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The federal government continues to make healthcare funding a point of focus, most recently using the Children’s Health Insurance Program (CHIP) as a bargaining tool to end a three-day government shutdown. After a lapse in long-term funding that lasted 114 days—nearly four months—Congress finally approved legislation that would fund CHIP until 2024. In emphasizing the refunding of CHIP, lawmakers have seemingly forgotten about community health centers—for which funding also ran out on Sept. 30, 2017.
This constant debate over healthcare funding, as well as the disputes surrounding the Affordable Care Act (ACA) and Medicaid expansion, have both patients and healthcare providers bracing for increased premiums and out-of-pocket payments. By July 2017, nearly 12 percent of Americans were uninsured—an increase of about 2 million people since the end of 2016. This upward trend is particularly damaging for rural patients and providers, with nearly double the number of rural facility executives than urban executives reporting that higher deductibles would negatively affect their practices.
Top Payers by Total Direct Premium Earned
|Payer Name||Premium Earned (M)||Covered Lives|
|Anthem BlueCross & BlueShield||$41,052||8,151,001|
|Kaiser Permanente Group||$40,807||7,427,939|
|Health Care Service Corporation Group||$25,797||4,892,441|
Fig 1 Data from Definitive Healthcare
For the first time, more than half of Americans are faced with insurance deductibles of $1,000 or more. This could result in denial of care from providers, reluctance to seek care from patients, and an increase in charity care spending—all of which would negatively affect a healthcare payer’s bottom line. The good news is that payers can reduce spending waste and effectively manage costs in an uncertain market.
The term “payer” refers to Preferred Provider Organizations (PPOs), Health Maintenance Organizations (HMOs), healthcare service contractors, state insurance agencies, claim handlers, and more. The primary difference between a health plan and a payer is that a health plan pays the cost of medical care, and a payer is an entity responsible for the processing of patient eligibility, services, claims, enrollment, or payment. Healthcare payers account for approximately 80 percent of all healthcare spending in the United States.
There is some conflict regarding the use of “payer” versus “payor.” Though both spellings are used interchangeably, “payor” is the usage preferred by the American Medical Association (AMA), and the most widely searched on Google.
Top Payers by Covered Lives
|Payer Name||Covered Lives||Premium Earned (M)|
|Kaiser Permanente Group||8,151,001||$40,807|
|Anthem Blue Cross & Blue Shield||7,427,939||$41,052|
|Health Care Service Corporation Group||4,892,441||$25,797|
Fig 2 Data from Definitive Healthcare
All-Payer Claims Databases (APCDs) are extensive electronic systems that methodically collect healthcare claims data from payers. Currently, 19 states have an APCD in place and 5 states are undergoing the implementation process. To develop an APCD system, state governments must assess the local healthcare market. This includes an evaluation of the health insurance market and public payers, development of data submission guidelines, and the validation and management of patient health data.
Though it seems like an immense amount of work and can be costly to maintain, the payoff is significant in terms of population health monitoring as well as in the reduction of unnecessary healthcare spending. Because APCDs are statewide systems, data sharing between payers, providers, and regulators is simplified. This allows for easy analysis of medical claims and identification of areas where financial waste can be prevented. Wasteful spending costs employers up to $2 billion per year, or about one-fifth of the total spend, according to a 2017 report from the American Health Policy Institute (AHPI).
APCDs can educate payers and other stakeholders on areas where healthcare services are overutilized, or where preventative care could have positively impacted overall spending. Once payers have this data, they can work with providers to deliver more comprehensive care, improving care outcomes and reducing costs. For example, a research team reviewing APCD data in Virginia found that unnecessary low-cost healthcare services, like lab tests, EKGs, and vitamin D screenings, cost more than $586 million annually. Similarly, participants in CMS Health Care Innovation programs used APCD claims data to reduce care costs by around $600 per beneficiary per year.
Researchers at the West Health Policy Center (WHPC) estimate that nationwide adoption of APCD systems could save around $61 billion for the healthcare industry.
Top Payers Participating in an ACO
|Payer Name||Premium Earned (M)||Covered Lives|
|Anthem Blue Cross & Blue Shield||$41,052||7,427,939|
|Blue Shield of California||$11,002||2,410,960|
Fig 3 Data from Definitive Healthcare
Patient out-of-pocket payments make up 35% of national healthcare spending. This increased investment means that patients will have higher expectations for care outcomes, provider communication, and data security. Like current EHR systems, blockchain eases communication between providers and payers, making data easily accessible to those who have permission to view it.
Blockchain is an expandable list of electronic records that are connected and secured using encrypting technology. Adoption of blockchain in healthcare has been slow to start but has vast potential as electronic health records (EHR) and electronic medical records (EMR) become virtually omnipresent. EHR systems and healthcare facilities can be vulnerable to cybersecurity breaches, as we’ve seen with Anthem BlueCross BlueShield, UC Davis Health, Bronx-Lebanon Hospital Center, and others. Implementing blockchain could save the healthcare industry around $68 billion per year by eliminating fraud.
Like APCDs, blockchain compiles massive amounts of patient data, allowing for easier analysis. This could allow employers that offer health plans to see the categories of care that are costing the most money—and implement wellness initiatives to combat it. Rather than using wearable technology that monitors individual employee activity levels, blockchain could offer a window into the reasons patients seek care, whether it’s smoking cessation, weight loss, or other areas.
Blockchain is still in its infancy, so it’s unlikely that it will be implemented on a large scale this year. However, companies like Change Healthcare have already introduced their own versions of blockchain for hospitals and payers, so widespread implementation could be closer than originally thought.
To learn more about how blockchain and other healthcare initiatives could affect cost savings, register for our upcoming webinar: The 8 Healthcare Trends That Will Impact Your Sales in 2018. The webinar will be hosted by Definitive Healthcare CEO Jason Krantz on Tuesday, January 30 at 3 p.m. ET.
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