Eight recent industry developments provide useful direction to health plans and other payers that are innovating their business models in response to macro industry changes like health care consumerism and increased competition. Here's our recap of the insights health plans and payers need to know to maintain and create business value.
Provider-Sponsored Health Plans
Number of provider-sponsored health plans continues to grow
Some 106 provider-sponsored health plans were in operation last year across the country, providing health insurance benefits to 15.3 million enrollees. That's according to a report from McKinsey & Co. on the market evolution of health plans owned by hospitals, health systems or integrated delivery networks. Those numbers are up 13 percent and 23 percent, respectively, from 2010, when 94 provider-sponsored health plans enrolled 12.4 million people. The report describes the plans' financial performance as “mixed” and lists four questions providers should ask themselves before diversifying into the health insurance business. Among them is whether they have advanced data analytics capabilities to identify at-risk patients and manage their care.
78% of provider-sponsored health plans increased membership this year
That's according to a separate report on provider-sponsored health plans from Atlantic Information Services. AIS' tally of health plans owned by hospitals, health systems and integrated delivery networks hit 270 this year, up from 247 last year. AIS says the biggest growth area for provider-sponsored health insurers are commercial plans, including those offered by provider sponsors on state health insurance exchanges created by the ACA.
Medical Claims Process
Eliminating all manual health care business transactions could save $8 billion per year
That's according to a report from CAQH, a Washington-based alliance of health plans and providers. By replacing manual health care business transactions between health plans and providers with electronic transactions, both sides collectively could reduce their administrative costs by $8 billion annually, the report says. The average rate of adoption of fully electronic transactions varies significantly by type of transaction, according to the report. At the high end of electronic adoption are claim submission and eligibility and benefit verification processes, which are done electronically 93.8 percent and 70.5 percent of the time, respectively. On the low end are prior authorization and referral certification processes, which are done electronically just 10.2 percent and 6.2 percent of the time, respectively. Manual transactions cost providers and health plans on average $2 more per transaction than automated electronic transactions, the report says.
HHS' competition demonstrates the need to simplify the medical billing system
Two awards will be given out by HHS this September: one to the innovator who designs the medical bill that's easiest to understand by patients; the other to the innovator who designs the best “transformational approach” to improving the medical billing system. The complexity of the medical billing process and the bills themselves make it “…difficult for patients to understand what they owe, what their insurance plan covers and whether the bills are correct or complete,” HHS says in announcing the competition. Six health systems have volunteered to test the winning solutions with their patients, according to HHS.
State Exchange Plan Enrollees
Members say exchange coverage provides access to previously unavailable health care services
Some 61 percent of enrollees who obtained health benefits from health plans sold on ACA-created state health insurance exchanges are receiving medical care from providers that was previously unavailable to them because of cost or access barriers. That's according to the results of the latest ACA Tracking Survey conducted by The Commonwealth Fund. The survey of nearly 5,000 people who now have health benefits via provisions of the ACA also finds that three in five say it's easy to find a new primary-care doctor and three in five say they wait two weeks or less to see a medical specialist. The results highlight the importance of health plans sold on the exchanges to effectively manage and work with their provider networks to provide timely access to care for newly insured enrollees.
22% of exchange plan enrollees describe health status as “fair” or “poor”
That's according to a survey of nearly 800 people enrolled in non-group, or individual, health plans conducted by the Kaiser Family Foundation. Of those surveyed, 64 percent say they obtained their individual health benefits from plans sold on state health insurance exchanges. The 22 percent of exchange plan enrollees who characterize their health status as “fair” or “poor” this year is up from 15 percent last year. If that severity-of-illness trend continues, health plans will need to step up efforts to manage the chronic medical illnesses of enrollees before they need expensive specialty, acute or emergency care that drives up underwriting costs and reduces financial performance.
Prices charged to commercially insured patients for common medical services varies by state
That's from a report by researchers from the Health Care Cost Institute and published in Health Affairs. The researchers used information in HCCI's claims database from three national health insurers to compare the average 2015 price for 162 common medical services in 41 states and the District of Columbia. Average prices in 15 states were lower than the national average; they were higher than the national average in 26 states and D.C. The researchers cite the lack of price transparency as one likely factor contributing to such dramatic variations in prices for the same treatments and procedures.
Employees spend more on outpatient care after they have access to a price transparency tool
That is the takeaway from a study in the Journal of the American Medical Association that examines the link between the availability of price transparency tools and spending on outpatient care. Researchers from the Harvard Medical School compared the use of the same price transparency tool by employees at two large national companies. The outpatient expenses and outpatient out-of-pocket costs rose for both groups of employees, but they rose faster for employees with the price transparency tool than for employees with no access to the price data. The researchers calculate that use of the tool added $59 in outpatient expenses per employee per year and $18 in outpatient out-of-pocket costs per employee per year. Additionally, they recommend health plans design benefits that incent enrollees to use less expensive providers, offer financial bonuses to enrollees who use less expensive providers and give enrollees more information on less expensive providers that offer the same quality of care.