Resuming Elective Surgery Part II: Volume, Pricing and the Private Insurance Market

In this episode of the Advancing Surgical Care Podcast, ASCA CEO Bill Prentice and Healthcare Bluebook Co-Founder and Senior Vice President Bill Kampine discuss the outlook for resuming elective surgeries and what to expect immediately and in the future regarding case volumes, pricing and commercial insurance coverage. 

Transcript

Bill Prentice:   0:06
Hello and welcome to this episode of the Advancing Surgical Care Podcast, brought to you by the Ambulatory Surgery Center Association, or ASCA. My name is Bill Prentice and I'm ASCA's CEO. This recording is taking place on Wednesday, May 27, 2020. As with all of ASCA's COVID-19 communications, please check to make sure you're reading or listening to our most up-to-date postings. The ASCA website should be your first stop for any of that. The purpose of today's podcast is to discuss the outlook for identifying value and pricing as elective surgeries start to resume in both hospital and ambulatory surgery center settings. With me today to discuss this and the current backlog in elective surgeries and how this dynamic may impact future pricing, as well as insurance premiums, is Bill Kampine, co-founder and senior vice president of Healthcare Bluebook. Bill is a healthcare economist, entrepreneur and passionate advocate for improving price transparency, and helping payers and consumers alike make better choices about how we all spend precious dollars on healthcare. By mining a vast database of commercial insurance claims, Bill and his colleagues at Healthcare Bluebook work with more than 5,000 companies all across the country to help them shop and compare both cost and quality of healthcare procedures. Bill, welcome and thanks for coming on the podcast.

Bill Kampine:   1:31
Bill, thanks for the opportunity to spend some time with you today. Really excited.
 
Bill Prentice:   1:35
Great. Well, let's start. What do we know from the data about the number of elective procedures that were postponed as a result of the coronavirus epidemic and the pent-up demand that has created as we look out over the next few months?
 
Bill Kampine:   1:49
That's a great question. You know, we're continuously looking at the data and reports and, as you can imagine, the numbers do depend a little bit upon where you are in the US. In terms of physician encounters, the latest survey data I read shows procedure lists, and I would include orthopedic, ENT, gastro, and others in that. The reporting for April drop-offs are over 50 percent over the prior year, and with some recovery in May. You know, to me this makes sense in the light of the CMS and state orders to curtail elective surgeries. On the facility side, hospital-based inpatient and outpatient care showed declines of 60 percent or more, with some sort of signs in orthopedics and other care, you know, virtually disappearing, particularly in the hotspot areas, again, with some recovery in terms of the early reports for this month. And so, you know, in aggregate, and there's not a lot of data out there, but the forecasts that I've seen for the remainder of the year are equally variable. There are a couple of data points in total. The volume, you know, the numbers show the volume through the end of the year reaching 70-80 percent of projected, but that's assuming that electives start up by mid-May. And, you know, we're seeing that happen in some areas of the country, but not all areas of the country.
 
Bill Prentice:   3:09
Well, despite, you know, the resumption that we are seeing of elective surgeries, and despite the recent government assistance programs that have, you know, been put in place to help healthcare providers during this time, there's no denying that this interruption of services and procedures is taking a huge financial toll on our entire healthcare system, not to mention healthcare workers. How do you believe the current financial challenges will impact future pricing?
 
Bill Kampine:   3:38
Well, in terms of pricing, over the short run it's really difficult to change the in-network negotiated prices that you would receive, right, as a facility or physician. We know there's pent-up demand, you know, both facilities and physicians would like to get back to work and that's perfectly understandable. As we speak with our employer clients, who are preparing for a post-COVID bump in utilization, I'm particularly interested in site of care and, you know, where the patients will be scheduled. Most of the cost for surgical procedures is in the facility component. One way of increasing revenue when you can't change the price, right, in the short run, is to deliver care in the higher cost setting, which for outpatient care would be in the HOPD setting, right, as opposed to the ASC setting. And that's an area where we're currently focused in terms of helping both employers and patients, and so that's, you know, really the short term because it's going to be hard to move those prices. As we think about the intermediate and the longer term, I would agree. You know, I think there's pressure on upward pricing that will have to be built, I would imagine, into the next round of negotiation. But that's not something I would anticipate here over the short run. It's really going to be for employers and consumers who pay the bills better managing that site of care, particularly as there'll be a wave of demand and different rules in terms of scheduling and a desire to get as many of those patients through the system as possible. So how do we manage those locations and the cost to ensure that employers and consumers are still getting good value? And, you know, that, Bill, is really how I think about that particular problem.
 
Bill Prentice:   5:24
Very interesting. Two other questions come to mind. First one: What do you think the pandemic and the resulting, you know, economic crisis we're now facing, what impact will that have on commercial insurance premiums both this year and in the near future?
 
