Health insurance startups are riding the wave of technology and innovation as the resulting consumer-centric models have created a powerful new way to do business.
They're also up against much larger companies that have the size and scale to negotiate and have their own data analytics.
Health 2.0 co-founder Matthew Holt will be among a panel of experts to speak at Health 2.0's session, "Big Bets in Insurtech," starting at 8:25 p.m., Wednesday, September 18, in Santa Clara, California.
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Other digital leaders on the panel include Dennis Ho, CEO of Preveon; Erick Schweber, CEO of Surveyor Health; Sara Wajnberg, chief product officer at Oscar Health; Seth Cohen, president and co-founder of OODA Health; Tony Miller, CEO of Bind On-Demand Insurance; and Vivek Garipalli, co-founder and CEO of Clover Health.
HIMSS is the parent company of Health 2.0 and HIMSS Media, which spoke to three insurtech panelists, Miller, Cohen and Garipalli.
In 2016, Miller decided to throw out the traditional health plan model and rebuild a health insurance plan. The result is Bind on-demand health insurance that has no deductibles or coinsurance.
Bind allows members to search and compare prices of various treatment options on their health plan app before selecting treatment.
The Bind plan includes foundational coverage for all members, offering simple copays and covering everything health insurance was meant to cover – preventative, primary and specialty care, urgent and emergency, chronic care, maternity care and prescription drugs.
To lower costs, Bind identifies about 45 plannable procedures that have the widest range of cost, treatment and effectiveness options as optional, add-in coverage at any time during the plan year. Members can get this coverage only if they need it.
Other insurers would call this "leakage," or lost revenue, Miller said.
"What other insurers call leakage, or lost dollars, consumers term a better choice," he said.
Monthly premiums are lower than other plans because of the separation between the plannable procedures and the core plan.
"We've changed the subsidy for what you pay depending on quality and cost," Miller said. "We have over 10,000 members on a plan in 2019. Every customer enjoys savings. Some have saved up to 30 percent; it drives lower out-of- pocket exposure to employees."
Bind works with the self-funded market and employers who are acting as their own insurance company.
Digital health technology has allowed Bind to build a modern tech stack based on capabilities such as machine learning and artificial intelligence. This couldn't have been done five years ago. But the difference still lies in the resulting product enabled by the tech stack, Miller said.
"It starts with the fact that most Americans are really frustrated with their health insurance," he said. "It's confusing; it's unaffordable."
Cohen, CEO of OODA Health and former vice president of Sales and Alliances for Castlight Health, co-founded OODA close to two years ago with a couple of motivations in mind.
First, he already had a team of about six people with whom he had worked on prior ventures.
"We got them together in a room so we could get the band together, so to speak," Cohen said. "Having been in the healthcare technology space, ideas will pivot. The next motivation for us beyond the people was the theme around payments. We were informed by our prior experience in other jobs."
OODA set about to disrupt the lengthy claims adjudication process through real-time payments. First it had to deal with the status quo of insurance companies being dependent on administrative layers that haven't changed in decades. Transformative data is hamstrung by the limitations of these systems, Cohen said.
"The system of claims and payment hasn't changed in 30 years," he said. The team's feeling, he said, was, "If we go into the belly of the beast, we could create a platform that would rise above."
The way it works is that once a claim is adjudicated, OODA gives the provider a guaranteed payment of what the patient owes. Then it tells the insurance company to underwrite the patient's financial risk of these bills, by consolidating various bills through one cover and giving a more convenient best-in-class experience.
"We don't charge anything to the provider," Cohen said. "The way our business model works, the payer pays us to deliver the customer experience. If we're able to collect more than 50 percent, it's offset through that."
OODA has launched pilots, such as in Arizona, that have shown good results, though Cohen has learned that it's not always easy to change the status quo. While the Silicon Valley mindset is to disrupt and move fast, sometimes it's best to step back. Also, never lose sight of the patient, he said.
"We're working with large providers, payers, trying to transform the operating model," Cohen said. "The art is when do you push and challenge and when do you respect that?"
OODA isn't a competitor to other insurtechs, but acts as their assistant.
"The big players are motivated now as ever before to innovate," Cohen said.
Clover Health CEO Garipalli co-founded the healthcare technology company and Medicare Advantage plan in 2014.
Clover uses a proprietary tech platform to collect, structure and analyze health and behavioral data to improve medical outcomes and to lower costs.
When consumers are younger, they think about healthcare in an episodic way, Garipalli said. But 90 percent of healthcare costs for older adults is driven by chronic conditions.
"We built a product focused on improving the decision-making for physicians," he said. "We felt it was a big opportunity, by physicians having more data at the point of care."
When decision-making is improved at the point of care, costs go down.
Physicians are typically paid based upon a diagnosis, or through Medicare Advantage plans, a capitated payment.
"In many cases, big health plans do not pay physicians based upon a diagnosis, but through a capitated payment as a percent of the premiums," Garipalli said. "In contrast, Clover actually pays a fair fixed price - so not to incentivize the wrong behavior. Reimbursement shouldn't fluctuate with decisions. It should be tied with using software at the point of care."
Most health insurance, or any insurance, is about identifying and pricing the risk, he said. Most risk arrangements are for a 12-month period. But cost savings sometimes are not realized until year two or three.
"When we were thinking about what to build at Clover, we focused on building a product focused on health outcomes," Garipalli said. "So many healthcare startups have wonderful missions, have all the right intentions. They struggle to find a way to execute. I hope over time with insurtech, people starting their own insurance company will be trying to affect risk in a positive way."
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The Santa Clara conference will showcase cutting-edge innovation transforming healthcare Sept. 16-18.