Last year, healthcare insurers laid the groundwork for collaborations that will continue through 2020 as they transition from a focus on geographic expansion, benefit design changes, and organizational up-sizing to vertical alignment and enhanced benefits. Meanwhile, patient outcomes, value-based care, and patient experience will continue to receive a large share of attention, while rising healthcare costs will be a focus for lawmakers. Providers will also be expected to be as transparent as payers and PBMs have been expected to be in the past.

Healthcare is in constant flux due to shifting dynamics between key stakeholders, and matters will become even more complicated with a contentious presidential election ahead. Below is a summary of the top 10 U.S. managed market trends to watch in 2020.

1. Integrated or consolidated markets: Vertical integration and mega-mergers have already reshaped the healthcare landscape over the past two years. More of these deals could be coming to create a counterweight to the massive entities that have recently appeared, such as CVS-Aetna. The Centene/WellCare deal is on track to close in 2020 and transform the Medicaid market. While smaller-scale and more rapid consolidation is expected in the provider space, payers will most likely explore larger deals offering vertical integration that could help improve patient outcomes and experience. Recent announcements of Humana’s intention to acquire Enclara, a hospice pharmacy and benefit management provider, and UnitedHealth’s plan to acquire Diplomat Specialty Pharmacy reinforces the observation that managed markets are likely to see more vertical integration this year.

2. Growth in Medicare Advantage: As the senior population grows nationwide, Medicare Advantage enrollment is expected to increase. The MA market continues to be a lucrative one, with top Medicare payer—including UnitedHealth and Humana—expanding their footprints and improving their benefit packages. Around 47 percent of Medicare Advantage plans in 2020 will be zero-dollar premium plans, while about 90 percent of plans will offer prescription drug benefits, meaning seniors will have more affordable plan options in addition to an increased selection of benefits. UnitedHealth and Humana will lead the pack by offering plans in more than half of all U.S. counties. Expect new market entrants such as Oscar and Troy to increase coverage. 

3. Focus on value-based and personalized care: Payers will increasingly adopt innovative reimbursement strategies, such as subscription-based models, as gene therapy or specialty drugs with large a dollar value get introduced into the market. Provider participation in value-based or risk-based payment arrangements will continue to rise, leading to more accountable care organizations, patient-centered medical homes, or retail clinics. CVS Health already plans to have 1,500 HealthHUB locations operating by the end of 2021, which will help to transform the consumer health experience for tens of thousands of additional patients. CVS/Aetna have also launched a program called Transform Oncology Care that focuses on a precision medicine strategy for payors. Expect an enhanced use of real-world evidence for regulatory decision making and improving patient outcomes, as well.

4. Disruption from retail or tech giants: The retail, technology, and healthcare sectors are increasingly intersecting, with bigger players including Amazon, Walmart, Google, Apple, Microsoft, etc., venturing into healthcare. Amazon is already going deeper into the healthcare market with its acquisition of PillPack, the launch of Haven (in collaboration with Berkshire Hathaway and JPMorgan Chase), and the creation of Amazon Care. Walmart has also signed value-based deals directly with providers to reduce costs and has opened a new health clinic in Georgia. Apple and Google continue to pursue big investments to enhance drug delivery platforms through digitization. Watch for other companies to follow suit.

5. Investment in digital health: The digital health market is projected to grow to $7.83 billion by 2025 as digital health companies develop augmented reality and artificial intelligence applications. Multiple stakeholders are embracing change by acknowledging digital health players and investing in machine learning and artificial intelligence. Express Scripts has created a curated list of digital health products for chronic diseases-also called a digital formulary. As the pipeline for digital therapeutics strengthen, more healthcare players can be expected to show a greater inclusion of these solutions.

6. Rise in telemedicine use: The use of telemedicine as a convenient care option has been increasing amid a persistent shortage in primary-care providers in some markets and increasing costs of chronic disease management. Medicare policy changes supporting telehealth access and 43 state parity laws encouraging insurers to cover telehealth services, remote care, and virtual visits should make telemedicine a more prominent force in mainstream medicine.

7. Social determinants of health: SDoH is becoming a popular focus area for payers looking for cost management through holistic health. Last year was the year of the concept’s resurgence, and 2019 saw many prominent national and regional insurers lay the foundation for what is to come. Anthem’s Take Action for Health, Humana’s Bold Goal initiative, and Kaiser Permanente’s “Total Health” framework are some of the payer initiatives focusing on SDoH. 

8. Specialty drug spending: Specialty drugs are expected to continue to drive up drug spending in the coming years despite the market entry of biosimilars. Additionally, 30 drug-makers are raising list prices for about 457 brand drugs in 2020. Climbing drug prices and newer therapies like CAR-T and other gene therapies will require innovative strategies between payers and manufacturers to gain favorable market access, such as Cigna and Express Script’s Embarc Benefit Protection platform for Luxturna and Zolgensma. Newer strategies like these should become more prevalent as payers look to manage the cost of cell and gene therapies.

9. Healthcare policy: The 2020 elections will be the hottest topic of the year, and healthcare will again be a top issue for voters. While extravagant single-payer plans like Medicare for All are being discussed, other options such as expansion of the Affordable Care Act by adding a public option are being considered as more cost-efficient solutions. Drug importation bills are expected to gain traction as states look for alternate ways of drug price reduction. All that being said, don’t expect major policy changes at the federal level in 2020, however.

10. ACA uncertainty: A federal appeals court (the U.S. Court of Appeals for the 5th Circuit) created a cloak of uncertainty over the future of the Affordable Care Act in December 2019 when it ruled that the ACA’s individual mandate was unconstitutional. However, the marketplace is treading back to normalcy as it enters the second straight year with only marginal premium fluctuation. It appears the introduction of short-term plans and the removal of the individual mandate have not impacted the risk pool, as average 2020 benchmark plan premiums are 3 percent lower than 2019 plan premiums.

Top 10 PBM Industry Macrotrends in 2019 & What to Expect in 2020

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