Session #3: Dynamics and Pressures in Health Insurance Markets. Matthew Anderson, J.D. Saturday, Jan. 12, a.m.

Transcription

1 Session #3: Dynamics and Pressures in Health Insurance Markets Matthew Anderson, J.D. Saturday, Jan. 12, a.m. Elm Creek

2 Matthew Anderson Matt Anderson is senior vice president of policy and chief strategy officer for the Minnesota Hospital Association. Before joining the hospital association in 2006, he handled complex litigation and public policy issues for the Minnesota Attorney General s Office, the Hennepin County Attorney s Office, and Minnesota State Colleges and Universities. He also served as a principal and the intellectual capital leader for Mercer s Government Human Services Consulting sector and is the founder of Atrede Consulting. Anderson is a graduate of St. John s University and received his law degree from the University of Minnesota.

3 Dynamics & Pressures in Health Insurance Markets Place picture here Matt Anderson, JD Sr VP of Policy & Chief Strategy Officer Minnesota Hospital Association January 2019 Discussion overview Overview of MN s health insurance markets Most significant shifts underway For-profit health plans Medicare Advantage Individual market Medicaid and MinnesotaCare procurements 1

4 Distribution of Minnesota Population by Primary Source of Insurance Coverage, 2016 TRICARE, 1.0% Total Population 5.5 Million Portion of Private Health Insurance Medicare, 17.0% MA and MNCare, 17.3% Private Health Insurance, 59.4% Self-Insured, 38.4% Fully- Insured, 21.0% Uninsured, 5.3% Sources: MDH Health Economics Program; U.S. Census Bureau, Annual Estimates of the Population for July 1, MA and MNCare includes Medical Assistance (MA) and MinnesotaCare (MNCare). Summary of graph Minnesota s Insurance Markets: Private Insurance Self-insured employer-sponsored Large group employer-sponsored Small group employer-sponsored Individual market (non-group) On exchange o Sold through MNsure Regulated by federal law, ERISA Regulated by MN law o Eligible for federal Advanced Premium Tax Credits if income is below 400% of federal poverty guidelines (FPG) Off exchange 2

5 Distribution of Minnesota s Private Health Insurance by Market Space 4,000 Population (in millions) 3,500 3,000 2,500 2,000 1,500 1, % 7.5% 7.3% 11.9% 9.9% 7.7% 80.9% 82.6% 85.0% (N=3.5 million) 2012 (N=3.3 million) 2016 (N=3.3 million) Large Group Small Group Non-Group Sources: MDH Health Economics Program; U.S. Census Bureau, Annual Estimates of the Population for July 1, Excludes HighRisk Pool population. Detail may not sum to total due to rounding. Summary of graph Cumulative Growth Rates of Premiums and Deductibles for Single Coverage 300% 250% 266.2% 200% 150% 175.5% 192.2% 100% 50% 0% 100.8% 75.2% 92.3% 65.8% 56.2% 42.8% 34.0% 23.2% 44.6% 42.9% 8.0% 17.6% 2002/ / / / / /2015 Employee Premium Growth Employer Premium Growth Deductible Growth Source: MDH analysis of data for private employers from the Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey- Insurance Component. Deductible data not reported prior to Data presented are weighted averages of two years of data. Summary of Graph 3

6 Minnesota s Insurance Markets: Public Programs Medicare Fee-for-service/traditional Medicare Advantage o Cost plans o Full risk plans Medicaid (Medical Assistance) Fee-for-Service Managed care (Prepaid Medical Assistance Plan or PMAP) MinnesotaCare Basic Health Plan under ACA Federal program for those >65 State and federal program for lowincome, children, disabled and elderly State program with federal subsidies Medicaid and MinnesotaCareEnrollees as Percent of Population, 2016 Medicaid MinnesotaCare State average: 19.4% State average: 1.9% Source: Minnesota Department of Human Services, enrollment data for calendar year 2016; U.S. Census Bureau, Population Estimatesfor Minnesota Counties for July 1, 2017 (as of 2016). Enrollment excludes other with no known category. Ranges are based on quintiles. Summary of graph 4

7 Minnesota s Insurance Markets: Uninsured 10% 8% 6% 4% 7.3% 9.0% 9.0% 9.0% 8.6% 8.2% 5.4% 4.3% 5.3% 6.3% 2% 0% Sources: MDH Health Economics Program. Uninsurance rate estimates based on the 2009, 2011, 2013, 2015, and 2017 Minnesota Health Access (MNHA) Surveys. For years in which MNHA surveys are not available, MDH estimates the uninsurancerate based on between-survey average; the exception is the 2014 uninsurancerate, which is based on Minnesota estimates from national surveys due to major policy changes. Summary of graph Uninsurance Rates by Economic Development Region *Indicates statistically significant difference from 2015 (95% level) ^ Indicates statistically significant difference (95% level) from statewide level in 2017 Source: Minnesota Health Access Survey, 2015 and 2017 Summary of graph 5

8 For-profit health insurance plans are coming to MN 2017 law change removed requirement that HMOs be nonprofit organizations For-profit health plans had been operating as Third Party Administrators (TPAs) for large, self-insured employers Significance of for-profit plans for MN s health care providers Greater competition in insurance markets More residents/employers changing plans year-to-year (at least initially) Wider spectrum of insurance companies means more differences in Coverage Billing, claims and appeals processes Prior authorization Less ability to negotiate on reimbursement rates, in- or out-of-network 6

