While a lot will depend on whether and to what extent a second outbreak occurs, as well as government intervention to help individuals and businesses, a few key trends have emerged that will have major short-term impacts on health care spending and utilization. And the actions brokers and their clients take in response to these trends will determine whether the long-term impacts are positive or negative.

Health care providers are getting walloped

According to one estimate from Chicago-based accounting firm Crowe, health care systems are losing an average of $1.4 billion in revenue each day during the pandemic. The cancellation or delay of elective procedures led to a 56% reduction in hospital traffic between March 1 and April 15. Since then, revenue reports from the nation's leading hospital systems have continued to paint an increasingly dark picture.

Even as hospitals prepare for surges in COVID-19-related volume, those costs won't be enough to offset the revenue lost to decreased traffic. Hotspots such as California, Florida and Texas have seen net decreases in traffic of 50%, 47% and 46%, respectively, according to the Crowe report. Moreover, elective procedures tend to have a higher margin of profitability than emergency services.

The Crowe report estimates that in order to recover, hospitals will have to run at 110% of previous capacity. The government has already provided a significant infusion of cash to keep hospitals afloat, but there will still be shortfalls to be made up, possibly resulting in increased prices and negotiated rates in future years. Further adding to the stress will be the increase in both uninsured individuals and Medicaid enrollees, populations for whom care reimbursements are much lower.

Of course, not all hospitals are in the same boat. "Positioned to better weather this storm would be some of the larger health systems with significant reserves and those that integrate the insurance and provider side of the equation," says Rob Brinkerhoff, health care practice managing director with Gallagher's benefits and HR consulting division.

While rural hospitals and "safety net" health systems that primarily serve Medicaid populations will continue to struggle, larger systems actually have the potential to expand. "Some of the larger health care systems that have become dominant have $8 billion, $10 billion, $14 billion sitting around," David Blumenthal of The Commonwealth Fund said in a recent webinar hosted by Catalyst for Payment Reform. "It will be a buyer's market, if health systems choose to acquire struggling practices and struggling facilities."

Key among those struggling groups? Independent primary care providers. "Hospitals are getting a lot of attention—and they should—but a silent crisis is going on where you have heroic efforts on the part of primary care clinicians to try to meet patients where they are and keep them safe," said Ann Greiner of the Primary Care Collaborative, another panelist in National Alliance's webinar. "We can't afford to lose this primary care infrastructure, or see small practices being acquired by large systems, because then prices are going to go up."

The extent to which this happens depends on the actions employers and insurers take in the coming months. Some insurers have already committed to "pre-paying" claims to smaller practices, helping to keep the doors open when traffic is down. "Private payers have to use some of the largesse they have to advance payments to primary care and make sure they remain viable, particularly the independents," Greiner said. In addition, now would be the time for payors to push away from fee-for-service models to value-based care or direct primary care.

Telehealth has finally entered the mainstream

For patients and providers alike, telehealth has proven to be a lifesaver, says Gallagher's Brinkerhoff. "Those in the telehealth and virtual care space are very well positioned to grow dramatically when we move into the post COVID-19 world."

Leading telehealth provider Teladoc saw its first-quarter revenues jump 41% over the previous year and is expecting strong performance in the second quarter, as well. "Patients are going to come to like virtual visits and telemedicine," said CPR webinar panelist Jay Crosson of MedPAC. "In the current situation, we have moved to 60% to 90% televisits, depending on specialty. I think that genie won't be put back in the bottle."

The momentum is there, but there's still the issue of how telemedicine visits are paid for. Currently, many private insurers reimburse telehealth visits at a lower rate than office visits, which, while good for the payor, doesn't help struggling care providers.

"In terms of payment in the fee-for-service environment, there aren't a lot of options," Crosson said, noting some options to consider when re-evaluating how telemedicine is addressed in the benefits plan. "You can limit the number of visits per year or month, put in place electronic auditing to make sure visits were real and lasted as long as was billed, but all of that is cumbersome. The hope is that this triggers some capitation model, both in commercial and Medicare."

Deferred care isn't necessarily a good thing

The drop in elective and routine care is resulting in immediate savings for payors, but how long will the trend last? It depends, in part, on how the pandemic plays out. The longer people stay inside, the longer they not only avoid unnecessary care, but also shield themselves from communicable diseases such as the flu, or injuries from outdoor activities, further adding to a reduction in claims.

"We've seen decreases, starting in earnest in April, with 20% to 80% of elective procedures being deferred," said PwC's St George. "Some of that will come back, but as we've learned from Hurricane Sandy, much of that care will never return. That could be as much as 20% or more—we really don't have a precedent."

