Insurers-Hospitals Face Cost Structure Change

Insurers-Hospitals Face Cost Structure Change

Insurance fundamentals (risk) that supersede the ACA are driving changes seen in coverage, and at a more rapid pace each year, resulting from ACA impacts. One of those changes has been a significant increase in the use of alternate sites of care (ASOCs) due to medical policy changes driven by health insurers (UHC, Aetna, Cigna, etc.).

ASOCs refers to healthcare that is delivered in settings different from and generally less expensive than a hospital room, outpatient center or physician’s office, such as an in-home setting, hospital outpatient department clinics, retail or convenience care clinics, urgent care clinics, various independent or corporate free-standing medical clinics and now, care delivered via telehealth.

As reimbursement rules have been adjusted since 2000 through contractual changes agreed upon by purchasers of care (individuals and employer groups), the ability to consider the pros and cons of different sites of care and the related economics of risk has more significantly come into play.

A number of new issues are being seen among the key stakeholders based upon their level of (financial) risk. In particular, as higher costs (risk) occur there is an increasing trend toward mitigating that risk by looking at benefit design options that target stakeholder behaviors to lower that risk. That is accomplished through various risk sharing and/or incentive and disincentive based reimbursement arrangements. As a result, lower cost based decision-making for drug administration such as ASOCs grows when that option is available.

For the past several years, the infusion-product market for immunologics has been moving from hospital-based care to ASOCs. As a result of more high-cost and higher volume drugs in general, such as rheumatology and oncology infusion products, manufacturers are increasingly being affected by the commercial insurance market’s greater shift of medical coverage policies to lower-cost alternate sites or levels of care for infusion of specialty drugs.

Healthcare reform in general has encouraged the use of alternative settings and exploration into new types of financial or risk-sharing arrangements. In 2017 and for the immediate future, companies that market and sell specialty pharmaceutical products should be aware that ASOC or ASOC-like strategies will likely grow in prominence in the infusible marketplace.

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