Introduction
Jean-Claude Biver, former CEO of Hublot luxury watchmaker encouraged companies to “be first, be unique, be different.” Payers (traditional healthcare insurance companies) use technology to reach customers, acting fast to increase affordability and access (A&A), customization and convenience (C&C), and ultimately to answer millions of customer inquiries while keeping their businesses ahead of the competition with innovation and on the profit-making side of the curve.
In order for us to discuss where we are today in our country’s healthcare journey, it’s worth noting the history of how we arrived here. If you’re familiar with this background, feel free to jump ahead to “Healthcare Payer Transformation Tools.”
How did employer coverage become a norm?
Signed in 2010 and came into force in 2014, “Patient Protection and Affordable Care Act” (PPACA) or “The Affordable Care Act (ACA)” contained provisions that offered the biggest health coverage expansion since 1965 when Medicare (health coverage through federal program for people who have a disability, no matter their income) and Medicaid (health coverage through federal program for people with a very low income) became law. It is estimated that in just two years, between 20 and 24 million Americans have become insured, a result accompanied by a decrease of the USA overall deficit due to the slowing down of spending in the health system. The law caused major changes in the public and private sector of health insurance. More people became eligible to be covered by Medicaid and individual insurance (purchased directly by citizens, not through the employer). Prior to the COVID outbreak, it is estimated that around 9% of the Americans were holding an individual insurance, while the rest relied on employer, public and other type of coverage.
PPACA had requirements for both citizens and employers: Americans were required to have a “minimum essential coverage” defined as basic level of health insurance, while the employers with minimum 50 FTE (full-time employees or full-time equivalents) also called Applicable Large Employers (ALEs), were required to provide health coverage for these employees. To ensure compliance with ACA, the legislation provided penalties for those who failed to do so. As of 2018, through the “shared responsibility” provision, citizens who did not maintain the minimum essential coverage could be subject to penalties (however, this provision ceased to be in effect since 2019). ALE companies are also subject to penalties if they fail to provide minimum health coverage. Basically, these employers had to align to the new regulations and many of them did that by turning the type and value of the health coverage into a tool to recruit and then retain valuable employees. The insurance offered as a part of the employee’s benefits package is often more consistent than the insurance provided by public or coverage or by other type of coverage.
Who are the big Healthcare Payers?
Based on the number of members or “covered lives” (how many people have enrolled in a health insurance plan), the largest health Payers in the U.S. are UnitedHealthcare Group, Anthem, Aetna, Cigna and Humana. Although the membership is not the only criteria to take into account when ranking the health insurance providers in the country, this indicator provides an overview. These companies offer insurance through Medicare, Medicaid, individual or company supported plans, etc. Employers play a major role in providing good insurance packages, as they use this as a tool to motivate or retain good employees. The large employers, who have thousands of employees often working around the world, need to keep the medical costs affordable and that is when they turn to Payers for solutions.
What is the biggest problem with the current American healthcare system and how it can be addressed?
In 2020, COVID-19 cost over 30 million Americans their jobs and with that many unfortunately lost their employer coverage. The US ranks high among countries without health coverage for its citizens, along with countries like Philippines and Mexico. It has been shown that lack of medical insurance puts citizens at risk, causing aggravated medical problems, higher costs of medical bills and a faster spreading of the virus.
Therefore, the question is how can Americans continue to benefit from medical coverage especially during the current environment, when it’s estimated that the unemployment rate will continue to fluctuate in the years to come (according to a estimations made by Federal Reserve)?
- A commonly debated solutions is extending Medicare to include everyone. In such an ambitious vision, the private system of insurances would disappear but would be a bureaucratic challenge. Historically, this type of policy failed to pass under several US presidents such as Roosevelt, Kennedy, or Clinton to name a few.
