Payers' operations have changed a year after Covid-19
Covid-19 changed the landscape of healthcare. Pharma companies had to ramp up their digital outreach to continue uninterrupted business. Patients faced other challenges, primarily of losing in-person access to doctors and treatments that were administered at hospitals, physician offices or medical centers. The Managed Care Organization (MCO) or payers are an important intermediary between pharma companies and patients. They manage and implement insurance and medical benefits. Pharma companies present their products to payers, who determine how it is placed in the market, the right price and access for it, and consequently, its affordability to patients.
Unlike the European Union, which has single payer systems, the US has a hybrid multi-player model, including Medicare (government benefit for the elderly), Medicaid (government benefit for low-income groups) and commercial insurance (employer-sponsored health plans). Additionally, there are Accountable Care Organizations (ACOs), Health Maintenance Organizations (HMOs), Integrated Delivery Networks (IDNs) and pharmacy benefit for outpatient drugs, managed by Pharmacy Benefit Managers (PBMs) or companies like Blue Cross Blue Shield.
Given the critical role payers play in access to drugs for patients, this study sought to understand the impact of Covid-19 on their business, how it affected their interactions with manufacturers, how they were adapting to the virtual world, what delays they encountered in new drug releases and what they saw as the way forward.
The survey was conducted in the April to June 2021 quarter by Medical Marketing Economics (MME), an Indegene company, with respondents from its panel of payers. In the US, MME's panel includes over 100 payers, covering Medicare, Medicaid and Commercial.
The study identifies disruptions to the business, impact on care delivery and impact on payer-manufacturer relations. It also offers future expectations in these areas from a payer perspective.
The survey followed a rigorous methodology
35 respondents participated in this web-based survey. Of these, two-thirds were pharmacy directors with outpatient health coverage and one-third were medical directors for inpatient and physician-administered products. Between them, they cover over 165 million patients in the US. Of the payers, 91% of the respondents managed commercial plans, 77% managed Medicare and 66% managed Medicaid.
The survey had 31 questions that respondents were asked to rate on a scale of 1 (no impact) to 10 (very large impact). From this, the median was calculated. The areas of focus included impact on overall business, impact on critical business processes, and industry relations.
The key highlights from the survey include
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Payer operations were moderately disrupted by Covid-19. Survey respondents rated disruption at 6.2 on a scale of 10 (1-no disruption, 10-very large disruption)
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Many Pharma Directors reported a high rate of disruption, 56% reporting 7.5 on a scale of 1 to 10
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Only 3% of payers felt that business disruptions would increase in 2021. Others believed it would stay the same or lessen. Moderate impact was felt on financial, network and operations and expected to lessen
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Care delivery saw moderate to large impact with oncology and mental illness most impacted
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Processes such as Drug Prior Authorizations, Medical Drug Authorizations, and New Drug Reimbursement decisions were impacted at a low to moderate rate
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Reliance on telehealth was rated as the top disruptor as many payers were not equipped to adapt to it
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On the other hand, telehealth was also the key enabler of healthcare, ensuring people had access to it. 26% reported reliance on telehealth as top disruptor while 29% said they had implemented more telehealth visits and telemedicine options
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Anticipated growth of telemedicine over the 6-12 month period was 5.1 on the scale of 1-10 with 100% of the respondents saying they would support telemedicine claims
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31% said virtual meetings were the main challenge in payer-manufacturer relations with nearly 50% payers saying they shifted to web/virtual meetings
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41% reported virtual meetings as the top manufacturer initiative that was helpful at this time. 17% said they wanted to see more telemedicine visits and virtual interactions. Ultimately, they expect to see an increase in in-person meetings over the coming two years
What was the impact of Covid-19 on payers' business functions?
Figure 1: Moderate disruption on organization's overall business with Covid-19 pandemic
Considering the impact of your organization's overall business, including an impact on revenue, costs, provider networks, etc. Using a scale of 1 to 10 where 1 is no disruption (business as usual) and 10 is a very large disruption (destabilizing), please rate how big of a disruption the COVID-19 epidemic was to your organization in 2020.
Base: All respondents (n=35)
Payers reported that their business was impacted at higher than median levels. The top four reasons for disruption were
Covid-19 brought virtual medicine to reality. However, many payers were not equipped with the structures and ways to adapt to this change, making it the single biggest reason for business disruption, with 26% listing this as reason for impact.
Delayed elective procedures:
Before Covid-19, telehealth was still finding its footing. Patients relied on inpatient consultations and visits. This meant that payers could rely on a predictive model for hospitalization or the number of elective procedures. However, with Covid-19, elective procedures significantly reduced as people chose not to visit doctors or have procedures for fear of exposure to the virus. This led to a decrease in healthcare utilization and created a backlog of services. Of the respondents, 14% listed this as a reason for impact.
Increase in Covid-related hospitalization:
Covid-19 brought a significant increase in hospitalization for related treatment. Payers had a hard time making predictions for Covid or assumptions about the occurrences related to it, with 14% listing this as reason for business disruption.
11% of survey respondents listed working from home as a cause for disruption. Payers had to enable remote working and ensure it operated with the same degree of efficiency as before.
The survey also delved into the impact on payers' financial, operational and network operations.
Financial impact
All respondents were asked about the level of impact on their company's operations. Medical and pharmacy costs saw an increase directly related to the treatment of Covid-19. Unplanned medical costs had a 44% increase with 31% of the respondents citing significant impact. 49% reported an increased in unplanned pharmacy costs however, 37% of the respondents cited very small impact. A 37% decrease in revenue was reported due to premium reductions from employment losses. Lastly, while companies were mandated to maintain the state-level insurance capital requirement, nearly 50% of the respondents reported no to low impact.
Operational impact
Service levels and turnaround times were disrupted for processes such as medical approval and prior authorization requests. 26% said these were significantly impacted. However, 49% said that Covid-positive staff was not as big an impact. This could mean that the workforce adapted to the new normal and to working remotely, which mitigated the impact.
Figure 2: Moderate impact on company's financial and operations due to Covid-19 in 2020 and expect it to decrease in 2021
Please consider the level of impact to your company's operations directly related to COVID-19. Using a scale of 1 to 10, where 1 is very small impact and 10 is very large impact, please indicate the level of impact this factor had to your company's operations in 2020?
Network impact
The payer network includes physician providers, hospitals, outpatient infusion centers, alternative care sites, lab providers and pharmacies. The survey addressed each of these network partners to understand the impact on their business. Four areas saw the most impact while two were not significantly impacted.
Figure 3: Payers reported moderate impact on company's network operations due to Covid-19 in 2020 and expect it to decrease in 2021
Please consider the level of impact to your company's operations directly related to COVID-19. Using a scale of 1 to 10, where 1 is very small impact and 10 is very large impact, please indicate the level of impact this factor had to your company's operations in 2020?
In 2020, for lab providers and pharmacy networks, payers saw little disruption as they were able to provide care directly at patients' homes, or via mail. In outpatient infusion centers payers saw some disruption that reduced over time. The ability of the physician provider networks and hospital networks to provide necessary services was most disrupted, as indicated by 34% of the respondents. In the case of hospital networks, this was because there were fewer people visiting hospitals. One year later, alternative care sites like rehab facilities, community mental health centers are seeing the least reduction in disruption.