VH Insights

Cost Savings
May 12, 2022

The Rising Cost of Medicare & Medicaid: What You Can Do

The rising cost of Medicare & Medicaid impacts health plans, payers, providers, and members. One in five seniors report that affording healthcare services in 2022 would be “very difficult,” and half of those respondents said they’d most likely be forgoing some medical care, according to a MedicarePlans survey.

Meanwhile, states face higher spending shares on Medicaid once the Public Health Emergency (PHE) put in place during the Covid-19 pandemic expires (which is set for mid-summer 2022). States also will need to redetermine the eligibility of Medicaid enrollees in light of the expiring PHE.

As Medicare and Medicaid beneficiaries experience these challenges, payers and providers need to focus on cost reduction and resource management. That means finding ways to tighten up care coordination. In this article, find out how technology helps you shift processes to get there faster.

How Are Medicare & Medicaid Costs Increasing?

In late 2021, CMS announced that Medicare beneficiaries would see significant increases in coverage costs. Most notably, the basic monthly premium increased by 15.5% ($21.60 per month). For many seniors, that takes a sizable bite out of the recent Social Security cost-of-living increase of 5.9%.

Here’s a detailed breakdown of Medicare increases for 2022:

  • Part B premium: $148.50 to $170.10
  • Part B deductible: $203 to $233
  • Part A deductible: $1,484 to $1,556
  • Co-payment for hospital stay days 61-90: $371 to $389/day
  • Co-payment for hospital stay days 91 and beyond (i.e., lifetime reserve days): $742 to $778/day
  • Skilled nursing facility co-payment, days 21-100: $185.50 to $194.50/day

State agencies are predicting that Medicaid spending will increase by 14% in FY 2023 as PHE measures wind down. In addition, as of April 1, 2022, states had the option to extend Medicaid maternity and postpartum coverage from 60 days to 12 months after the date of birth.

Implications for Payers & Health Plans: It’s about Value-Based Care

CMS attributes the higher Medicare coverage amounts to a few factors, including:

  • Escalating labor and supply prices across the healthcare industry
  • Uncertainty regarding the potential usage and Medicare outlay for a high-priced Alzheimer’s treatment drug

But what is perhaps the most significant contributing factor that should be resonating with payers, health plans, and providers? Inflated utilization of health services is an issue that’s been on CMS’ radar for years. Today, increased demand, deteriorating population health following deferred medical care, and in some cases, poor health habits during the pandemic, are driving even higher utilization.

Medicare and Medicaid populations are especially susceptible to pandemic-related stressors, including medical, behavioral, and even economic difficulties. Since economic challenges often lead to avoidance of extra expenses, such as preventive medical care, individuals are more likely to postpone proactive services and rely on costly, reactive emergent care for health troubles.

Payers and health plans need to commit to making medical services more accessible, seamless, and cost-effective for all member populations. Keep in mind, also, that CMS continues to tie member satisfaction and quality of care to reimbursement – for example, highly rated Medicare Advantage payers receive a 5% bonus on CMS payment benchmarks.

It’s time to focus on value-based care that drives better member outcomes and fights wasted spend.

What Do Payers Need for Value-Based Care?

Delivering value-based care rests on some key fundamentals:

  • First, care coordination that optimizes every interaction with members is critical. This requires unifying care teams around a single source for member information to strengthen collaboration and communication.
  • A focus on preventive care rather than reactive measures is a hallmark of value-based care. Preventive care reduces unnecessary readmissions, ED usage, and costly interventions.
  • Implementing evidence-based clinical pathways to guide decision-making around management of chronic disease is another building block. Clinical pathways streamline care delivery and proactively identify care gaps.

Another essential? That four-letter word: time. If health plans can find ways to give care management teams more time to spend one-on-one with members, the return is invaluable. Personal connections with members give care managers the “hook” they need to educate and engage them in their treatment – and more quickly guide them toward self-management.

How Tech-Enabled Care Coordination Drives Cost Savings and Improved Outcomes

Shifting to value-based care doesn’t happen overnight, but with care management technology that applies AI, automated workflows, and third-party data to routine care management tasks, organizations can more quickly transform their processes and workflows to support a value-based care model.

Here’s how:

  • Software that automates administrative tasks – or removes them altogether – lets care management teams focus on members, not screens.
  • With time back in their day and more transparent access to member information, care managers can focus on making personal connections with more members, improving efficiency.
  • A platform that unifies real-time member data (e.g., progress notes, assessments, referrals, transitions of care, prescriptions) gives all care team members an instant picture of the whole person. This enables more targeted care management and treatment decisions and can reduce reliance on multiple technology platforms.
  • Automated clinical pathways suggest actions and interventions based on population or need, and alert care managers to follow up within recommended timeframes.
  • AI-supported automation can proactively identify care gaps (e.g., a member missed her mammogram appointment) and alert care management teams to take action, preventing unnecessary readmissions or emergent care.
  • Platforms that integrate with community partners make it easier for care managers to connect members with resources that address social determinants of health (e.g., food banks, transportation, financial assistance). This supports whole-person care and strengthens clinical outcomes and higher overall quality of life.

Stretch the Impact of Your Tech Dollars: Select a Platform with High Lifetime Value

It’s important to take a cost-effective approach to selecting care management technology, too. Going with a cloud-based model is one way to ensure you’re getting a platform that can scale with your organization and maintain lifetime value.

In addition to benefits like enhanced data storage and speed of access to real-time data, cloud-based solutions typically involve more frequent updates that require less IT involvement or downtime.

Know before you commit: Whether you’re looking at on-premises solutions or a cloud-based model, make sure to consider ongoing upgrades and management fees that can contribute to the total cost of the technology.

Need additional guidance on selecting care management software to enable value-based care? Read Care Management Software for Medicare & Medicaid Payers: 11 Key Questions to Ask.

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