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ISAE Blog

Trends in Healthcare Benefits- Now What?

Posted by Sarah Rosenberger on Aug 21, 2013 2:17:00 PM

Trends_in_Healthcare_Benefits-_Now_WhatIt’s now evident that Healthcare Reform will not be going away anytime in the near future. Now what?

Will this be the great healthcare solution for which we’ve all been waiting, or will it turn out to create more problems than the legislation set out to fix?

I can definitely tell you things will be different. The way we access a health insurance policy will be different. Our choice as to whether or not to carry health insurance will be different. The insurance carrier’s ability to decline coverage to someone based on their medical condition(s) or health history will be different. Even the benefits required under a medical plan will be different.

What will be the same, you might ask? The premiums paid for health insurance will still be considered expensive. Which is quite odd for legislation called “The Affordable Care Act.”

However, I am excited about the direction in which insurance carriers are moving in an effort to stabilize the cost of insurance and bend the ever-increasing trend downwards. One of the tools used in the arsenal of reducing costs is changing the way medical providers are paid. If you change the way providers are compensated based on actual outcomes, you can affect the way health care is delivered. This is called a Value-Based System or Evidence Based Care. It has been around for a while and has gained even more momentum since the passage of the Affordable Care Act.

The current “Fee-for-Service” reimbursement model throughout the U.S. reimburses physicians and hospitals for services rendered. The more services rendered to a patient or group of patients, the more revenue a hospital or provider would stand to generate. A Value-Based System focuses on improving outcomes, lowering costs, and increasing overall access to care.

Carriers, like Anthem and United Healthcare, have adopted Value-Based Contracting which will transition providers from a “Fee-for-Service” reimbursement model to a “Values-Based” methodology. This is designed to drive overall quality and efficiencies within the insurer’s provider networks.

The basics of a Value-Based Contracting model include:

  • A portion of the total potential provider payments will be tied to quality and performance measures. Under this model, providers could be paid bonuses. In order to receive the bonus, the provider would need to meet certain cost efficiencies and/or quality targets. With poor outcomes, payments to providers could actually be withheld.
  • Providers can receive clinical fees that are contingent upon them engaging in practice transformation. This would involve adopting new technologies and processes that change the way they deliver care to produce the best, most efficient outcome.
  • Wellness, preventive care, and patient accountability will be a main theme under Value Based Contracting.

This shift in reimbursement methodology is projected to save a significant amount of money and be a beneficial for providers, patients, and employers who sponsor group health plans. As new innovations evolve, Value-Based Contracting is one that I hope continues its current momentum and becomes the standard practice in provider reimbursement.

About Andrew Loehr

Andrew_LoehrAndrew J. Loehr, Area Vice President of Gallagher Benefit Services, is a recognized employee benefits consultant who specializes in cost containment, strategic analysis, and group benefit plan management. His value proposition is to provide effective, thoughtful consulting advice focused on achieving results-based solutions specific to each client of Gallagher Benefit Services. He understands that executives of employer groups are constantly seeking to balance the elements of the human capital equation: Financial constraints, competitive benefit package, and a quality workforce. Andrew leads with technology to create efficiencies for his clients and strives to help employees become better consumers, taking a self-reliant stake in planning and using their benefits effectively. Andrew is a graduate of Indiana University with a Bachelor’s Degree in Public Health/Hospital Administration and a Minor in Psychology. Andrew resides in the Indianapolis area with his wife Shannon and their two children, Bennett and Emerson.

Topics: Healthcare

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