- A second approach is to separate the private coverage from employment, a regulation that exists in other countries such as Germany but is very difficult to implement. This would give citizens the option of choosing the type of coverage they want from all the private insurers that exist in the market. Such an approach would ensure that citizens preserve their coverage even when they change jobs. However, in the US the main obstacles of this initiative are the tax exemptions and the lower premiums of the insurances covered by employers.
- A third approach is the expansion of Medicaid to all those who do not benefit from any type of health coverage. With an estimated 17 million Americans gaining coverage by 2021, Medicaid’s expanded coverage faces several obstacles such as enrollment issues (some enrollment offices were closed due to COVID that checked documentation) and presumptive eligibility (temporary enrollment until eligibility can be verified properly).
Policy makers continue to debate how we solve for our healthcare access and affordability.
What are the main challenges faced by Payers?
Payers are facing challenges like never before such as explosion in customer inquiries worried if their insurance covers COVID infection treatment and hospitalization, less direct contact between their network of professionals and the members, potential increase in fraud attempts, “fishing” for customer data or financial information, insufficient or untrained staff of third parties working with Payers that cause delays in responding to customers requests for renewal information, changes in banks’ equities and interest rates that cause management risks for long-term care and life insurers, increase in clients’ requests for personalized services, convenience and transparency.
When the “Families First Coronavirus Response Act” (H.R.6201) passed on March 17, 2020, this required all health plans (Medicaid and Medicare included) to pay for COVID testing, meaning coverage for lab fees and for ER, clinic or doctor’s office fees where the test is being performed and it translated into increased expense for the coverage provided by Payers. For Payers who provide different membership mixes (like Commercial ASO vs. Commercial Fully Insured vs. Medicare Advantage vs. Managed Medicaid), this meant Payers needed to identify and analyze which of the memberships mix required reimbursement.
With COVID, Payers also had to solve the ways to support, internally, the corresponding costs. If one or more of the Payers who provided various membership mixes take the decision to extend the coverage of one of their memberships to include telehealth, the challenge increased. Payers had to implement these new coverage exceptions to the existing memberships. This translates into system reconfiguration or manual handling of received claims. While the system reconfiguration to reflect this change into thousands of memberships is a significant and potentially expensive automated process, manual handling may be just as expensive or cheaper, but it can be done in longer period of time and can be subject to human error. That is a challenge facing Payers who offer memberships mixes more than those who focus their businesses on simplified memberships.
How Payers Innovate During COVID
One significant area for innovation is return on investment. An improved ROI means, among other things, a reduced medical spend or Medical Loss Ratio (MLR). The Medical Loss Ratio can be reduced by using the prepaid estimated MLR rebates for 2019 MLR reporting year. Medical Loss Ratio rebates are based on a three-year rolling average of premium revenue calculated against claims costs and administrative costs.
In a bulletin released on June 12, 2020 “Centers for Medicare and Medicaid Services” (CMS) stated “Due to the urgent need to help facilitate the nation’s response to the public health emergency posed by COVID, the Centers for Medicare & Medicaid Services (CMS) is exercising discretion to adopt temporary policies of relaxed enforcement in connection with the below identified standards under the conditions outlined in this bulletin. CMS is providing this additional flexibility to permit issuers to prepay to enrollees a portion or the entire estimated MLR rebate for the 2019 MLR reporting year to support continuity of coverage for enrollees who may struggle to pay premiums because of illness or loss of income resulting from the COVID public health emergency”.
With rebates of $5.3 billion sent by Payers over the last 8 years, prepayment of estimated MLR rebates for 2019 can make a difference in retaining customers in a climate where many people face financial challenges and hence an improved cash flow.
Faced with the requirement of covering COVID testing without any cost sharing, either in fully insured health plans or short-term ones, some of the largest Payers have voluntarily given up cost sharing for COVID treatment. This innovative action would spare Payers money that they would have to pay as MLR rebates if the medical costs will be lower than estimated this year as a result of elective procedures cancellation caused by the COVID pandemic.
