Insurers eye payment 'recalibration' as coronavirus fuels shift to telehealth, testing

Anjalee Khemlani
Senior Reporter

The easing of coronavirus lockdowns are creating a new playing field for the health industry, which is bracing itself for a wave of new practices — including how reimbursements in the era of telemedicine and widespread testing.

In response to the COVID-19 outbreak, insurers pivoted quickly by covering costs of testing, telemedicine and inpatient visits. At least for now, those expenses have not outweighed the savings from a drop in elective procedures: Analysts anticipate the largest for-profit national players to weather the pandemic with a strong balance sheet.

However, one top insurance executive warned the industry is still likely to see widespread change as the aftermath of the outbreak affects reimbursements, with telemedicine use spiking and national coronavirus testing kicking into high gear.

“There are a number of questions given the shock that happened to the system,” Maureen Sullivan, chief strategy and innovation officer at the Blue Cross Blue Shield Association, told Yahoo Finance in a recent interview.

Sullivan noted that the 36 Blue Cross and Blue Shield insurers— which are largely not-for-profit— are expected to have a strong year end. However, she noted that “there is a recalibration that is happening, and not just with Blue Cross Blue Shield.”

According to the executive, the experience of insurers throughout the pandemic can be defined in multiple waves. Parts of the industry were suddenly shut down, while others shifted to an increased reliance on technology.

The first involved making sure members had access to coverage, including telehealth expansion, and the waivers of cost sharing. The second wave, currently underway, looks to support providers in local markets, beyond trying to secure personal protective equipment.

For example, some BCBS insurers, which usually have a majority of the market share in each state, are working with officials there to deploy staff members as contact tracers — an important public health strategy to support the reopening of the economy.

The next wave will come as the new normal starts to settle in, as physicians and insurers adjust to the new balance between in-person and at-home care.

Testing, a key cog in the machine to support reopening states and cities, also remains a concern. Yet Sullivan said much is still unknown about its efficacy.

It is still “in its early stage in terms of both use, funding and value,” she said.

Telehealth as meat and potatoes

A spike in telemedicine use, and the shift of physicians to the platform as lockdowns took effect, have given industry observers hope that the technology is finally here to stay.

Sullivan agreed, telling Yahoo Finance that it’s better that doctors are using it for their own patients, rather than patients going to a panel of doctors made available on any given site.

“When we used to think about telehealth, we thought about companies who would provide (care) as an alternative,” Sullivan said.

“We’re expecting that the use of telehealth, given that it’s your provider talking...is likely to remain.”

A recent report from Moody’s highlighted the increased use, citing a report that showed nearly half of physicians are now using telemedicine to treat patients — up sharply from 18% in 2018.

Supporting that increase in use has been easing of regulations, and government and commercial reimbursements to go with it. Federal rules now allow doctors to use platforms like FaceTime, Facebook Messenger, Google Hangouts, Zoom, or Skype to conduct telehealth visits— a shift from when privacy concerns once restricted use of those platforms, Moody’s said.

In addition, the Centers for Medicare and Medicaid Services (CMS) previously announced it is paying providers for phone calls for telehealth visits that have become the norm for seniors during the pandemic.

Insurers are also increasing reimbursement amounts. Previously telemedicine was paid at 1/3 the cost of an in-person visit, according to Farzad Mostashari, president and CEO of Aledade.

“Reimbursement rates are about 30% less than face-to-face, so practices (were) facing lower volumes with telemedicine,” he said.

BCBSA’s Sullivan said different reimbursement models are finally seeing greater adoption. She cited a shift to value-based care — which rewards providers for keeping their patients healthy — rather than fee-for-service where physicians charge for every item and service during a visit.

Value-based care has been pushed by insurers for several years as a way to manage costs, but a survey in 2018 showed 64% of doctors believed the payment model would negatively impact their business. However, Sullivan said a plunge in patient volumes during the pandemic have led some to reconsider.

“One of the earliest insights coming through from both physicians and BCBS plans is more interest from those who haven’t (switched). Because if your reimbursement was just fee-for-service, and utilization went down significantly...(those physicians) felt that more financially than those that were getting their reimbursement based on outcomes,” Sullivan said.

And as testing remains a key to reopening the economy safely, many insurers will continue to cover diagnostic testing.

However, antibody screenings, something advocated as paving the way for employees to return to work, are not yet covered. Sullivan said those conversations are ongoing, echoing recent comments from Quest Diagnostics.

Still, questions remain about the usefulness of antibody tests. It’s not yet clear if their presence means a person is immune to the virus.The American Medical Association recently said that antibody tests should not be used in “determining immunity or discontinuing physical distancing.”

Anjalee Khemlani is a reporter at Yahoo Finance. Follow her on Twitter: @AnjKhem

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