9 Significance of for-profit plans for MN s health care providers Already seeing signs from legacy health plans Recent examples from BCBS-MN New prior authorization policies and process Policy to deny payment for certain procedures if performed at hospital o Some infusion therapies o Endoscopy, colonoscopy o Carpal tunnel surgery What to expect? More... Difficult negotiations on reimbursement rates from all plans Administrative delays and denials of payment Appeals and associated costs Confusion among patients regarding coverage and networks 7

10 MN Medicare Enrollment as Percent of Population, million Minnesotans are enrolled in Medicare Growing fast State average: 17.0% Sources: CMS, CMS Enrollment Dashboard 2016, calendar year; U.S. Census Bureau, Population Estimates for Minnesota Counties for July 1, 2017 (as of 2016). Ranges are based on quintiles enrollment as of July 12, Summary of graph Rates of Medicare Beneficiaries Enrolled in Medicare Advantage Plans 8

11 Minnesota s Medicare Advantage Shift Cost plans (MN s historical Medicare Advantage) MN is one of last states to have cost plans 2/3 of MN Medicare Advantage was in cost plans Medicare Advantage plan receives per member/ per month (pm/pm) administrative fee + reimbursement of costs of enrollees services Relatively low margin; no risk Risk-based plans (future Medicare Advantage) Managed care organization receives single pm/pm payment for administrative andmedical costs Uncertain (potential for higher) margin; full risk What to expect? More... Difficult negotiations on reimbursement rates from Medicare Advantage plans Administrative delays and denials of payment Appeals and associated costs Confusion among patients regarding coverage and networks More churning between plans over the next few years 9

12 Individual Market Significant amount of attention from media and policymakers 4.3% of total population Premiums, deductibles, copays paid with postincome tax resources Two populations Those above 400% FPG Responsible for 100% of premium, deductible, etc. Those between % FPG Federal premium tax subsidies reduce premium cost to approx. 9% of annual income Individual Market: Reinsurance Temporary (2018 and 2019 policy years) $542 million $400 million from Health Care Access Fund $142 million from General Fund State reimburses private insurers for 80% of an enrollee s cost of care between $50,000 and $250,000 Required federal waiver Reduced premiums in individual market by 20% 10

13 What to expect? If reinsurance is extended beyond 2019 Slower growth in premiums Possibly expediting insolvency of state fund used to finance portions of MinnesotaCare and Medicaid If reinsurance is not extended Substantial increase in 2020 premiums Possibly increased support for Minnesota Care Buy-In proposal or other method of subsidizing coverage Individual Market: Not-Insurance Plans ACA allowed for qualified health care sharing ministry as alternative to insurance More than 100 ministries across US More than 1 million members nationally Not regulated federally or at state level Explosion of share plans in recent years as individual market premiums increased 11

14 Individual Market: Not-Insurance Plans Members voluntarily share to help pay one another s medical bills Much cheaper than real insurance No contract, coverage terms or benefit set E.g., primary, preventive and mental health care typically excluded Individual responsible to pay provider and then submit receipts to receive help from other members What to expect? More... Patients mistakenly believing they have insurance Complaints about or disputed medical bills Uncompensated care Policy discussion regarding regulation v. separation of church and state 12

15 Medicaid and MinnesotaCare Procurements State has competitive bidding process for health plans that want to provide managed care for At least three rounds of procurement Managed care for low-income seniors (2019) Managed care for low-income families and children outside of Twin Cities metro (2019) Managed care contracts for low-income families and children outside of Twin Cities metro (2020) Medicaid and MinnesotaCare Procurements New dynamics in state public program market Strong interest from for-profit health plans to secure Medicaid and MinnCare contracts History of volatility and concerns about sustainability of rates bid by legacy nonprofit plans Uncertainty regarding o Federal funding levels for MinnesotaCare o Ongoing financing of programs if provider tax sunsets Interest from state in pilot projects for direct contracting with providers in Twin Cities instead of using managed care organizations 13

16 Medicaid and MinnesotaCare Procurements Speculations For-profit plans either o Underbid capitation rates and accept losses in return for gaining market foothold, and/or o Overbid benefits and coverage for enrollees and accept losses in return for gaining market foothold Nonprofit plans either o Mirror for-profit plans strategy and attempt to weather the resulting losses, or o Pull out of state programs in certain areas of the state while trying to bid up their competitors bids What to expect? More... Cuts to provider rates for Medicaid managed care and MinnesotaCare o Plans design their bids, contract with the state and thenadjust provider rates to fit their contract Confusion among patients regarding coverage and networks Requirements or incentives to incorporate social determinants of health services in care model 14

17 Different Markets; Consistent Themes Multiple, simultaneous changes are making MN s insurance markets much more competitive Competition is almost exclusively on price Competition on price flows downhill to increase pressure on provider reimbursement rates Payer mix is expanding patient mix is not More plan options => more switching plans => more confusion regarding coverage and networks Generally, providers will have less negotiating leverage across patient mix as a whole And the good news.... Initial spike in insurance market competition will... Help stifle or soften premium rate increases Generate some creativity around covered services, especially in Medicaid (social determinants) and Medicare Advantage Increase some payers interest in new collaborations with providers 15

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