Innovation Investments
In times of great uncertainty, many companies are tempted to cut on costs. One way of achieving that is often through suspension of investments. But innovation during these times is doing exactly the opposite. By continuing to invest in the most important areas, Payers ensure they strengthen key capabilities such as digital tools for call centers, claims, and shared service centers, and that they do something their competitors refuse to do.
An assessment prior to taking a decision regarding where and how to invest is crucial: analyze if the company has the proper and sufficient resources to support an increased, long-term volume of remote work of company’s employees and remote interactions with prospective and existent customers, create business disruption simulations, test and adjust business resilience plans, check the impact of increasing the percentage of digital workflows so they can replace “physical” workflows, brainstorm and document all the valid scenarios for ways of conducting business post-COVID and so on. The Payers that continue to invest this way will be better prepared for the future.
Healthcare Payer Transformation Tools
1. Artificial Intelligence
Artificial intelligence is an area of computer science concentrated on building intelligent things such as applications, systems, and many more. AI can improve decisional process inside companies, can stream up some back-office processes and analyze higher amounts of data than ever before.
Payers can find several uses for AI such as call centers. Since time is a crucial factor in addressing inquiries, complaints, claims or requests of information from potential and existent clients, talking to an AI-based assistant that includes NLP (natural language processing) will enable Payers for example to:
- authenticate existing clients by voice
- anticipate the reason why a client is calling
- prepare for the human call center agent to answer questions about benefits
Payers are required by State and federal laws and regulations to periodically update provider databases, meaning the information that helps enrollees to connect with care providers. Names, addresses, phone numbers are all used to identify the care providers and this information is very important for Payers. If any detail in a Payer’s database is inaccurate, its clients might feel reluctant in continuing to have their state of health dealt by that Payer and will consider moving to another. Care providers will also be affected, as they will not be able to be contacted by existing clients (patients) or express their acceptance for new clients (patients).
2. Blockchain
With $2.1+ billion spent annually in maintaining the provider database updated, Blockchain programs can be the solution to decrease this cost and to improve data accuracy. A Blockchain is a shared, distributed digital log on which transactions are chronologically recorded in a cooperative and “no-alteration possible” manner.
Blockchain technology can coordinate the benefits of Payers by establishing, for example, the order of claim payments for enrollees who are covered for several policies. It also makes claims’ processing and payments more secure and efficient, can provide a real-time view of a person’s health, improves the security of access to health records, giving enrollees control of their own health files, hence ensuring transparency.
Artificial Intelligence has more tools that can be used as innovations by Payers. Terms like “Deep learning”, “NLP” or “Internet of Things” are beginning to make their way into the Payer industry, one that will drastically contribute to coming back to a state of new normal post-COVID . A world in which the requests for health plans and coverage will change, since the effects of the pandemic — either physical, either psychological, will be visible for a long period of time.
3. Access to Care in Telehealth
With a goal in mind to ensure a faster adoption of Telehealth (also known as Virtual Health or Telemedicine), patients can talk to a doctor about their symptoms and receive guidance and treatment virtually. “Virtual doctors” can treat urgent care illnesses like coughs, rashes, gynecologic issues and can provide prescription refills for blood pressure medication.
Telemedicine is available to many Medicare Advantage and commercial members. With a use of a computer, tablet or phone, patients can have a face to face discussion with a doctor, 24/7. The medical staff treats common health issues such as urinary tract infections, allergies, colds and flues and can refill prescriptions for problems such as cholesterol and diabetes. Based on the history and symptoms of the patient, the doctor can recommend lab investigations or specialized exams.
