Deloitte expert details how insurers can survive in the new world order

Last week I urged insurers to accept the reality of healthcare reform and move forward. A tall, possibly daunting, order, I know. Since I am not an actual member of the health insurance industry, I also recognize this message could be viewed as the "do-as-I-say-not-as-I-do" type of advice. As such, I thought it beneficial for my dear readers if I sought out specific guidance. I went straight to the source--Jeffrey Bowman, Director of Deloitte Consulting's Health Plans and author of the whitepaper, Six Months (and counting) of Health Reform: Lessons Learned for Health Plans--for some answers.

FHP: Can you elaborate on why fighting health reform changes is not a productive option?

Bowman: Total repeal of health reform seems unlikely. But that doesn't mean health plans can't play a role in helping to shape the transformation of the industry. Health plans have an opportunity to play a constructive, positive role in shaping the implementation of health reform both at the federal and state level. We are working with our clients to understand the legislation, identify the issues in the legislation that are most important to them, and engage in a dialogue with regulators and lawmakers as they address individual reform components. This will help lawmakers and regulators understand health plans' concerns and perspectives as final decisions are made. Two examples of issues that are likely to be important for many health plans are the implementation of state exchange models and the requirements and roll-out of administrative simplification provisions.

FHP: What specific steps can insurers take to create a culture of acceptance?

Bowman: Education and communication are critical in times of significant change. We saw this with the implementation of the original HIPAA privacy and security requirements, where there was a need for health plan employees to understand the requirements about confidentiality and rules around how to handle personally-identifiable health information. Health reform will be no different. An open and honest dialogue between health plan leaders and employees can help to ensure that everyone in the organization understands what reform is, what will change and how the health plan will respond. Examples of communication methods that we have seen be effective include regular updates from the CEO (or other leaders), town hall meetings and newsletters.

FHP: What type of collaboration do you recommend? What type of partners should insurers collaborate with? What types of industries should insurers contemplate collaborating with?

Bowman: Health reform has the potential to transform the industry and to create new sets of interactions and incentives for ALL industry stakeholders, including employers, providers, hospitals, physicians, PBMs, and pharmaceutical and biotech companies. Health plans should also start thinking about potential partnerships and alliances with organizations OUTSIDE of the healthcare industry. We believe that health plans should take account of their current capabilities and strengths, identify the capabilities, strengths and requirements they will require to be successful in the future, and where there are gaps, consider whether those gaps can be most effectively closed by developing those skills and capabilities themselves, or by partnering with others. The answers will be different for every health plan, but the imperative to change and redefine or reinvigorate how health plans provide value in the market is consistent. Innovative partnerships can be a catalyst to delivering that change.

FHP: Are there any particular types of products or new areas of diversification you would recommend insurers consider?

Bowman: Health plans could consider a variety of new products and services and diversification paths. Some ideas that we think are intriguing are outsourced services to providers or other health plans, the development of other lifestyle and supplemental products for consumers, and information management. Whether any of these would be possibilities for an individual health plan will depend on what their strengths and capabilities are today.

FHP: How can insurers leverage scenario modeling?

Bowman: There is, and will likely remain, significant uncertainty in how health reform will play out--both from a legislative and regulatory perspective, but also from a market perspective at the local, state and federal level. Scenario modeling allows an organization to understand and plan for a future, even when that future is unknown, by enabling the organization to envision a range of potential futures and plan appropriate strategies for each of them. By then evaluating and comparing each of those potential strategies, the organization can identify the elements it should pursue under any scenario, those that would be effective in more than one scenario, and those that should be employed only for a particular scenario.

One of the key areas that we have been working with our health plan clients to understand, is how might different choices about the implementation of reform play out in terms of membership and coverage shifts. In that way, health plans gain a better understanding of the key levers or changes to reform that could materially impact the size and components of their future markets. It also allows plans to model the financial implications of potential market shifts, including the impact of MLR requirements and specific benefit design requirements, etc. Taken together, this understanding of potential futures can help health plans prioritize their investments and focus. - Dina