COVID-19 has Reduced Claims for Health Plans, but Changes Could be on the Horizon | Deloitte US has been saved
Limited functionality available
By David Biel, principal, and James Whisler, principal, Deloitte Consulting LLP
While hospitals in some parts of the country are dealing with high volumes of COVID-19 cases, most patients are staying at home. As a result, health plans are paying significantly fewer medical claims than they were just a few months ago as members defer non-essential hospital procedures and avoid doctor offices. Since the crisis began, physician practices have seen revenue decline by an average of 55 percent, with patient volume dropping to 60 percent, according to the results of a recent survey.1 However, while overall claims have declined, health plans are paying for COVID-19 testing and treatment—usually with no cost sharing. Many plans are beginning to pay for virtual/telehealth visits.
Health-plan members are also having fewer health issues. A decrease in strep throat and flu cases over the past month is likely related to social distancing, increased handwashing, and more people working from home.2 Moreover, fewer cars on the road could mean there are fewer accidents and fewer trauma cases for hospital ERs. In California, for example, traffic accidents have been cut in half.3 And with no one playing sports, there are also likely to be fewer sports-related injuries.
Once schools and businesses reopen, car accidents, sports injuries, and elective surgeries will return, but there likely won’t be any more than there were before COVID-19. This is similar to a seat in a restaurant on a Friday night. If that seat doesn’t get filled, that revenue is lost and isn’t made up the next night. Although members will return to hospitals and doctor offices, claims volume is unlikely to offset the lower volume we are seeing now. Some health plans have estimated trend rates might decline 5 percentage points this year, but they don’t expect rates will rebound by as much. Some patients who deferred care might decide not to return. Patients who were scheduled for back surgery, for example, might have healed after six months of rest and (possibly virtual) physical therapy.
However, while some unnecessary procedures have been put on hold, important preventive care—such as mammograms, Pap smears, and PSA screenings—are also likely being deferred. Over the next two years, it’s possible that skipping those services could result in a wave of preventable illnesses that weren’t detected. We see this as a bit of a wild card, but it could have a negative impact on the health of some enrollees and future claims costs.
How will COVID-19 change health plans?
Many of our health plan clients are asking us how we expect the COVID-19 pandemic might impact their business segments. Here’s what we expect:
While the decreased volume of inbound claims is providing some temporary relief for health plans, we expect that this respite is temporary. We are advising our health plan clients to seize the day and move toward a digital/virtual front door that can allow them to more directly manage the care journey for their members. The health plans that prepare now for these near and long-term changes caused by COVID-19 will likely emerge as market leaders.
1. COVID-19 financial impact on medical practices, Medical Group Management Association, April 2020
2. Remember influenza? Stay-at-home order and other coronavirus precautions seem to have halted a bad flu season and ‘probably saved thousands of lives,’ Chicago Tribune, April 16, 2020
3. Impact of COVID-19 mitigation numbers and costs of California traffic crashes, Road Ecology Center, UC Davis, April 1, 2020
4. Covered California Newsroom, April 16, 2020
5. Sign-ups surge on state’s health exchange, The Daily New of Newburyport, May 4, 2020
6. Telemedicine keeps patients safe, medical practices going in the age of COVID-19, The Buffalo News, April 24, 2019
7. Cigna launched dental virtual care to improve access and protect customers in response to COVID-19, Cigna press release, April 14, 2020
8. Premera Blue Cross offers zero cost share virtual mental health and substance use disorder treatment during COVID-19 pandemic, Premera Blue Cross press release, April 21, 2020
David Biel, Deloitte Consulting LLP, is a principal in the firm’s Life Sciences & Health Care practice with extensive experience in information technology. He has 26 years of experience in health care and digital technologies, 24 of them with Deloitte. He currently serves as the national Consulting Health Care Sector leader. In his role, Biel focuses on driving the strategy, growth, and financial performance of the practice by developing service offerings and capabilities, talent, go-to-market strategies, and client relationships with US and global health plans, providers, and ecosystem players. He has served numerous health care clients in multiyear operational and digitally enabled business transformations. He is based in Chicago.