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As a result of the Patient Protection and Affordable Care Act (PPACA), the role of the individual will be more prominent than ever. Experts say the momentum is forcing health plans to adopt new business strategies.
“The central problem for health plans has always been who the customer is. Is it the business [client] or is it the individual subscriber?” says Jeff Goldsmith, the president of Health Futures, Inc., a consulting firm. “This huge increase in individual decision making in the market is going to resolve that definitively: It is the subscriber.”
Healthcare experts say for health plans to stay competitive, they will not only have to enhance operational efficiencies and improve care management but they will also have to revise their strategies to better meet the needs of the individual customer. Consumers will have more choice than ever, so differentiation must be part of a plan’s marketing.
“It’s a whole new game, and it’s a different skill set that health plans have to build on,” says Debra Donahue, vice president of market analytics and online products for Mark Farrah Associates.
Even in the changing marketplace, healthcare experts believe there are a few ways that health plans can begin to differentiate themselves.
Goldsmith believes one of the best ways to stay competitive in the changing marketplace is for health plans to redesign benefits to enhance the value. Provide members with better information about their care options and share in the savings through value-based design.
For instance, with a typical imaging procedure, members pay some out-of-pocket costs. But Goldsmith says if members had a choice to have the imaging done at a lower cost facility, it could mean significant savings for the insurer. In that case, beneficiaries should be able to reap some of the advantages as well, through reduced out-of-pocket costs.
“This whole issue of value-based payment that a lot of people are pursuing-the very first example of which was the tiered pharmacy networks-we’re going to see that spreading to a lot of other parts of the health system,” he says.
He says providing an economic benefit to the patient will in turn result in a high value choice for the insurer as well.
Health plans might need to think beyond coverage of traditional medical services. Steven Bohner, chief financial officer of AmeriHealth Caritas, a managed Medicaid organization, says effective care management models could not only help differentiate plans, but could reduce the cost of care for high-utilization patients.
“For us, we take a very holistic approach to our care management, and it really addresses the whole person and the unique needs of that individual,” Bohner says. “We’re using predictive modeling, and we’re actually identifying, proactively, members that have the highest risk for adverse health outcomes. And we’re focusing our energies around making sure that we get the most intense intervention possible to those high risk members.”
Bohner says the plan shares data about gaps in care with providers to alert them if a patient has missed a prescription fill or health screening and integrates behavioral healthcare with their patient services. Coordination with the pharmacy benefit management company the health plans owns is also central to providing robust care.
“We are able to integrate the care between the physical health side and the pharmacy benefits,” he says. “They really have a focus around medication adherence.”
Donahue says she’s seen plans adding additional benefits such as chiropractic, dental or behavioral health.
“That’s another slight product enhancement,” she says.
The key to effective care management, Goldsmith says, isn’t population health, but rather “subpopulation health.” He says health plans will need to find ways to divide their subscribers into meaningful subgroups to determine what services and needs best serve each subgroup.
As the individual takes a more prominent role in coverage decisions than ever before, healthcare experts say quality customer service will be essential for attracting and maintaining beneficiaries.
“Anyone that has contact with the subscriber has got to understand that the quality of that contact has a bearing on whether the subscriber renews,” Goldsmith says.
Healthcare coverage is shifting from solely business-to-business to include business-to-consumer models, and Goldsmith says plans have the difficult task of changing their culture. Whether they follow models of successful retail organizations, enlist the use of digital communication tools or find ways to communicate based on individuals’ preferences, Goldsmith says it’s a major shift.
“This is hard,” he says. “These are not insignificant cultural changes.”
Health plans can improve efficiency, expand their market or increase integration with behavioral health or pharmaceuticals through mergers and acquisitions-but healthcare experts say it’s important to find the right fit.
Bohner believes companies need to view any merger or acquisition opportunities as partnerships.
“You need to look at whether that potential acquisition entity-that company-will complement your product line,” he says.
Pharmacy and behavioral health companies offer integrative potential, but Bohner says health plans can go ever deeper when investigating merger and acquisition opportunities by considering claims processing companies or firms that simply have the experience that could help drive costs down.
“You need to look at more than just the obvious do you get access to a new market,” he says. “It’s also what else they bring to the table as far as their processes.”
Donahue says health plans should look at the competition, determine which one is making money, what markets they are in, and which one might be a good fit with the organization. Competitive analysis data is readily available, she says, for companies to investigate potential merger and acquisition targets.
“We really believe that states can save money by having pharmacy included and not carved out of the program. Integration is important.” -Steven Bohner
Innovation is important for all health plans, but Bohner says it’s crucial to differentiating oneself in the Medicaid managed care arena.
“The governors across the U.S. are trying to figure out the expansion of Medicaid and whether they are going to do it or not,” he says. “So they are trying to figure out the balance between access-ensuring access to healthcare for those that need it the most-with a Medicaid line item that takes 20% to 25% of the state’s budget.”
The answer, Bohner believes, is coming to the table with innovative solutions that give states the ability to improve access to quality healthcare for as many people as possible, while also being fiscally responsible.
For instance, in Pennsylvania, AmeriHealth Caritas approached the governor’s office with a plan that didn’t just ask for a rate increase, it included ways the state could save money. The plan also included an expansion of Medicaid managed care to areas of the state that weren’t already in managed care arrangements.
“It’s not just going and asking for money,” he says.
Health plans need to respond to local needs and find ways they can provide quality care while also curbing costs.
“It could be around making sure that pharmacy is integrated,” he says. “We really believe that states can save money by having pharmacy included and not carved out of the program. Integration is important.”
Quality, reputation and customer service can help health plans distinguish themselves from the competition in the eyes of the consumer-but experts say for many consumers, particularly individuals, price will still lead the way.
“There is definitely going to be a segment that focuses mostly on price,” Donahue says.
To reach those consumers, health plans need to do their research and competitively price their services. However, health plans need to be operating at peak financial efficiency to maintain profits, so a balance is needed.
Bohner, who says he understands working with very slim margins, says companies need to focus on the quality of their revenue to ensure they are getting the appropriate rates. They should assess the acuity risk of their members and ensure they are also earning all the performance incentives a state may offer.
And Medical Loss Ratios (MLRs) cannot be ignored. Medical expense is typically the largest expense line on any healthcare company’s books, so Bohner says it’s also crucial that health plans look at ways to reduce those costs whether it’s through care management programs or integration.
Finally, he says administrative functioning will need to be as efficient as possible. To achieve that, he says plans will need to make sure claims are getting paid on time and processed as efficiently as possible, IT systems are operating smoothly and call centers are meeting member needs.