Editor’s Note: Chris Althoff and Larry Briski are partners at Invoyent, a healthcare IT company focused on software implementations for hospital systems and the insurance industry.
ACA exchanges. Is sustainable business to be found in the new marketplace? With industry powerhouses like UnitedHealth and several Blues reporting major challenges, the long-term viability of the healthcare exchanges is in question.
The U.S. government needs to take steps to improve market viability, like closing special enrollment loopholes that plague payers unnecessarily, but the government is not completely to blame. Some payer wounds are self-inflicted. And with product filing timelines as they are, we still have a long way to go. Payers can take several steps now to streamline their business and drive cost out of a business model that is long overdue for change.
Industry leaders are already focusing on three strategies key to long-term sustainability:
1. Narrow networks design
2. Enhancing patient engagement capabilities
3. Employing hard-nosed, actionable P&L value management.
1. Narrow networks design
Narrow or single system networks are an obvious first step toward controlling cost. In the past, consumers were generally leary of HMO-like products and unwilling to accept narrower networks for the convenience of a PPO. However, that was when risk could be more tightly controlled through underwriting.
With rising costs and access to subsidies, there is early evidence that exchange consumers are willing to accept limited preferred provider organizations (PPO), exclusive provider organizations (EPO) and even some single-system network structures for the trade off in cost. But out-of-network leakage can be a significant problem with this population and health plans must ensure they have strong patient experience, advocacy programs, and effective transparency tools in place to steer consumers to the right care settings.
While there might be growing acceptance of narrow networks from consumers, new CMS rules will require health plans to rethink their approach to structuring exchange offerings. Specifically, new network rating labels will be introduced for exchange offerings that show the breath of the network for the plan. This might drive consumers to choose larger networks offerings that are at a similar price point. However, the new rules also introduce an increase in out-of-pocket maximums, which might provide enough flexibility to health plans for them to still have a compelling value proposition for narrow networks offerings.
2. Enhancing patient engagement
Nearly 17 million Americans have taken the initial step toward access by enrolling and obtaining health insurance coverage through state and federal exchanges and expanded Medicaid coverage. However, most of these patients are new to the game of utilizing care. For many of these patients, their health is managed through episodic care in an ER instead of preventative, coordinated care. They are often overwhelmed by or unaware of care options.
Educating and engaging these new patients will help them navigate the system, improve health and lower the cost of care:
– Patient “Activation” is Critical to Success. Traditional member engagement channels and strategies are often one-sided, not aligned to consumer preferences or needs and only produce marginal engagement rates. New, data-driven engagement tools such as mobile and social media are necessary to both enable empowerment and influence decisions and to activate members and improve outcomes. Activation requires the right message and the right channel, at the right time.
– Break down the walls and collaborate. Providers, insurers and many others will need to enact patient engagement strategies in order to support the education of patients and team members. With physicians as the current gatekeeper of information, limited care options are provided to patients. Alternative healthcare resources and targeted care management services should be identified and promoted to ensure patients are looking for and receiving a more coordinated care experience.
– It’s Not a “One-Size-Fits-All” Approach. Care management teams currently treat all members across populations equally, not accounting for the unique needs of individuals. This leads to members disregarding the attempted engagement by the organization. Customer engagement capabilities are often front-office focused and absent within the middle office. Tailored capabilities by population are required to assist with care improvement outcomes.
3. Hard-nosed, P&L-based value management
Actionable P&L data is critical to health plans in today’s changing healthcare environment. A value management discipline must be instituted at the enterprise level to reinforce the cross-functional realities required to survive.
Developed correctly, this discipline drives a holistic review of end-to-end business functions to quickly reveal operational gaps, and in-turn, significant cost savings opportunities. Engaging each level of the enterprise and establishing a clear delineation of responsibilities further ensures accountability in achieving the identified opportunities. Fostering continuous performance improvement competencies that support sustainable operations ensures longevity for operating in the ACA environment.
Best practices for long-term value management are centered on a proactive, top-down approach that is defined by the ability to understand and mitigate cost drivers, establish a P&L focused organizational structure, and implement a centralized performance management function.
Best practices include:
– Cost drivers. Assess cost drivers and identify associated savings opportunities while developing actionable plans for achieving cost savings opportunities.
– Organizational structure. Identify key stakeholders and define a shared governance model to establish accountability while implementing defined goals (e.g. KPIs) and corresponding improvement activities that are required in order to achieve overall goals. Establish a path to eliminate roadblocks for achieving operational excellence.
– Continuous performance improvement. Establish a dedicated performance management function that is integrated across the organization. Establish cadence for evaluating performance management indicators while developing performance-tracking tools to monitor ongoing performance.
Tackling the challenges of ACA exchanges is difficult, but the plans that figure it out have 17 million new customers to serve. Designing narrow networks, enhancing patient engagement and exercising value management are critical to success.