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Blog & News

Session 7: A Look at PwC Health Research Institute’s 2020 Medical Cost Trend Report

Medical Cost Trend: Behind the numbers 2020


PwC Health Research Institute (HRI)

Condensed and presented by Advanced Plan for Health

The Advanced Plan for Health team regularly scans the health market for trends, analysis and insight. In our research, we found The PwC HRI Medical Cost Trend: Behind the Numbers 2020 report to be full of valuable healthcare market information and thought our readers would benefit from the report findings. We decided to condense and present the PwC HRI report in a bi-weekly blog series to highlight what we found to be most pertinent to our readers and to better understand factors that could potentially affect the 2020 medical cost trend. Below is Session #7: Employers and payers will nudge people toward lower-cost sites of care, per the PwC Health Research Institute (HRI) report.

Session #7 Employers and payers will nudge people toward lower-cost sites of care

For a long time, doctors directed where patients went for care and site options were limited. Now employers are having more of a hand in guiding patients, creating preferred channels for care delivery that align employee preferences with a growing continuum of care options to achieve the most value. In 2020, employers will strive to find the right mix of virtual and in-person benefit offerings and expand the scope of telehealth offerings. They also will begin to join the ranks of payers already encouraging their members to choose lower-cost options outside the hospital such as free-standing imaging centers and ambulatory surgery centers, and through telehealth. Some employers will use their worksite health clinics to encourage the use of high-quality, lower-cost care. Collectively, these moves are expected to deflate medical cost trend in 2020.

Some employers may persuade employees to choose the lowest-cost, most appropriate site of care through their care advocacy programs, which were offered by 74 percent of employers in 2019.81 For example, care advocates may help employees understand if a specialty care visit is needed or if a primary care visit would be appropriate for a specific health concern.82 Some may use benefit design to encourage employees to use the most appropriate site of care like Indianapolis-based Anthem does for its members by not paying for outpatient MRI studies and CT scans conducted in a hospital setting, and instead send its members to lower-cost, free-standing imaging centers for these services.83

Others may use lower copays or coinsurance to reach a similar outcome as Blue Cross Blue Shield of Massachusetts and Walmart. Starting Jan. 1, 2019, for most of its small group plans, Blue Cross Blue Shield of Massachusetts began covering imaging services at free-standing imaging centers, so employees pay less than if they were to get images in a hospital setting.84

After discovering high error rates in diagnostic imaging for its employees, Walmart—which covers 1.1 million employees and their dependents through its health plan—began encouraging employees to seek imaging services at centers the company has “identified as providing high-quality care.”85 Employees seeking these services elsewhere are subject to higher cost sharing. With national average hospital charges for imaging services running anywhere from 170 percent to 308 percent of what is charged by free-standing imaging providers, HRI expects to see employers and payers encourage the use of free-standing imaging centers in place of hospital imaging.86

Meanwhile, some large payers continue their strategies of purchasing various parts of the healthcare value chain, positioning themselves to have greater influence over where to direct patients for care. In recent years, Eden Prairie, Minnesota-based Optum, which runs UnitedHealth Group’s population health business, has announced purchases of multiple physician groups, surgery centers and urgent care centers.87 Through these purchases Optum has significantly increased its ability to direct patients to lower-cost sites of care

Employers and payers also are nudging employees to receive administered drugs in lower-cost ways, including in their homes. According to the Health Care Cost Institute, employer spending on administered drugs, such as those that must be infused or injected intravenously, increased 45 percent from 2013 to 2017.89 The cost of infusion and intravenous medications in the home setting is lower than in a medical office or hospital outpatient center.90 Pittsburgh-based Highmark Blue Cross Blue Shield sees site of care optimization for medications as one of the top medical cost trend deflators for 2020.93 Patients also tend to prefer home infusion therapy.95

Employers continue to emphasize telehealth and make it an attractive care option for employees. In 2016, 41 percent of employers offered the benefit; in 2019, 86 percent did.96 Sixty-one percent of employers set employee cost sharing lower for telemedicine visits than in-person visits in 2019.97 Many employers and payers have added telehealth as an option for urgent care. But according to the 49 percent of consumers HRI surveyed with employer coverage willing to use telehealth, the most popular perceived use was ongoing treatment of a physical condition or ailment (see Figure 13).

An estimated 1.4 million individuals with employer-based insurance suffered from musculoskeletal issues in 2015 to the tune of approximately $2.5 billion.99 In partnerships with employers, San Francisco-based Hinge Health delivers a 12-week virtual physical therapy program to employees with chronic back or joint pain, focusing on sensor-guided exercise therapy.100 The program provides patients with self-management tools that help them avoid prescription drugs or surgery and eliminates some of the barriers to in-person physical therapy, such as time constraints for appointments, costs of transportation and challenges to tracking outcomes and program adherence.

With all that is stated in this recap concerning lower-cost sites of care, each employer needs access to data that will allow them to determine the unique inflators and deflators that are driving their cost trend. In turn this will enable the development of strategies that provide a path to intervene at the point of risk and mitigate its impact, e.g. benefit design considerations, care management effectiveness, and others. To learn more about this research, feel free to contact us here.

PwC HRI Sources

(81) PwC 2019 Health and Well-being Touchstone Survey.

(82) PwC Health Research Institute, “Medical cost trend: Behind the numbers 2019.”

(83) Shelby Livingston, “Anthem’s new outpatient imaging policy likely to hit hospitals’ bottom line,” Modern Healthcare, Aug. 26, 2017,

(84) Blue Cross Blue Shield of Massachusetts, “2019 Product and benefit updates: Small employers,” 2018,

(85) Phil Galewitz, “Walmart charts new course by steering workers to high-quality imaging centers,” Kaiser Health News, May 15, 2019,

(86) Jamie Cleverley, “Identifying the gap between hospital and free-standing prices,” Healthcare Financial Management Association Journal of Strategic Financial Planning, Feb. 20, 2017,

(87) Bruce Japsen, “Buying binge for UnitedHealth’s Optum is only just beginning,” Forbes, April 18, 2018,

(89) Health Care Cost Institute, “2017 Health Care Cost and Utilization report.”

(90) Optum, “Home infusion therapy: Better outcomes, How site of care optimization is changing infusion therapy,” accessed May 2019,

(93) PwC Health Research Institute interview with Bill Cashion, senior vice president and chief actuary at Highmark Health, Bill Sarniak, chief actuary at Highmark Inc., and Dave Berry, vice president of actuarial services at Highmark Health, on April 17, 2019.

(95) JM Polinski, MK Kowal, et al., “Home infusion: Safe, clinically effective, patient preferred, and cost saving,” Healthcare, March 5 2017,

(96) PwC Health and Well-being Touchstone surveys, 2016 and 2019.

(97) PwC 2019 Health and Well-being Touchstone Survey.

(99) PwC Health Research Institute analysis of Medical Expenditure Panel Survey data for individuals with employerbased insurance with other bone disease and musculoskeletal deformities, 2015.

(100) Hinge Health, accessed April 23, 2019,


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