Despite dramatic decrease in claims costs due to the pandemic, health insurers seek rate increase for 2021

Earlier this month, New York’s insurance plans asked the State Department of Financial Services to consider a weighted average rate hike of 11.7 percent in the individual market and a weighted average increase of 11.4 percent in the small group market for 2021. The 2021 average rate increase request is higher than last year’s average request of 8.4 percent in the individual market.  This request perplexes those of us in the healthcare business.

With fewer claims costs because elective procedures were halted for two months during the peak of the coronavirus crisis and fewer individuals venturing out, even now, to access healthcare, shouldn’t there be a decrease in rates?

What’s the Reason?

Some plans cite increased costs due to COVID-19 as the reason for the rate hikes.  Fidelis Care, which requested the second largest increase at 18.8 percent, says it took into account the increased risk and uncertainty caused by the pandemic when calculating its 2021 rate increase request.  Fidelis does business in nearly all of New York’s 62 counties.

New York State requires health insurers to seek pre-approval for premium rate hikes.  Plans must present reasonable justification for their increase requests.  Typically, plans will look at prior year claims costs and activity, medical cost trends, and the medical inflation rate when determining rates for the upcoming year.   The state’s Medical Loss Ratio regulation also comes into play.  It requires plans to spend  82 percent of premium dollars on direct care and quality improvement activities.  If plans exceed this ratio, money is returned to consumers. The New York State Department of Financial Services ultimately decides the percent increase it will allow.  We will know that in August.

The State Acts

While it is true that health plans did not and still do not collect co-pays for COVID testing when an in-network provider is used, the sheer drop in patient claims for routine care and cancelled elective surgeries more than balanced this. The state issued a Circular Letter on April 22, 2020 directing health plans to take a variety of steps to alleviate the financial burden imposed by COVID-19 on hospitals and help them with their cash flow.  Some of these steps included no retrospective reviews, no medical necessity denials, resolution of appeals within 60 days, and a requirement that plans work directly with hospitals and provide some financial assistance, especially to those hospitals that were severely cash-strapped.  Nevertheless, many hospitals report that plans have not acted in good faith to ease the cash crisis, despite the health plans’ ever-growing reserves.  The letter’s directives expired June 18^th but an extension is under negotiation.

Predicting Health Costs

PwC’s Health Research Institute recently issued a report that detailed several economic scenarios that could play out next year.  The report projects that the medical cost trend could range from a high of 10 percent to a low of 4 percent.

The surge in telehealth has also driven down costs for health insurers.  These visits are reimbursed at a lower rate.  In the Northeast, telehealth claims increased by 4300 percent, during the peak of the pandemic, according to nonprofit Fair Health’s monthly telehealth tracker .

We can’t figure out how COVID-19 imposed undue financial burden on health insurers.  Let’s hope the State Department of Financial Services keeps that fact in mind when it reviews the plans’ rate increase requests for 2021.

About the Suburban Hospital Alliance of New York State 

The Suburban Hospital Alliance of New York State advocates on behalf of hospitals in the Hudson Valley and Long Island regions. It engages key lawmakers and regulatory decision-makers in Albany and Washington to ensure reasonable and rational health care policy prevails.

About the Nassau-Suffolk Hospital Council (NSHC)   

The Nassau-Suffolk Hospital Council represents the not-for-profit and public hospitals on Long Island. It works in conjunction with the Suburban Hospital Alliance of New York State to advance legislative and regulatory priorities.  NSHC serves as the local and collective voice of hospitals on Long Island.

About the Northern Metropolitan Hospital Association (NorMet)  

The Northern Metropolitan Hospital Association represents the not-for-profit and public hospitals in the Hudson Valley region. It works in conjunction with the Suburban Hospital Alliance of New York State to advance legislative and regulatory priorities.  NorMet serves as the local and collective voice of hospitals in the Hudson Valley.

 

Campaign draws attention to safety, infection control protocols

Delaying care can lead to more acute and complicated health problems

We have come a long way since New York recorded its first coronavirus patient on March 1, 2020.  Thankfully, today, the number of daily coronavirus cases has decreased dramatically.

Now, fears about utilizing hospitals and physician offices for routine, but necessary care could spark another crisis of sorts.  Routine care, screenings, and vaccinations serve to blunt more complex health issues if left unattended.   Delaying care is not the healthiest option.  All hospitals in the suburban regions were recently given the green light to resume elective surgeries and scheduling a procedure sooner rather than later is a wise decision.

 

 

 

 

 

 

It is understandable that patients are wary of accessing care, and they fear for their safety in such settings.  But throughout this pandemic, hospitals took extraordinary measures with infection control and safety protocols to protect patients and staff.  This continues full force.  Social distancing in waiting areas, temperature checks, and deep sanitization, are some of the measures your healthcare providers are taking to keep you safe during your next visit.

Recent studies and polls show that many consumers are delaying care – some with telltale signs of heart attack or stroke are not going to the emergency department where immediate care and minutes are critical to a positive outcome.  One study shows ischemic stroke patients are arriving at the ER 160 minutes later as compared to a similar timeframe in 2019.

A poll conducted in late April by the American College of Emergency Physicians and Morning Consult found that nearly a third of American adults (29 percent) delayed or avoided care due to fears about contracting the coronavirus.  A Kaiser Health poll conducted several weeks later found that nearly half of the adults surveyed said they or a family member skipped or delayed care due to the coronavirus. But most said they expect to access care within three months.

Responsive, Resilient, Ready – this is the message healthcare providers throughout the Hudson Valley and Long Island regions have for patients.  The world has changed, but their care has not.  Consumers can read about the specific steps that hospitals in their area are taking to keep patients safe during their next in-person visit by visiting the Responsive, Resilient, Ready page maintained by the Suburban Hospital Alliance.

Consumers should also keep in mind that a region’s ability to remain open hinges on a few metrics maintained by hospitals.  Ensuring that timely primary care and other care needs are handled in the community ensures that hospital capacity is not overtaxed with critically patients.  As part of the governor’s New York Forward Plan, hospitals must maintain a 30 percent hospital bed and ICU bed capacity at all times.

About the Suburban Hospital Alliance of New York State

The Suburban Hospital Alliance of New York State advocates on behalf of hospitals in the Hudson Valley and Long Island regions. We engage key lawmakers and regulatory decision makers in Albany and Washington to ensure reasonable and rational health care policy prevails.

About the Nassau-Suffolk Hospital Council (NSHC)   

The Nassau-Suffolk Hospital Council represents the not-for-profit and public hospitals on Long Island. It works in conjunction with the Suburban Hospital Alliance of New York State to advance legislative and regulatory priorities.  NSHC serves as the local and collective voice of hospitals on Long Island.

About the Northern Metropolitan Hospital Association (NorMet)  

The Northern Metropolitan Hospital Association represents the not-for-profit and public hospitals in the Hudson Valley region. It works in conjunction with the Suburban Hospital Alliance of New York State to advance legislative and regulatory priorities.  NorMet serves as the local and collective voice of hospitals in the Hudson Valley.