With World Health Care Congress 2019 in our hometown of Washington, D.C. this month, our payer research team heard from plans, providers, purchasers, and other industry leaders about their passions and challenges.

This year, it caught our attention that ever-present speculation about looming disruption possibilities has morphed into discussions about the disruption that’s already here—and impacting the industry. Read on for our biggest takeaways from the week.

1. Today’s disruptors highlight the new competencies in network contracting that plans will need to showcase

Attendees widely agreed that our inefficient industry makes disruption “inevitable”—but the greatest buzz centered around new growth in global-contract primary care models and direct contracting with employers. There’s a lot to take in here, but we couldn’t help but notice that these approaches (so far) aren’t eliminating health plans—they’re actually requiring plans to evolve alongside them.

For one, plans may soon have to grapple with physician-level network guidance. Models like Iora, ChenMed, and Oak Street are setting their own specialty networks and managing referrals tightly, but most systems currently preclude plans from this kind of preferential management.

Dr. Craig Samitt, CEO of Blue Cross and Blue Shield of Minnesota, noted that “employer direct contracting on a fee-for-service model without the plan in the middle will create the same cost management problems we see today—without the plan as a check and balance.” Success will depend on managing total cost of care through data-driven care management—a position that health plans are poised to capture if they’re willing to reinvent themselves.

2. Addressing social determinants will be one of the most disruptive forces in health care

Just as we’ve seen new disruptors raise the bar for member experience, the same will soon be true in social determinants of health. Kate Sommerfeld at ProMedica astutely points out that addressing social determinants represents an enormous disruption to the health care industry today—a disruption that goes beyond Medicaid and Medicare members (though those purchasers are increasingly funding support initiatives). ProMedica discovered that 35% of their commercial members screened positive for at least one key need.

Social interventions represent an entirely new service line in health care. Health plans must begin laying the groundwork now, building a comprehensive infrastructure and going beyond pilot programs. This starts with capturing and sharing data to support funding procurement and care coordination, which is made difficult by regulatory constraints and a wider array of involved organizations. Pioneers, however, are devising interim ways to capture baseline data to build the case. Examples include Hennepin Health and their innovative use of self-reported addresses to predict homelessness status, and United Healthcare and their aim to create an “imputed market price” to ascribe a dollar value to referrals for social support.

3. Affordability is a choice that the industry must collectively make—but plans can start now

Amid discussions of driving affordability, Venture capitalist Lisa Suennen challenged plans and providers on their negotiation habits. She noted that not everyone in the industry wants transparency in negotiated rates. To which, her comment prompted our favorite audience question of the day: “Which group has to make the first concession for the industry to get true transparency?”

The general consensus is that outsiders will drive shake-ups and legacy players would follow. But we see many opportunities for health plans to lead. One example based on our research: Build a platform for transparency into provider performance by fostering more collaborative engagement with clinicians on the data itself. As Dr. Jason Mitchell, CMO of Presbyterian Healthcare Services mentioned, “All (clinician) data is wrong. So assume yours is wrong the first five times you meet with clinicians, and ask them to help you fix it. They will. And then they’ll make changes in how they practice.”

4. Innovative drug spend management spills over onto an interconnected ecosystem

Perhaps the greatest source of anxiety over affordability, high pharmacy spend continues to prompt drastic actions aimed at disrupting the pharmacy supply chain and financing structures. Martin Van Trieste, CEO of CivicaRx, shared that when CivicaRx investigated distributors (e.g. UPS) he was shocked to see how many pharma manufacturers were turning to direct distribution. His prediction: A “market correction is coming.”

But changes in drug spending approaches have ripple effects throughout the drug ecosystem. The West Virginia Medicaid program, for example, found that while terminating their PBM contracts resulted in increased dispensing fees, it also enabled local pharmacies to stock needed medications. Further, in an effort to avoid “best price” penalties, we saw that the Oklahoma Health Care Authority secured an exemption from “best price” requirements for a manufacturer to provide optimal drug pricing to Medicaid in an alternative pharmacy payment model. As plans attempt to tackle ever higher cost specialty and curative drugs, they’ll have to account for these complex spillovers.