay in premiums, not the size of the physician and hospital networks, or an insurer’s reputation.
This economic reality may help explain why cost containment is a focus of healthcare reform bills currently under discussion in Congress. Whether you agree or disagree with the American Health Care Act (HR1628), the Republican Party’s plan to repeal and replace the ACA, it should be viewed in this broader context: Healthcare consumers are avoiding higher-priced healthcare plans in droves, and millions of younger Americans are finding the cost of coverage a barrier to entry. This is the challenge facing politicians of both parties, whether they will admit it publicly or not.
Obamacare Enrollee Numbers Dropping
A 2015 report by the Office of the Assistant Secretary for Planning and Evaluation in the Department of Health and Human Services, found that “the premium is the most important factor in consumers’ decision-making when shopping for insurance.” In 2014, 64% of people shopping in the marketplaces choose the lowest cost or second lowest cost plan in their metal tier, while 48% did so in 2015.
Perhaps more significantly, millions of people fewer than expected have enrolled in Obamacare. A CNN Money report noted that 10.3-million people enrolled in an ACA marketplace as of mid-March 2017, down from the 12.2-million who signed up for coverage when enrollment ended on January 31.
Mark T. Bertolini (left), Chief Executive of Aetna, and Joseph R. Swedish (right), Anthem’s Chief Executive, testified before a House committee hearing last fall. Major insurers are struggling to find a business model that works in the marketplaces created by the federal healthcare law. (Caption and photo copyright: New York Times/Jacquelyn Martin/Associated Press.)
Those numbers fall short of recent federal government projections for Obamacare and are dramatically less than original estimates. A 2015 report from Congressional Budget Office (CBO) projected marketplace enrollment would increase to 15-million in 2017, before rising to between 18-million and 19-million people a year from 2018 to 2026.
Shortly after Congress passed the ACA, the CBO projected that by 2016, 32-million people would gain healthcare coverage overall.
As a New York Times article pointed out, not only are young and healthy people selecting the cheapest ACA marketplace plans, but also many are opting to risk tax penalties and go without healthcare coverage.
“The unexpected laser focus on price has contributed to hundreds of millions of dollars in losses among the country’s top insurers, as fewer healthy people than expected have signed up,” the New York Times article noted.
ACA Marketplace Unsustainable, Says Anthem Chief Executive
Healthy younger people were expected to join the ranks of the insured and provide an essential counter balance that would offset insurers’ cost of care for newly insured unhealthy people. That prediction also has failed to materialize, forcing major insurance companies to re-evaluate their role in the marketplace or to exit Obamacare completely.
“The marketplace has been and continues to be unsustainable,” stated Joseph R. Swedish, Chairman, President and Chief Executive of Anthem, a Blue Cross and Blue Shield company, in the New York Times article.
In a CNN Money article, Anthem announced it would not participate in Ohio’s Obamacare exchange in 2018 and added that it was evaluating its participation in all 14 states where it currently offers plans.
“A stable insurance market is dependent on products that create value for consumers through the broad spreading of risk and a known set of conditions upon which rates can be developed,” Anthem stated in a press statement. “Today, planning and pricing for ACA-compliant health plans has become increasingly difficult due to the shrinking individual market as well as continual changes in federal operations, rules, and guidance.”
Inaccurate CBO Predictions Impact Clinical Laboratories and Pathology Groups
Anthem is not the only large insurer losing money selling insurance in the marketplaces. Humana and Aetna also this year scaled back their involvement with Obamacare, with Aetna citing $430-million in losses selling insurance to individuals since January 2014.
“Providing affordable, high-quality healthcare options to consumers is not possible without a balanced risk pool,” Aetna Chairman and CEO Mark T. Bertolini declared in an Aetna statement.
How this plays out may matter a great deal to the nation’s clinical laboratories and anatomic pathology practices. As noted above, in 2010, at the time that the Affordable Care Act was passed, the Congressional Budget Office estimated that as many as 32-million additional people would have health insurance in 2016 because of the ACA. The reality is much different. Less than a third of that number have health insurance policies because of the Affordable Care Act.
Pathologists and medical laboratory managers may want to consider how wrong that 2010 CBO estimate of coverage was. If the CBO’s estimate could be off by 66% in 2016, how reliable are CBO estimates when the federal agency scores the various “repeal and replace” bills that Republicans have proposed during the current Congress?
—Andrea Downing Peck
Related Information:
Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2016 to 2026
Cost, Not Choice, Is Top Concern of Health Insurance Customers
Health Plan Choice and Premiums in the 2016 Health Insurance Marketplace
CBO’s Analysis of the Major Health Care Legislation Enacted in March 2010
Obamacare Enrollment Slides to 10.3 Million
Anthem Statement on Individual Market Participation in Ohio
Aetna to Narrow Individual Public Exchange Participation