Bill Kampine:   5:42
You know, I think the potential certainly exists for upward pressure on those premiums but I do think we're sort of in a "we have to wait and see" mode. I spent a good deal of time talking to our large, self-insuring clients, really to gain a better understanding in terms of what they're experiencing in terms of both utilization and claims cost. General feeling is that we're a little early to understand that picture. For example, we're in late May, and depending on claims reporting lag, the best we have is a partial picture for April. In terms of, you know, overall utilization will be down over the rest of the year. You know, again, I think earlier, we spoke a little bit about what will the volume be post COVID. Most projections have that at 70 or 80 percent of projected, if we do a really good job there of managing venue and getting patients to the right locations. Employers, at least in their premium costs, or their expense for the year, could be flat or a little bit down as we roll on the end of the next year. A lot of it has to do with the price negotiation cycle, and whether we'll see increased costs into the next year, but I think we're a little early to tell you.
 
Bill Prentice:   6:58
The second question, and you actually touched on it when you mentioned utilization, is what do you think the impact of the economic crisis in terms of the huge number of unemployed we have right now? And the fact that many of those Americans will likely lose their health insurance coverage in the near future, what impact will that have on our healthcare system both this year and next?
 
Bill Kampine:   7:25
Well, I think it's definitely a concern, right, for providers, whether you're a hospital or an ASC. Fewer members on role as fewer patients and that will have definitely an impact on cases and revenue. Much like the prior question, I do think it's a little bit of a latency, unprecedented levels of unemployment. Some folks may have their insurance extended or have an option to go on Cobra for a period of time. If that stays in place and we don't have a quick recovery, it'll obviously be a more significant impact, but much like overall premium costs for employers, you know, I think we're probably in a latency on that one as well.
 
Bill Prentice:   8:11
Understood. Well, let's bring Healthcare Bluebook into our discussion and the work that you do to help payers and consumers identify the providers who offer the best value for their healthcare dollars. I would ask that we share your passion for price transparency and creating an identifying consumer value. The need for your work, for the work that you do, has always been essential to helping control spending. But the demand for that information, at least on a macro level, hasn't been what we would all expect given the enormous disparity in pricing for the same procedure in the same market. So I have two questions. The first is simply, why haven't we seen more consumers and payers demanding greater transparency and an ability to shop for good value? And then secondly, what are some of the best practices that you and your clients follow to incentivize better choices?
 
Bill Kampine:   9:07
You know, Bill, on the first question, I probably have a slightly, you know, different take. The evidence is that we're seeing interest in transparency, and I mean at the level of employers and consumers and policymakers, at an all time high. You know, in the past year, we've had federal and state hearings on transparency, and you and I have both testified in numerous venues on the topic. We've seen CMS rule changes on price transparency for hospitals and the proposed transparency requirements for plans and plan sponsors. At Bluebook we've been fortunate to experience a steady growth for a decade now, but really in the last two years we've seen our largest growth yet. So I do think, you know, we do see a lot of interest in this. I believe the growth that we are experiencing is directly related to the progress we've made over the past decade and the evolution in terms of getting better at getting patients to the right locations for care. We've covered this at some of the ASCA meetings in the past couple of years but, you know, I think care in the ASC environment for outpatient care is a great example. You know, we've done a better and better job of helping patients keep their doctor, understand the venues where they can receive care and help them navigate to those cost-effective, higher-quality locations. And, you know, I think part of that is a growing interest in how do we do more of that. On the second piece, Bill, in terms of what works, you know, here's what we know. When patients understand the level of cost and quality disparity, they're over 10 times more likely to compare providers before they receive care. And we know that when they do shop priority care, patients do make better decisions. And so patients who compare providers are three times more likely to choose high-quality, cost-effective care. And there are a few important lessons that we've learned over the years in our evolution in terms of best practices, right. The first is, make it easy. Make it easy for patients. You know, healthcare is hard to navigate. And so at Bluebook, we use color coding and an intuitive search, but that's important. The second piece is rewarding good behavior. So benefit design, incentives, waiver of out-of-pocket costs and shared savings are really important to create incentive and reward patients when they make better choices. The third is really engagement, and I can't stress this enough, I think the numbers show it clearly. Particularly digital engagement and getting information to patients when they need it, is critical. And then the last one is really as care becomes more complex, it's more challenging for patients to navigate. So we've learned, you know, that providing a level of patient concierge to support getting those cases scheduled and getting them to the right locations has been really, really important.
 
Bill Prentice:   12:11
Well, that's tremendous. And I'm actually, you know, very heartened to hear your optimism in terms of, you know, seeing and experiencing greater demand for the type of services that Healthcare Bluebook provides in terms of identifying low-cost, high-quality providers and finding ways to get patients to them. So, Bill, thank you for being on the podcast today and sharing your knowledge and insight. The data and analytics that, you know, you and your colleagues at Healthcare Bluebook create has, you know, just continues to really blow me away in terms of the information about healthcare spending and how we too often misspend our precious healthcare dollars by not going to the high-quality, low-cost provider. And I would encourage anyone listening to this podcast to become more familiar with the work of Healthcare Bluebook and what you're doing, and they can do so by going to your website, healthcarebluebook.com. So again, Bill, thank you for being on the podcast.
 
Bill Kampine:   13:11
Thanks for having me, Bill. It's been a real pleasure.
 
Bill Prentice:   13:14 
Great. And so if anyone listening has thoughts or suggestions for future topics or how we might improve these presentations, as always do not hesitate to send us your thoughts and recommendations. We want to hear from you so that we can make sure that we at ASCA are serving you as well as we can. So, thanks for listening and please stay safe and stay healthy.