How an AI App Navigates Narrow Networks, Cuts Healthcare Spending

November 12, 2020 - In the San Francisco Bay Area, employers face the challenge of escalating healthcare spending.

This problem is not restricted to the Bay Area alone. Average premiums nationwide were around $7,470 for individuals and over $21,000 for families in 2020, a recent Kaiser Family Foundation survey revealed. This was a four percent increase for both groups compared to 2019 premiums, continuing an upward trend.

In California specifically, however, the average family’s premiums had risen 49 percent between 2008 and 2018 while wages declined, according to experts at the UC Berkeley Labor Center.

Additionally, in 2018, nearly 3,600 private companies in California were self-funded, adding another layer of complexity as more employers took on the responsibility of managing and covering healthcare spending.

In order to assist their employer partners with rising healthcare costs, Beth Andersen, president of Anthem Blue Cross, and her team designed an exclusive provider organization called Blue Connection that leveraged an artificial intelligence app.

Exclusive provider organizations

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Exclusive provider organizations (EPOs) are health plans that only cover in-network providers, except in the case of an emergency. These plans also do not use primary care providers as “gatekeepers” like health maintenance organizations (HMOs) do, meaning that members do not require provider referrals to see a specialist.

EPOs tend to be less expensive than preferred provider organizations (PPOs) because they have narrow networks. Although consumers prefer large networks, large networks are not as effective at reducing costs.

Due to the small network size, members in health maintenance organizations (HMOs) and EPOs tend to see higher out-of-pocket costs, Kaiser Family Foundation researchers have discovered.

But Andersen saw several advantages to offering Blue Connection health plan, which is expected to save employers 10 to 25 percent savings compared to the payer’s typical PPO, depending on residence and provider selection.

“We wanted to build that EPO because we have a lot of self-funded prospects and employers, and it's easier to have a self-funded administered plan based off an EPO platform than an HMO, certainly,” Andersen told HealthPayerIntelligence.

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The decision also grew out of a gap in the market, she acknowledged.

“We did a listening tour with our current employer groups as well as prospective employer groups and we found that, while there are HMO options certainly in the Bay Area, what we didn't have was a high-value, narrow-network option that was built off an EPO platform,” Andersen said.

Although the new health plan fit into the traditional EPO category by lacking a “gatekeeper,” the primary care provider was central to the health plan’s design.

Blue Connection members are required to select a primary care provider—not as a gatekeeper, but rather as an advocate for the member, according to Andersen.

Artificial intelligence app

The health plan sought to build a culture of advocacy around the primary care provider-member relationship through their artificial intelligence app.

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The app is designed to enable easy appointment scheduling with primary care providers. Beneath providers’ names is a “Schedule Now” button intended to streamline the scheduling process and reduce barriers to making an appointment.

Blue Connection also uses the app data to calculate upside incentives.

Anthem set up Blue Connection to maintain lower healthcare spending by building it on value-based contracts. It took Anthem two years to develop this plan in part because the payer had to find providers who were willing to participate in an upside incentive model.

Providers may receive upside payments for enabling patients to schedule appointments through the artificial intelligence app.

The payer can also base payments on referrals to high value providers and the results of membership satisfaction surveys. Surveys have become key to gauging member experience, particularly for Medicare Advantage plans as adjustments to Medicare Advantage Star Ratings place a heavier emphasis on member experience.

Lastly, the artificial intelligence app helps manage healthcare spending by giving members greater insight into potential providers’ interests beyond the traditional, clinical information.

“We will have pictures of the primary care physicians that participate in this network; we will have profiles that talk about their practice philosophy,” Andersen described.

“By going through the process of reading those profiles, you will engage more readily with your primary care physician. You won't bypass him or her to go directly to specialists. You will form a relationship.”

The payer kept the primary care provider central because, while ease of access to specialists is a major advantage of an EPO, the primary care provider is best positioned to assist the member in keeping healthcare spending low.

"We really are focused on the primary care physician member relationship and using that primary care physician as an advocate for the member to help influence them to their most efficient affordable and correct place of care,” Andersen said.

Primary care providers have significant influence over reducing low value care costs.

“It's more than just a narrow network construct,” Andersen summarized. “We could have put that together a year ago, but it's really this technology and experience that brings the member and their primary care physicians together. It's not only the primary care physician, but the care team that supports the primary care physician. It makes it a different experience than just going to a narrow network where you don't have an out-of-network option.”