Telemedicine services provide doctors instant access to the patient medical records (including lab results and past diagnoses), as well as to their benefit plan and claims. Telemedicine systems often are interconnected with other teams of the Payers (such as Concierge) who make arrangements in case further action is needed, whether it’s an in-person visit to a specialist, a preparation for a surgery or a check-up follow-up. Telemedicine alongside chat/text-based virtual health services provide access to medical care for people living in isolated or underserved areas. Most importantly, they prevent patients (especially those with pre-existent medical conditions) from taking risks by going to a doctor’s office during the pandemic. It helps the fight against COVID also by not crowding hospitals or specialist offices for issues that can be addressed in a virtual and remote manner.
The cost reduction enabled by this type of service is visible for everyone — patients, doctors and Payers — to such an extent that some employers who provide coverage for their employees are already talking about lower cost for health plans that are virtual first. It looks like this approach will become a constant in the future, especially since Telemedicine has known a spectacular increase from 11 percent of patients last year compared to 45 percent this year, especially after COVID outbreak. Healthcare providers are also among the voices who ask Payers to add this type of remote services to the list of paid services in their contracts and many of the Payers already reimburse remote care. However, shifting remote care into a core position of the healthcare system means all parties must be aware of the implied challenges such as the health provider margins, the need to change Payer workflows, to provide a wider technologic integration, to enhance the system security, to establish the reimbursement policies and to increase patient awareness regarding the benefits of this type of services.
4. Home-Based Services
In the past few years we have seen some Payers allocating funds and resources to home-based care services. Payers are bringing this method of providing medical care back in business to provide primary care at home to treat symptoms related to COVID. These movements in the healthcare sector will continue to develop post-COVID and Payers are considering the reimbursement paths of home-based care as an innovation.
5. Integration of Medical and Behavioral Health
Behavioral Health is more important during COVID times especially for vulnerable populations. The “integration of behavioral, psychosocial, and biomedical science knowledge and techniques relevant to the understanding of health and illness” summarizes how behavioral health can be addressed by providers and Payers. The need for escalating mental health services has been amplified by the pandemic, as many Payers have extended member cost-sharing waivers for in-network telemedicine visits and for outpatient behavioral and mental health counseling services. An example is Blue Cross Blue Shield of Michigan, the first care plan in Michigan to waive the cost sharing for his Medicare Advantage members, applicable to all virtual medicine and in-person visits, including for those who need behavioral health services.
6. Support Employers with “Return to Work”
For employers all over the world, recovery after COVID lockdowns means restarting or reinventing their business operations. In order to do so, employers need their people to return, safely, to work. Both employees and employers need support in achieving this goal.
Several innovative Payers supporting ASOs are managing the full cycle of COVID through prevention, early detection, testing, tracing, isolation and monitoring of positive cases, recovery and safe return to work of the positive-tested employees who have been treated. For example, innovative Payers assign a team that helps members and their families improve their state of health and well-being during the current pandemic. Payers continue to team up with digital solutions and the Centers for Disease Control and Prevention (CDC) protocols to address both the prevention phase of the virus, by screening employees for symptoms and the recovery phase for those tested positive.
7. Quality of Care: “Peace of mind” Initiatives
COVID has brought humanity face to face with some of the greatest challenges of modern times. Fear of the unknown, fear of contracting the virus, fear of physical distancing from family, friends and co-workers, along with unemployment and home-schooling of children that takes a toll on financial status and emotional well-being. To support people in handling all these challenges while preserving global the efforts to curb down the virus spreading, several Health Payer have launched initiatives designed to provide financial and emotional relief.
Several Payers have launched services to allow employer members to pre-load funds that their employees can use for a range of products and services such as medical bills, childcare and even groceries. These funds are tax-free for employees and deductible for employers, helping members of communities who are vulnerable with critical information provided remotely by nurse care managers.
Bottom Line: Healthcare Payers will continue to be part of a real-time marketplace innovation engine between clients and providers and technology investment is a great way to get there.
About the author: Liz Kwo is a physician, faculty lecturer at Harvard Medical School, and a serial digital health entrepreneur. She lives in Boston with her family. All views expressed are her own and do not represent the opinions of any entity.
