With the ongoing COVID-19 pandemic, there remains continued movement and changes in practice management throughout the health care landscape. One focused area under question is how commercial payers are going to manage their 2021 formularies and how will these changes affect integrated health networks and health systems?
Unemployment is a fallout from the COVID-19 pandemic and causing members of employer-sponsored health insurance to enroll in Medicaid and Exchanges to cover health care needs. This shift in population is a potential revenue loss for commercial payers, especially regional ones. In addition, national payers may start trying to re-coup losses from member enrollment reduction by either increasing premiums (which is never a popular move), or increasing management and scrutiny of their members’ pharmaceutical spend within health systems and IDNs. In 2021, commercial payers will most likely continue with tighter controls, restrictive prior authorization criteria, step therapy, and exclusionary formularies as they continue to trim costs in response to plan member reduction. Some health plans may even develop internal treatment pathways in specialty areas like autoimmune diseases and oncology.
This leads us to the bigger question: How will these commercial payer changes affect integrated delivery networks and health systems? Since the beginning of the COVID-19 pandemic, systems experienced dramatic reductions in many elective procedures and treatments. In addition, many patients within these systems also delayed, postponed, or even skipped routine infusions out of fear of COVID-19 transmission. These types of procedures and fee-for- service offerings are large drivers of revenue and profitability for many IDNs and health systems.
With the slow ramp up of normal primary care and specialty service line operations, the majority of health systems are back up and running at full capacity. These health systems may begin to feel the effects of the commercial payers’ formulary management responses in several different ways.
The biggest impacts will be felt by IDNs and these systems in several resounding manners:
- Drug shortage and backorder management (due to misalignment with commercial plans’ formulary and preferred medication availability)
- Patient retention for all services within system, eg, imaging, procedures, labs, diagnostics (due to reduction in commercial lives and coverage insurance gaps)
- Increased administrative burden for benefit verification due to change in the type of coverage and health insurer of the patient
These 3 areas highlight the possible fallout from payers leveraging more restrictive formularies and mandating a higher level of control around high-cost therapies and disease states. There are still a lot of unknowns and variables in the commercial payer formulary landscape in response to the pandemic. The trickle-down effects could be felt in the prior mentioned areas for weeks or months to come, and therefore it is important to demonstrate product value to IDNs and health systems who may be able to influence commercial payers. Value-based results, outcomes-based benefits, and total cost of care are all important drivers for IDNs and health systems. Understanding these drivers offers opportunities for engagement and development of potential partnerships. While the COVID-19 pandemic curve is flattening, change may happen from the bottom up when it comes to IDNs, health systems, and commercial payers.
Pharmacy Times. May 2020 snapshot: The impact of COVID-19 on health plans from a pharmacy point-of-view. https://www.pharmacytimes.com/news/may-2020-snapshot-the-impact-of-covid-19-on-health-plans-from-a-pharmacy-point-of-view. Accessed June 16, 2020.