The insurance industry appears likely to have another big year in 2020, as growth in government and commercial markets is expected to continue.
But a presidential election and new transparency initiatives could throw some major curveballs to payers.
Here are the top five issues and trends to watch out for in the next year:
Medicare Advantage diversifies
Enrollment growth in Medicare Advantage is likely to continue next year, as more than 22 million Medicare beneficiaries already have a plan. But what will be different is diversification into new populations, especially as insurers pursue dually eligible beneficiaries on both Medicare and Medicaid.
“This is being made possible because of strong support from government,” said Dan Mendelson, founder of consulting firm Avalere Health.
Support for Medicare Advantage “transcends partisanship and that has been true under Trump and Obama,” he added.
New benefit designs, such as paying for food or transportation to address social determinants of health, are also going to increase in popularity. The Centers for Medicare & Medicaid Services (CMS) has made it easier for plans to offer such supplemental benefits.
Get ready for transparency, whether you like it or not
This past year saw CMS release a major rule on transparency that forces hospitals to post payer-negotiated rates starting in 2021 for more than 300 “shoppable” hospital services.
The rule, which is being contested in court, could fundamentally change how insurers negotiate with hospitals on how to cover those services. The rule brings up questions about revealing “private information for the sake of transparency,” said Monica Hon, vice president for consulting firm Advis.
But it remains unclear how the court battle over the rule, which has garnered opposition from not just hospitals but also insurers, will play out. Hospital groups behind the lawsuit challenging the rule have had success getting favorable rulings that struck down payment cuts.
“I think there is going to be a lot of back and forth,” Hon said. “Whatever the result is that will impact how payers and providers negotiate rates with this transparency rule.”
Don't expect major rules in 2020
2020 is a presidential and congressional election year, and traditionally few major initiatives get going in Congress. But experts say the same goes for regulations as administrations tend not to issue major regulations in the run-up to the vote in November, said Ben Isgur, leader of PwC’s Health Research Institute.
“What we will end up with is much more change on regulations on the state side,” Isgur said.
But new regulations on proposals that have been floated could be released. Chief among them could be a final rule to halt information blocking at hospitals and a new regulation on tying Medicare Part B prices for certain drugs to the prices paid in certain countries.
Congressional lawmakers are still hoping to reach a compromise on surprise billing, but they don’t have much time before campaigning for reelection in November.
A lot of the healthcare direction will be set after the presidential election in November. If a Democrat defeats President Donald Trump, then waivers for items like Medicaid work requirements and block grants will likely go by the wayside.
“Depending on who takes the White House and Congress, are we going to further repeal the Affordable Care Act and replace it or will we have Medicare for All,” Isgur said.
Insurers continue to go vertical in dealmaking
Insurers certainly weren't shy about engaging in mergers and acquisitions in 2019, and that trend doesn't appear likely to dissipate next year.
But the types of mergers might be different. Insurers and providers are increasingly looking at deals that would offer a vertical integration, such as acquiring more pharmacy services or a technology company to enhance the patient experience. Plenty of big-ticket vertical deals, such as CVS' acquisition of Aetna and Cigna's purchase of Express Scripts, have changed the industry landscape significantly.
"Deals in 2020 are going to be much more around the identity," Isgur said. "Five years ago we had a lot of horizontal deals where health systems got bigger and regional payers got bigger."
Payers continue to push patients away from hospitals
Insurers are going to try to find new ways to push patients toward outpatient services to avoid higher costs from going to a hospital.
For instance, “we are seeing a lot of payers not going to honor hospital imaging,” said Hon. “A lot of payers are saying we want you to go outside the hospital and that is a lot cheaper for us,” she said.
Instead, payers will try to steer patients toward imaging centers or physicians' offices.
“We are seeing that with imaging and free-standing surgical centers now being able to do a lot more,” she added.
Insurers are also starting to use primary care more proactively to “ensure that they understand the needs of the patient, their needs are being addressed,” Mendelson said.