The Post-COVID Era Will Chart the Course for the Future of American Healthcare
This spring marks the end of a full year most of us would like to forget. We appear to be finally on the downslope of the COVID-19 curve, but we shouldn’t fool ourselves about its lasting effects on our healthcare system. From the pandemic, to the ensuing system-wide fiscal crisis, to landmark legislation, the past year marked the beginning of a transformation in American healthcare. Now is our opportunity to make sure that America’s healthcare system is viable for years and decades to come.
The COVID-19 pandemic will continue to define how our healthcare system operates for the foreseeable future. Patient volumes plummeted last spring, wiping out 1.4 million healthcare jobs in April alone. We saw some recovery in volumes by October, but many areas of medicine, including emergency medicine, remain at reimbursable volume levels that are 25 percent below pre-pandemic levels. Policymakers wisely avoided inflicting additional financial pain upon healthcare providers at the end of 2020 by passing a fair and equitable fix to surprise medical billing and also halting steep Medicare reimbursement rate cuts that have likely allowed many clinicians to keep their doors open in 2021.
TeamHealth and other provider groups fought aggressively against a catastrophic policy “solution” to surprise medical bills that would have decimated providers for the benefit of insurers. We won an important victory by instead passing into law an arbitration system that will prevent insurers from unilaterally setting payment rates. Crucially, insurers weren’t given absolute leverage over reimbursement rates that would result in a rapid decline in physician pay, but challenging long-term trends remain. An increasing percentage of patients without insurance and little ability to pay, aggressive insurer tactics to deny legitimate claims, and the continued shift of healthcare costs from insurers to patients through higher deductibles and copayments all result in downward rate pressure. The surprise billing fix buys time for clinicians, but it will not eliminate the erosion of reimbursement rates.
The Biden administration and Department of Health and Human Services Secretary Xavier Becerra will preside over the rulemaking process implementing surprise medical billing legislation, which takes effect in 2022. Rulemaking might seem like an afterthought given the lengthy public debate over surprise medical bills, but the details are critically important. If the considerations built into the independent dispute resolution process are too heavily weighted toward insurers, providers will face additional financial pressure as they attempt to recover from the prolonged loss in reimbursable patient volumes that accompanied the COVID-19 pandemic. After losing out in the legislative process, large health insurers will undoubtedly try to exert influence in rulemaking and shape arbitration in their favor.
Similarly, the Medicare Physician Fee Schedule rule still represents a material risk to physicians. The final resolution to amend the rule for 2021 didn’t eliminate the six to eight percent cuts, but only granted providers temporary relief. Many specialties – including those that comprise the country’s healthcare safety net – will see combined rate cuts of over eight percent in 2022 and 2024. This is an existential threat that the Biden administration and Congress must address.
Aggressive behavior from major insurers further complicates the healthcare landscape in 2021 and beyond. In addition to reduced patient volumes, COVID-19 created downward rate pressure by tilting the payer mix away from private insurance and toward Medicare and Medicaid. Despite posting record profits during the height of the pandemic, large insurers continue to demand arbitrary, unsustainable reimbursement rate cuts that do not reflect market rates, terminating network agreements with those who do not comply.
In the midst of all of these challenges to their livelihoods, our hospital-based clinicians and other healthcare providers have been on the front lines providing heroic service and life-giving care in extremely challenging conditions - unwavering in their dedication throughout the pandemic.
The year of COVID-19 left a lasting mark on society at large, but the immediate future will chart the course of American healthcare. The brief reprieve from the Medicare rate cut and the promise of a fair and equitable surprise billing fix will help sustain the system as we continue to fight COVID-19. Now is the time to embrace long-term solutions that will put healthcare on stable footing before the calendar turns to 2022.
Leif Murphy is the President and CEO of TeamHealth and has more than 20 years of experience in healthcare operations, business development and finance.
