Why Payers Should Consider Consumer Needs in Value-Based Care

October 03, 2016 - The Healthcare Financial Management Association (HFMA) released a new report called Health Care 2020: Consumerism showing that the health insurance industry has two new trends affecting it: a greater push toward patient cost sharing and outcomes-based payment between payers and providers. Both public and private payers have been moving towards value-based care reimbursement and engaging consumers with high-deductible health plans.

Now that the healthcare field has begun moving itself toward value-based care reimbursement and emphasizing population health management, payers will need to work toward engaging consumers and meeting their needs. This can be completed with further patient education, the implementation of user-friendly technologies, and by supporting better access to medical information.

The health insurance industry will need to pay greater attention to consumer needs and what drives them in order to position patient cost sharing more effectively in the coming years, according to an HFMA press release. Since the Affordable Care Act has required payers to take on more high-risk pools by requiring insurers to cover those with pre-existing conditions, eliminated significant cost differences between young and older consumers, and mandated insurers to take on the costs of preventive care, more health payers have been emphasizing high-deductible health plans in which patients take on more cost sharing.

The importance of price transparency

For health plans, high-deductible health plans offer a way to move from high-cost to low-cost service areas, but patient satisfaction may be implicated if the consumer is unaware of their cost obligation before a medical service is received.

Therefore, offering more clear pricing information will remain a major topic for health payers to focus on in the coming years. The HFMA report emphasizes how important it is for payers to listen to the consumer as well as provide the information their consumer base needs to make the best healthcare decisions for themselves.

“With many priorities competing for attention and resources, consumerism isn’t always on the short list of key priorities for healthcare organizations,” HFMA President and CEO Joseph J. Fifer, FHFMA, CPA, said in a public statement. “That must change. It’s not enough to try to serve consumers; we must truly listen to them and put ourselves in their shoes when we design our processes and our conversations.”

Price transparency will remain a major topic among health plans throughout the country over the coming years. Payers will need to improve price transparency within their provider network in order to ensure their consumer base chooses the most cost-effective medical services in their area. The report outlines that the lack of pricing information is a major challenge for patients along with insurance literacy deficiency.

Another reason why payers will need to bring more focus toward price transparency within their provider network is the potential for employers to choose to self-insure their base of employees instead of relying on private insurers. Adam Russo, Chief Executive Officer of Phia Group, is one such employer that chose to self-insure at his company.

“When we decided to go self-funded, there was a very simple reason. Every year, our healthcare broker would give us three options: keep what you have with a potential 15 or 20 percent increase, increase your copays and deductibles to your employees which would reduce the cost increase, and the third option is to offer worse benefits to your employees. That was it. There was never an explanation as to why any of this is happening,” Russo told HealthPayerIntelligence.com.

This means that health payers may need to also improve their own transparency with setting prices among the employers they contract with.

“In healthcare, there’s never an explanation. The premiums just went up and I’m looking around and our employees are healthy. So what I realize is that we have no control of the spend, and I think that’s what makes self-funding so unique,” Russo explained. “In every aspect of my business, I can try to control costs except healthcare. Every CFO of a company looks at healthcare like a fixed expense with increases every year. By going with self-funding, the one thing you do have is control.”

Patient engagement in value-based care

As health plans and providers move towards outcome-based healthcare delivery and adopt value-based care reimbursement contracts, patient engagement remains a key part of effectively managing the risks of the new models of payment. Payers could incentivize patients to receive preventive care and yearly physical exams by sending reminder cards and potentially providing more convenient ways to access medical facilities. This might mean connecting patients with community resources that could meet transportation needs.

Additionally, when operating through value-based care reimbursement contracts, health plans and providers will need to work toward reducing unnecessary medical care such as redundant testing. However, switching from fee-for-service to value-based care reimbursement could negatively impact the revenue of providers, which is why payers will need to work toward increasing overall enrollment in their health plans, according to the HFMA report.

The overall goals that health payers will need to focus on in the coming years are to improve patient engagement along with price transparency while truly meeting their consumers’ needs.

Dig Deeper:

Lack of Price Transparency Leading Employers to Self-Insure

How Payers Should Prepare for Value-Based Reimbursement