Some of those claims will be for low-value services that were never really warranted in the first place, but potentially life-saving screenings and appointments are also being shrugged off. "The bigger concern here is that patients who have delayed care without consequence so far will wait too long for care and present with a more acute condition and/or co-morbidities," Brinkerhoff says. "The vast majority of health care systems continue to provide medically necessary care for patients with chronic and/or life-threatening conditions, but what continues to be worrisome is that there is an emerging patient population that has yet to be diagnosed based on social distancing restrictions and the fear of contracting the virus in practice settings."

Indeed, a study in New England Journal of Medicine points to a 40 percent reduction in people seeking medical treatment for stroke symptoms. Oncologists have noted a similar trend among cancer diagnoses and are predicting an uptick in late-stage cancer diagnoses after the pandemic subsides.

This is an opportunity for advisors, employers, carriers and other health care partners to come together and prepare for those complications down the road. The savings they're currently enjoying in their health care costs may be better spent on programs to address and manage chronic conditions, or even investing in a switch to a value-based care strategy.

"This is a great opportunity to have those alternative health conversations," said CPR webinar panelist Ellen Kelsay of Business Group on Health. "Many health provider partners have seen the reduction in claims payments. How are they proactively managing the chronic conditions? How are they setting themselves up for the next wave of utilization that needs to be addressed?"

Social distancing and isolation will take a toll

As if high rates of unemployment and a recession weren't causing Americans enough stress, social distancing and remote work are also predicted to lead to an uptick in mental health issues. "Behavioral health and wellness is another area that should absolutely be enriched from a design and coverage standpoint," Brinkerhoff says. "I'm confident the need for behavioral and emotional support will increase exponentially across all sectors and industries as we move forward."

Prescriptions for anti-anxiety and antidepressant drugs increased during the first months of the COVID pandemic. As people try to adjust to new routines—either in the workplace or at home—the need for mental support is going to increase. "Mental health access was awful before COVID, and we need to use this opportunity to re-engage mental health professionals, bring them back into the system and keep them," said National Alliance president and CEO Michael Thompson.

For employer plans, this will include not only re-thinking integration of physical and behavioral benefits, but also retooling EAPs and even wellness programs. As Thompson pointed out, unaddressed mental health issues can have a major financial impact, including as much as a 30% increase in costs for comorbid conditions. "The direct medical costs are just the small tip of the iceberg," he said. "Mental health costs will go up, medication costs will go up, but the bigger rise is the higher cost of comorbidities, and then the productivity issues."

Now is the time to push for change

All signs point to a health care spending reprieve for employers this year; possibly as much as 4%, according to actuaries at Willis Towers Watson. Even self-insured employers, who have chosen to take on a greater financial risk and responsibility, will come out ahead, according to Gallaher's projections. "It is becoming increasingly clear that substantial numbers of routine doctor visits and elective procedures are being cancelled or deferred," Brinkerhoff says. "This is resulting in an unanticipated, favorable cash flow. While much is still unknown, what is clear in most scenarios is that the anticipated savings due to reduced utilization of the health care system will outweigh any increased cost burden of direct COVID-19 related claims."

One undeniably positive outcome of the disruption in health care is that it's fanning the flames of a long-smoldering reform movement. "Many of the trends among our employer members have been underscored, not changed," Business Group's Kelsay said. Faced with threats of higher prices from health care providers, larger employers like those in her organization are in a better position to fight back. "Our members have the bandwidth, anticipating where the puck may go when it comes to further price pressures. They're going to be increasingly active and aggressive."

Benefits brokers and employers also have a rare opportunity to finally get employees to take ownership of their health care decisions, CPR founder Robert Galvin told webinar attendees, hitting on a pain point employers have struggled with for years. "Most employees hardly ever think about their health care. Now, that's all they think about. Use the momentum to engage employees where they are today and then drive that forward when this goes away."

The same sentiment was echoed by other industry experts. The COVID-19 pandemic has laid bare the most serious flaws in America's health care system. Now, it's up to those who use and pay for health care to decide if they want to patch the cracks or start rebuilding something new.

"What I see now is confusion, disorientation, uncertainty and anxiety," Blumenthal said. "We have an opportunity to do major surgery on the way payment occurs and we have open-mindedness on the part of physicians. Can we get out of the starting block now and get something going that is really different?"

Related: 

• Nearly half of Americans have delayed medical care due to COVID-19
• Telemedicine is here to stay–and not just for the doctors
• UnitedHealth, other insurers offer discounts to customers hit by COVID-19