This year will be the start of major environmental changes for the healthcare industry following a shift in the balance of power in Washington, D.C. and the states. Avalere experts anticipate repeal of the Affordable Care Act (ACA) along with broader efforts to restructure entitlement programs, which introduces the potential for a range of new tax and other programmatic ideas.

At the same time, Avalere experts expect a continuation of many existing trends — including, most importantly, the shift from volume to value in healthcare markets. This shift will position providers in the center of healthcare change, leading to increased demands for data and a growing role for quality measurement in payment systems.

A focus on the consumer is also a major facet of the environment that deserves attention. Digital health technology will increasingly place the consumer at the center of decision making and change the way patients access healthcare. At the same time, lower-cost insurance benefit designs with higher out-of-pocket costs, more limited access to drugs, and narrower provider networks will continue to spread.

Avalere experts are looking at 10 specific trends in 2017:

  1. Election Results Will Directly Affect Insurance Coverage: In addition to the repeal of the ACA, Avalere experts predict the new Congress and Administration will look to make changes to the Medicare and Medicaid programs, including ways to cap spending, put more control in the hands of states, and increase the role of private plans in the programs.
  2. Costs of Employer Benefits Continue to Be Shifted to Workers: As employer-sponsored plans take on the benefit innovations adopted by the ACA marketplaces (e.g., narrow networks, higher out-of-pocket costs, limited formularies) to achieve lower premiums, the consumer is put at the center of the healthcare purchasing decision and exposed to more of the costs. Avalere experts predict this could shift employee behavior to choose lower-premium health plans, seek care from lower-cost providers, or forgo services.
  3. Drug Pricing Threat Diminished but Not Forgotten: Avalere experts predict market-driven approaches will be enacted in the context of entitlement reform, or via other means, as a way to curb high drug prices. These could include policies that emphasize outcomes-based contracts, reforms to the Food and Drug Administration (FDA), or ways to increase transparency in the system.
  4. Payers Respond to Biosimilar Market Competition: In 2017, according to Avalere experts, payers will need to determine whether they will substitute biosmilars for innovator products, as more biosimilars are approved by the FDA and become commercially available, or rely on competition to drive price discounts across all types of prescription drugs.
  5. Outcomes-Based Contracting Shapes Drug Purchasing: Experts from Avalere predict that, amidst concerns about drug prices, outcomes-based contracts between manufacturers, payers, and providers could be used as a market-based solution to address drug costs and improving patient outcomes in 2017.
  6. Value-Based Payment Becoming a Reality: The move toward value-based payment will continue in 2017 as more public and private payers adopt these models across more conditions and provider types, according to Avalere experts. Value-based care models enjoy bipartisan support. Furthermore, the Center for Medicare and Medicaid Innovation is testing value and delivery reform across 46 programs, and there are over 800 Accountable Care Organizations nationwide.
  7. Proliferation of Quality Measures: The existing measure development process is slow and costly, and as a result, measurement gaps remain for certain diseases, care settings, and patient-reported outcomes. Experts from Avalere predict the U.S. could experience a rapid proliferation of measures via the Medicare Quality Payment Program’s qualified clinical data registries.
  8. New Care Models Demand Optimal Use of Post-Acute Care: According to Avalere experts, new care models will focus on improving post-acute care for patients recently discharged from the hospital—a major driver of healthcare spending. In 2017, payers and providers may seek to optimize post-acute care patterns to improve outcomes, reduce readmissions, and lower overall costs.
  9. Value Frameworks Must Evolve to Encourage Adoption: According to Avalere experts, value frameworks could be used to inform decision making by patients and providers, and to assess coverage in health plans; however, they have had limited impact to date. Improvements in transparency and the inclusion of the patient’s voice in models could spur their adoption in 2017.
  10. Digital Health Is Transforming Patient Engagement: Innovations like web-based coaching, cloud-based self-management programs, real-time monitoring, and online urgent care clinics are transforming how care is delivered and how patients engage in the healthcare system. In 2017, these innovations will move from the testing phase and be scaled out in an effort to improve care while lowering costs, according to experts at Avalere.

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