It’s not every day that Ezekiel Emanuel and Victor Fuchs suggest health insurance company profits are not the reason American healthcare costs are spiraling out of control. Even as surprise medical bills get more attention by our legislative leaders with draft bills focused on limiting payments to out-of-network providers to something close to what in-network provider receive, 86% of Americans blame payers for this problem. Given the poor customer service experience most payers deliver to their members, few individuals take the time to learn what services and providers are actually covered by their health insurance plan. Even if health insurance plans could close this knowledge gap among their customers, the industry should consider making a stronger case for why they deserve the profits they do (according to Emanuel and Fuchs, $22.1 billion for the eight largest for-profit healh insurance companies in 2016, or 0.6% of all health spending).
Unlike other types of insurance, health insurance covers anticipated expenses (e.g., follow-up visits and planned surgeries) as well as unexpected events (e.g., car accidents, hip fractures). As the healthcare system develops more effective and costlier interventions to treat disease or slow the inevitable decline associated with older age, health insurance premiums continue to rise to pay for these breakthroughs. Many employers have given up on asking health insurance companies to control their healthcare costs and relegating the insurance company to serve as a claims administrator for their employees. At least one group has developed a model for self-insured employers that includes a benefits administration system, a provider pricing/claims monitoring system and stop-loss insurance for catastrophic claims.
Health insurance companies are also facing threats from innovators from the technology sector. SmileDirectClub, a consumer-focused company working with state-licensed providers, delivers less expensive and more convenient teeth alignment services than dentists can currently offer. There are several healthcare start-ups that are using similar tactics to engage consumers looking for assistance with acne, erectile dysfunction, oral contraceptives, hair loss and HIV pre-exposure prophylaxis (among other things). In this environment where others seem more cost-effective and more responsive to consumer demands, what can health insurance companies contribute to increase value in healthcare?
As financial stewards of the an entity’s resources allocated to managing healthcare, payers have been portrayed as the monsters who created the prior authorization nightmare. In 2004, Hamel and Epstein suggested that state Medicaid programs will save more money than the costs to administer a prior authorization program, but from a societal perspective, the costs of the program are greater than what a state Medicaid program can see from its viewpoint. Payers might use their communication channels to suggest a different message to the American public: private health insurance can deliver more value for each dollar spent compared to government-run or individuals purchasing their own healthcare without insurance. Unfortunately, the comparisons between traditional Medicare and Medicare Advantage have been muddled at best.
I suggest payers (my employer, UnitedHealth Group, included) consider three strategies that capitalize on their existing strengths. First, consider deploying information about diagnostic or treatment decisions based on available claims information. Unlike venture capital-backed start-ups, traditional payers have been working with claims data for decades. Claims information, despite its data quality challenges, remains the single best source of data to address questions not yet addressed by the clinical research community. For patients who have congestive heart failure and rheumatoid arthritis, payers may be able to suggest treatments based on their claims histories more effectively than any group of cardiologists and rheumatologists. This presumes payers can update their prior authorization rules to account for different disease combinations to supplement coverage policies based on specialty-society guidelines that do not traditionally cover these disease complex permutations.
Second, payers can provide alternatives to a patient’s exisitng care team to both provide reassurance that the diagnostic approach or treatment decision is appropriate as well as suggest alternative venues to complete the evaluation or treatment. As health systems continue to consolidate and demand higher reimbursements from payers, payers could route members to other facilities to obtain their care. As health information technology interoperability improves, payers can relay information back to the member’s primary care provider, reducing antagonism between the primary care provider and the payer.
Finally, payers can accelerate the development of virtual models and other value-based arrangements inside and outside accountable care organizations to help members obtain care more conveniently and/or less expensively than they do currently. Providers and medical centers are currently locked into specific care delivery processes due to the existing reimbursement requirements. Arranging technology platforms, remote patient monitoring tools, home health services and support teams may be more work than existing care teams can do today, but payers could help arrange these services until new contracts.
The current political climate around healthcare reflects anger about out-of-pocket expenses many Americans face. State officials have been addressing multiple targets to help reform healthcare: price transparency, benefit design, provider payment, provider networks and market power. Payers have an opportunity to leverage their existing assets to engage in this conversation. Using claims to inform providers and patients about alternative diagnostic or treatment options, providing second opinions or other sites of care and accelerating the creation of virtual health care models to members to consider instead of additional face-to-face encounters for clearly defined diagnoses or treatment plans could all help increase healthcare value. Payers continuing to do what they have always done is unlikely to change public sentiment toward them.