By Sandra Agik and Rachel Sokol
Plagued with regulatory uncertainty, disruptive newcomers, and a rapidly consolidating industry, health plans have faced new and unprecedented challenges in the past few months. We spoke to plans across the nation about some of their key challenges in the current health care economy and the strategies they are adopting to stay ahead of competitors. Here are six important insights we took away from our conversations.
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Even with an unclear legislative path on health reform from the federal government, purchaser pressure on plans to reduce costs continue to mount. From our conversations with plans across the nation, the strategic direction for most health plans is fundamentally similar—they need to keep medical costs low. Most plans recognize the need to better engage members either directly, or through provider relationships in order to keep medical costs low.
Significant revisions to the ACA such as elimination of the individual mandate penalty and expansion of association health plans (AHPs) mean that plans should expect a riskier individual membership as healthier consumers shift to cheaper and less comprehensive coverage or no coverage at all. To limit unsustainable premium hikes for individual market products, health plan executives are investing in medical cost management strategies. The majority of plans are revamping their member identification strategies to be able to rapidly detect and manage high-risk members.
While all plan staff agreed that medical cost management should be a top priority, there was no consensus on what the best strategy for cost control was. When we spoke to senior executive staff at health plans a key priority for containing costs was reining in unnecessary drug spend while junior staff pointed to collaborations with providers to engage members in cost-saving care decisions. Frontline junior staff spend time interacting directly with members and recognize that empowering members to make decisions about their care can lead to significant cost savings. Alternatively, senior executives monitor the drivers of healthcare costs at a macro level thus prioritize addressing the rapidly rising cost of prescription drugs.
Increasingly popular consumer-directed health plans present an opportunity for directly influencing member decisions to low cost, high quality care. But results on the ability of CDHPs to activate consumers remains inconsistent. Our conversations with plan leaders revealed that they are still wary about leaving costly care decisions to members. Most executives identified benefit design as a more effective strategy for eliminating high-cost ED use compared to direct outreach to promote alternative sites of care.
Health plans across the nation are participating in more and more value based contracts with providers, but many are frustrated by the slow pace of provider realignment. Providers in risk contracts have mostly focused on the less complex changes like improving risk coding leaving strategies like chronic care management and behavioral health integration untapped. This has slowed providers’ shift to downside risk and the potential to generate even higher savings.
Blue Cross Blue Shield Plans, small regional and Medicaid plans expressed strong interest in spurring innovation in primary care to keep up with market consolidation and regulatory changes. With the flurry of M&A activity among the national players, increased scale and improved capabilities for medical cost management present competitive threats to local insurers. These plans must therefore consider new and innovative ways to deliver primary care to keep costs low.
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