Regional payers are increasingly under fire from all corners: They don’t have the capital or people to compete with the larger payers, who can offer more comprehensive plans at lower costs.
And now with retailers like Walmart and Amazon getting into the marketplace with new health insurance concepts aimed at younger, healthier (and less-costly) Americans who are the foundation of any health plan, the risks of becoming commodities—or even going extinct—go even higher.
What many regional payers are discovering, however, is that the secret sauce for fending off these pressures and creating a unique niche is analytics that give them insights into the total cost of care for their overall populations as well as key specific populations. By gaining a much deeper understanding of who their sickest patients are and what levers they can pull to improve the health of their sickest members, they are learning where to apply their limited resources to drive better health outcomes.
The result is a level of efficiency that helps them lower their costs and improve quality as well as provider and patient satisfaction. In other words, achieve the Quadruple Aim.
By using data effectively, they can build a more targeted and personal relationship with each member, giving each of them as much (or as little) support as they need. This enables regional health plans to distinguish themselves from the impersonal experience of large payers (and retailers) while creating more member loyalty as well.
Targeting resources appropriately
Unlike large payers and retailers, regional health plans can’t just throw money at problems. Instead, they must use analytics wisely to determine where their resources will have the greatest effect.
It is well understood in healthcare that the sickest 5% of a health plan’s population accounts for 50% of the cost. They hold the greatest risk, so clearly the first step is to identify who those members are so they can be targeted for the appropriate interventions.
But it is also important to identify those with rising risk of becoming part of that 5% in the future. By keeping them healthier now, regional health plans can reduce their exposure immediately as well as significantly lower their future costs.
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For example, under fee-for-service, an orthopedic surgeon will tend to automatically choose the surgical option to solve most issues. In a value-based reimbursement contract where members are capitated, however, a change in prior authorization requirements may in many cases encourage those surgeons to pursue non-surgical (and less costly) interventions such as physical therapy first, especially if there is no financial penalty for doing so.