Value-based Care, Member Incentives May be Payers’ ‘Holy Grail’

December 18, 2015 - The healthcare payer industry is expected to change drastically over the coming years as more insurance companies adopt new business models and focus on value-based care. Moving away from fee-for-service, federal agencies and many payers are stressing the importance of value-based care approaches.

According to the State of the Payer Industry survey released by HealthEdge, more than 80 percent of payers surveyed were interested in pursuing value-based payment models throughout the following three years. The majority are also looking to join state health insurance exchanges and more than three-quarters of those polled plan to support expanded Medicare and Medicaid program offerings.

Technology and new business models are making a large impact on the healthcare payer industry starting in 2016 and beyond. To learn more about where the health payer market is moving and how it will be evolving over the coming years, HealthPayerIntelligence.com interviewed Ray Desrochers, Chief Marketing Officer of HealthEdge.

HealthPayerIntelligence.com: What are some of the most interesting and surprising findings discovered in the State of the Payer Industry survey?

Ray Desrochers: “A couple of things were interesting to us. At number one, as we’ve watched the survey data change and morph over the last few years, one thing has become really clear to us. This is that the majority of payer executives surveyed have moved from a place where they did not necessarily believe that they needed to adopt new business models and change their fundamental way of thinking to a place where now the majority of the population believes that some number of these new healthcare business models will indeed be critical to their lives.”

“That’s a big change in thinking. It’s a big change in their fundamental approach. What comes with that is the next question – ‘What does that mean and how are we going to get there?’ One of the things that we’ve been doing is we’ve been following up with a number of individuals and a number of the C-level executives and asking ‘Are you ready?’”

“Interestingly enough, the majority of the folks that we’ve been talking to have said, “No, we know we need to do this and that this is critical to our lives, but at this point, we really don’t know how we’re going to get there.’ In some cases, it is from a people or process standpoint. In most cases, it’s from a technology standpoint.”

“We’ve got this fundamental disconnect in the organization where the vast majority of the executives are telling us that we have to do this. Some number of these models are going to be critical to our lives. At the same time, they’re saying, ‘but we’re not quite sure how we’re going to get there.’”

“The other thing that was very evident is that the concept of reducing and managing administrative cost has become super critical as well. One of the interesting things we learned is that many executives have told us that this problem is going to get worse before it gets better.”

“We asked ‘Why is that?’ and they said, ‘Unfortunately, what we’re doing to support many of these new business models today is using a combination of manual processing and various workarounds along with other satellite systems to accomplish the goals. What’s happening as a result of that, is for those lines of business, there is a reduction in administrative efficiency, introducing more human error than ever before due to manual processing, and creating a spiral where we originally thought we’d go manual for one specific function and we’ve now gotten to the point where we’ve done it seven or eight times with no end in sight.’”

“We believe that there are some significant technology challenges coming for the industry as a result of this. The big question that we asked this time is ‘how many of you will use technology in order to help transform your organizations and help bring you into the next generation healthcare marketplace?’ Interestingly enough, the vast majority have said that they are going to use technology to help drive transformation within their organizations.”

“What this means is that they’re going to take a business problem or a new line of business and they are going to drive new technology into the business to help solve that problem and ultimately build a foundation that they will use in other lines of business over time.”

HealthPayerIntelligence.com: What are some of the biggest challenges facing payers and the health insurance industry today?

Ray Desrochers: “The whole concept of out-of-control administrative costs has become a huge challenge. There’s a ton of anxiety around this in the market and many of them think we haven’t seen anything yet and that it’s going to get worse.”

“If you peel back the onion one layer on that and wonder why that is, the answer is pretty straightforward. Most of the organizations in the market, whether you like it or not, are still today using 35- or 40-year-old technology. That’s how they’re paying claims. That’s how they’re dealing with enrollment. That’s how they’re dealing with member services.”

“As a result of that, they don’t have anything that was built to address the needs of this new healthcare marketplace. They really have a culture that’s built on the one-size-fits-all, fee-for-service models and so they have to fundamentally transform the business including claim processing and everything else they do on a day-to-day basis.”

“The other thing that’s a challenge for them is that more than ever before, we’re hearing about the concept of transparency. We used to think of transparency as something that is purely inward-facing to the business. How do you make sure that you’ve got the right information in the hands of the business leaders so that they can make good, real-time decisions? That’s still very important, but now what’s happened is there’s an equal focus on external-facing transparency and particularly transparency that’s tied to these new healthcare business models.”

“For example, for those that are actually dealing with value-based care models, one of the things that they’re quickly finding is that their ability to be successful with those models is gated by their ability to provide real-time actionable information to the member population or, in the case of value-based payments, to the provider population.”

“As soon as you can’t do that, the models fall apart because people throw their hands up and say this is just too hard. That’s a very important thing that we’re going to need to address very, very quickly.”

