Walking into 2020, healthcare payers continued to combat rapidly climbing costs and affordability while trying to improve access and quality of care for their members.
They also sought to establish a common ground with healthcare providers through value-based care models that would create shared incentives between payers and providers, ultimately driving healthier outcomes at a lower cost.
However, the COVID-19 pandemic demanded an immediate course correction.
Payers instantly shifted their focus toward enabling remote workforce management, waving off member co-pays for coronavirus services, enabling alternate service delivery mechanisms (e.g., telehealth), reducing scrutiny on utilization management and pre-authorization and redirecting additional investments to support members and providers.
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During this time, elective care was put on hold as many providers had to close their offices, while hospital systems had to become COVID-19 crisis response units. This reduced medical expense and creating financial hardship for many providers.
Payers today seem better positioned to ride out this storm financially than their ecosystem partners—members, providers, laboratories, pharmaceutical companies and technology healthcare startups.
They are seeing a 20% to 30% reduction in claims (much of which will be subject to medical loss ratio requirements and potentially rebated back to customers) due to fewer elective visits and procedures and members’ accelerated adoption of telehealth and home-health solutions (which will be lower cost to deliver in the future—once the COVID-19 crisis has passed, members have received the quality of care needed, and scale is reached).
But this payer advantage might boomerang in the medium to longer term. Members, who now are delaying or deferring elective visits and procedures and are (in some cases) avoiding ERs, might be putting themselves at greater risk. Their risk could result in an increase in their medical episodes or in their developing other complications—and in driving up costs.
In addition, the increased level of unemployment might significantly change the commercial mix of the member base and further squeeze payers’ overall margins.
Instead of reacting on the fly to a post-crisis recovery road map or reverting to a pre-pandemic status quo, healthcare payers need to accelerate their digital investments so they can capitalize on the following:
- Automation to drive lean operations
- Data-driven care collaboration with their providers and other ecosystem partners to enable population and community health leveraging social determinants, proactively assess risk and engage with members and providers ahead of episodes, harness decision support tools and deliver healthier outcomes at lower overall cost
What to expect and shape across your constituents
Besides altering the member healthcare consumption pattern, the COVID-19 crisis also has changed the commercial mix of the health plan’s member base. The crisis, on the one hand, has accelerated a broader willingness and adoption of alternative ways to consume health services (such as virtual care, self-service and alternate sites for outpatient service).
But on the other hand, rising and unprecedented levels of unemployment are churning employer-sponsored plans toward Medicaid and subsidized Affordable Care Act plans.
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On the provider front, costs to deliver necessary services will continue to escalate in the near term, driven by new expenditures for additional staff- and patient-safety protocols, personal protection equipment procurements and other crisis-related issues.
With their continued tweaking of services, providers are implementing changes almost daily, underlining the need for payers to implement agile technology teams that can keep pace with this rapid change. Adding to provider problems, the cash-strapped provider market is ripe for further consolidation, paving the way for high stake contract negotiations and contentious dispute resolutions between providers and payers.
On the care management front, the delay of member care and the potential complication of their health conditions could result in a higher claims outlay for payers down the road. Therefore, payers need to expedite their push toward tighter collaboration with provider networks so they can share analytic insights based upon claims data, clinical data, social determinants and demographics in order to proactively deliver healthier outcomes and a higher quality experience across the payer and provider.
Additionally, this collaboration will enable value-based reimbursement mechanisms which align incentives, risk and reward across payers and providers.
This challenging environment has again highlighted the need for payers to double down on their risk stratification, prediction, activation and member engagement and education—to supplement the expertise of their provider networks. A multichannel engagement with self-service capabilities becomes even more pivotal to support pre-, during- and post-episodes to enhance member experience, improve health outcomes and lower overall costs.
Finally, the pandemic has forced the healthcare industry workforce, like that of other industries globally, to work remotely for the foreseeable future, while companies evaluate both their short-term and longer-term plans for the future of work. Regardless of payers’ forthcoming plans, their IT infrastructure teams will have accommodated a sizable increase in workforce (including call center agents and contractors working from home) and will have ensured that a collaboration tool suite can be scaled up or down as needed, while compliance exposures and security risks are mitigated.
Although this crisis seems, on the surface, to have created multipronged challenges, it also has provided the necessary tailwind for payers to leapfrog some of the regulatory and change-management challenges that impede the overall healthcare industry. They now have an opening to capitalize on this opportunity and to bend up the digital curve by accelerating their build-out of digital capabilities in the following four important areas:
Automation everywhere
Payers need to strongly consider increasing their automation capabilities across the enterprise. Increased automation will help reduce or eliminate manual work (e.g., in billing, credentialing, contracting, finance and other areas). Additionally, automation can drive material advantage in increasing deployment and adoption of electronic communications replacing paper and postal. Self-service capabilities (portals, mobile apps) for members and providers will reduce demand for human-to-human support of transactional needs.
Business process automation tools are becoming ubiquitous and fairly easy to deploy in a matter of weeks. Many payers have created automation centers of excellence to rapidly and effectively deploy automation capabilities for select business areas.
Data, analytics and AI
Many payers continue to make investments on various analytics fronts, but have not seen consistent degrees of success toward leveraging those analytics to create healthier outcomes. It’s now time for them to revisit their project portfolios and double down on population health, risk stratification, integration with provider data, social determinants of health and digitized care coordination. They need to create rich data lakes upon which these analytic beds can be built, consolidating data across patient populations and integrating with providers’ clinical systems.
These actions will enable them to proactively identify high-risk individuals, segments, communities and populations, and help give providers a 360-degree view of patients, establishing a data-driven care coordination model between them and the providers. Ultimately, these actions will lead to healthier patient outcomes, reduced cost and an engaging member experience.
Deployment of the right patient engagement tools—ensuring that at-risk patients have the digital tools available to manage their health effectively and that they receive care when they need it. They also will enable providers to use the generated patient data based on research and user interactions to provide personalized recommendations and suggestions for preventative care, physicians, providers, and other resources. And they will create a closed loop with members for healthy living and for navigating them to their best healthcare options.
Remote work enablement
Whether or not the future will be a radically “new normal,” we will not return to the old ways of working. Knowing this, payers need to think long term, plan for remote work teams and create plans to foster collaboration between their teams and those of their ecosystem partners. Key to successfully enabling this remote work environment will be having the right software collaboration tools, security, firewalls and hardware, as well as a portable device strategy and a connectivity for distributed work and access. Likewise, mapping and testing of vulnerabilities across critical assets based on risk profiling will be another necessary focus area.
Ecosystem partnership and architecture
Payers can play a pivotal role in enabling collaboration across the healthcare ecosystem. They can leverage their own reach while also creating a data and analytics exchange where the entire value chain can gain from bringing down costs and enhancing patient care and experience.
By accelerating their build-out of these four digital capabilities, payers will be better prepared for the future—whatever it turns out to be. Although they might not be tempted to take immediate actions during the COVID-19 crisis, it is just a matter of time before payers are staring at margin headwinds and are facing heavy administrative cost pressure.
So, they must now accelerate their digital enablement in automation, data analytics and AI, and workforce management—if they are to be in the driver’s seat post-pandemic and are to have the capability to bend their company’s cost curve, while improving member and provider experience and collaboration.
Joshua Swartz is a partner, Sachin Mahishi is a principal and Anshuman Jaiswal is principal of digital transformation at Kearney.