COVID-19’s Potential Cost Impact
Many providers across the country are struggling financially as they treat victims of the COVID-19 outbreak and manage through the shutdown of elective procedures. They are managing through the surge and planning for recovery, along with any possible future waves of the pandemic.
Now is the time to determine your strategy to reclaim lost volumes and increase your organization’s market share post COVID-19..
To understand the potential impact of this pandemic through 2021, America’s Health Insurance Plans (AHIP) recently released a study that estimates a range of costs for the healthcare system. Given the wide range of scenarios presented in the AHIP report, it’s clear that the ability to forecast revenue under rapidly changing conditions is a critical competency for hospitals, health systems and medical practices.
The report estimated the COVID-19 testing and treatment costs incurred by private health insurers in the U.S. for 2020 and 2021. The estimates are for private health insurers running commercial health plans, Medicare Advantage plans and Medicaid managed-care plans.
The report estimated total testing and treatment costs for 2020-2021 for private health insurers at $56.2 billion (assuming a low population infection rate of 10 percent) to $556.1 billion (assuming a high population infection rate of 60 percent). The total cost would be $112.5 billion to $185.4 billion with a baseline population infection rate of 20 percent.
Using the 20 percent rate as a baseline, the report estimated that the virus would infect more than 51 million members in commercial, Medicare Advantage and Medicaid managed-care plans out of a total of nearly 255.4 million members. Of those infected, an estimated 5.5 million would be hospitalized with 1.3 million of that 5.5 million needed intensive care.
The average reimbursement per non-ICU visit to the hospital would be approximately $11,050, ranging from $6,800 for a Medicaid managed-care plan enrollee to $12,450 for a commercially insured patient. The average cost per ICU visit would be approximately $30,950, ranging from $16,250 for a Medicaid recipient to $38,450 for a patient with coverage through a commercial health plan.
On the outpatient side, the report estimated that nearly 21.4 million infected members would need hospital outpatient care. The average cost per outpatient visit would be approximately $850, and the average cost per outpatient visit for profession services would be approximately $130.
Patients themselves also could see their total out-of-pocket costs range from $20 billion to $26 billion, assuming a 20 percent infection rate.
“Costs should not be a barrier to anyone seeking treatment,” said Matt Eyles, AHIP president and CEO. “This is why many health insurance providers have stepped forward to proactively waive out-of-pocket costs for testing and treatment.”1
Eyles added that waiving patients’ out-of-pocket costs for testing and treatment “eliminates the need (for hospitals) to bill and collect from patients so they can focus on caring for their patients.”
How will the COVID-19 public health emergency affect your revenue cycle performance under different and changing pandemic scenarios and payer reimbursement policies? Healthcare will experience changes in consumer utilization during COVID-19 recovery. Now is the time to determine your strategy to reclaim lost volumes and increase your organization’s market share post COVID-19.