U.S. health plans today operate in a world of rising expectations. They must work to contain rising healthcare costs, while at the same time catering more to consumers as the ultimate users of their products, rather than solely satisfying the demands of employers.
They are redesigning their networks in search of value--finding the providers who deliver the best quality of care, preventing health problems before they occur, and doing so efficiently and cost-effectively.
In addition to the economic and regulatory pressures forcing change, health plans are subject to the same digital business trends impacting every other industry. Health plans are becoming digital products.
Consumers increasingly pick their plan online, whether through a government-run exchange or a portal operated by their employer. They expect that online experience to be a good one, and will be sorely disappointed if it's not.
The same is true for providers. They are looking for a good digital experience when they interact with the health plan.
This is something consumers and providers have in common: a demand not only for a better digital experience, but a good overall experience. That means providing accurate, up-to-date information, and being as convenient to do business with as possible.
The challenge is also the opportunity. The health plans that do the best job of seizing the opportunity to engage with providers and consumers in a positive way will be the ones that thrive in the new healthcare economy.
We can't keep doing business the same old way. Rather, we need to understand that consumer satisfaction; provider satisfaction; and designing high quality, cost effective networks are interrelated goals.
Transforming provider relationships can be the key to meeting all of them.
Recognizing this, Florida Blue and McKesson are working together to break down the silos between the organizations and information systems that serve providers and consumers, with the goal of providing better service and strengthening loyalty from both constituencies.
By engaging providers differently, with streamlined tools and business processes, we believe we can reduce administrative and medical costs, improve member health outcomes, and make Florida Blue the plan of choice for providers as well as members.
The strategy we recommend is informed by an analysis of four concurrent trends.
By the end of 2018, that will go to 50 percent. Already 20 major health plans have pledged to convert 75 percent of their business to value-based arrangements. Half of the commercial business for Blue Cross and Blue Shield of Massachusetts is tied to these new models.
Aetna is up to 28 percent for its business as a whole. Overall, we're expecting that two-thirds of payments will be tied to value-based measures by 2020.
Consumers are playing an ever-bigger role in the U.S. healthcare system. For starters, 16.4 million people gained health insurance coverage through the Affordable Care Act, which means they shopped for and picked their own plan. Even in the context of employer-provided plans, more responsibility is being shifted onto employees.
Overall, patients now pay almost 25 percent of medical bills and 37 percent of the cost of health benefit premiums. In part, this reflects a deliberate strategy of exposing consumers to more of the true cost of healthcare and health insurance, so they are motivated to be part of the solution for controlling costs.
They are feeling the change: 40 percent of consumers say healthcare costs strain their family budgets. In 2014, roughly 50 percent of the products sold on exchanges were narrow-network plans, in which consumer bargained away a degree of provider choice in return for lower premiums.
Healthcare cost management
U.S. healthcare spending has reached $2.9 trillion annually, and one of the biggest complaints about it is that too much of that goes to administrative overhead.
Claims processing is estimated as a $400 billion expense.
Providers spend $31 billion annually interacting with payers.
Excess administrative costs--those we ought to be able to eliminate--are pegged at $190 billion annually.
Regulatory change is occurring on multiple dimensions as a result of the Affordable Care Act and CMS initiatives. One aspect that deserves more attention: As consumers are increasingly tasked with choosing the provider network that's right for them, they need accurate and useful information about whether providers and services (such as pharmacies they use or want to use) are included in the plan.
State and federal regulators are taking note of situations in which that's not the case-- where, for example, too many of the providers listed are not, in fact, taking new patients and therefore are not realistic options for new members.
The Centers for Medicare and Medicaid Services is setting minimal requirements for "network adequacy."
Meanwhile, 29 states have set price transparency standards (and eight states have made them particularly stringent) so consumers can get a better picture of the bottom-line when considering a given network and a given premium.
Next time we'll address these trends and give four plans of attack.
Dianne Wagner is Senior Director of Provider Engagement & Enablement at Florida Blue (Blue Cross Blue Shield of Florida).
Carolyn Wukitch is Senior Vice President and General Manager of McKesson Health Solutions.