HealthPayerIntelligence.com: What is keeping some health insurers from participating in state exchanges or pursuing new payment models like value-based care?

Ray Desrochers: “What’s happened here is we have built over many years a decent infrastructure that is really focused on servicing this one-size-fits-all version of healthcare particularly these fee-for-service models.”

“As we start to move into things that are much more individualized, personalized, and customized – that’s both on the benefits and payments side leveraging value-based care benefits and payments as well as the new ACO models and individual market models – we are suddenly in a world where the one-size-fits-all approach doesn’t work anymore.”

“People are seeing that there’s a fundamental disconnect in terms of the technology that’s in the organizations today, which was great in the old days but was never built or designed to handle any of the things we’ve just talked about.”

“They’re also seeing a fundamental disconnect with their people and processes. What many of these organizations are doing is they’re undertaking a fundamental transformation of the business. Most of the executives now believe that this transformation of their businesses is the only way they’re going to compete in this new healthcare economy.”

“That’s an important reality here where many of them have said that they know this is critical and that they need to do this to take their rightful place in this market. Now they’re starting to transform their businesses but not all at once.”

“In many cases, it’s one line of business at a time. They pick their trouble spot or line of business that might be causing the most pain or bring the most opportunity in terms of taking on additional capabilities or membership. They go after that and modernize that part of the company and then use it as the example for everything else they do going forward.”

“Another challenge related to all of these things that is becoming a significant focus for many payers is the obstacles around customer service. Why is that? The reasoning is that it was hard enough to take a phone call and answer questions about payments regarding a complex set of procedures or hospitalization when the patients were one-size-fits-all. Now it’s much harder when a patient can get a completely different answer when compared to the person sitting next to them, based upon how they manage value-based care benefits, disease states, and at-risk conditions.”

“We are trying to incentivize those members of the population that are most at-risk to have good behaviors to make themselves healthier and happier. We’ve got a customer service issue now among the payers that’s quickly getting out of control, as customer service has been declining very rapidly over the last several years as people are finding it harder and harder to answer any question of any complexity.”

HealthPayerIntelligence.com: Based on your survey, what steps are health payers taking to engage consumers and improve care coordination?

Ray Desrochers: “With the focus being on the at-risk population and those with chronic conditions, what folks are trying to do now is combine what had been traditional care and disease management, which we know is effective.”

“If you’re a diabetic, for example, and we have a nurse that’s doing outreach with you and making sure that you’re taking care of yourself, we know that’s effective. People have been doing that for quite a while now.”

“If we can combine that concept with the incentives that are part of the value-based care models – incentivizing the right member behavior, particularly for this at-risk population – and combining that with the incentives for the providers to help make sure patients are doing the right things – seeing the doctor on a regular basis, taking health-risk assessments, and taking their medicines – then, all of a sudden, we have the holy grail.”

“All of a sudden, we have that thing that people have been talking about for so long, which is a complete alignment for the at-risk population with good care and disease management and incentives for everyone involved in the healthcare delivery cycle. That’s what we’re after.”

“We’re seeing that people, more than ever before, are putting programs in place with that in mind. What they’re doing is saying, ‘We do believe that care and disease management are important things but how do we combine them with some of these interesting new approaches and new models and create cases where one plus one are more than two?’”

“That’s what a lot of innovative organizations are starting to do. They’re taking advantage of multiple models simultaneously and are creating an exponential value by doing so. The successes of those folks are going to help drive what the next generation of the industry does.”

HealthPayerIntelligence.com: What are the biggest successes of the health payer industry in 2015?

Ray Desrochers: “I think a couple of things have happened that have been important. We talked a lot about embracing the individual models and embracing an exchange-type marketplace, including both the public and private exchanges.”

“Overall, the payer market has been successful. I know that there are some examples such as the fact that UnitedHealth might be pulling out of the exchanges, and I realize that some other folks may be having trouble, but we went from a place where everyone thought this was going to fail miserably and we wouldn’t have the infrastructure necessary to deal with it to a point where overall a number of people are successfully coming in, successfully getting their care and coverage, and successfully moving through the cycle.”

“A lot had to go right for that to become true. People are really starting to look at ways to embrace these new models and many are doing some innovative things to really drive down the cost of care and really create a healthier and happier population.”

“The number of folks that are embracing those types of approaches is up significantly. We’re really going to start to see that become mainstream over the next 12 to 18 to 24 months, and that’s valuable to all of us. The cost of healthcare in the United States and the growth in the cost of healthcare is unsustainable so embracing these solutions [is vital].”

“I think it’s going to be a combination of things that we know about already in terms of approaches that are being tried today and some combination of new approaches that people are just starting to debate and discuss that are going to be important tomorrow. We’re going to really find the combination that drives the right things in terms of cost and quality of care.”