The Affordable Care Act (ACA) has brought about a lot of changes in the healthcare industry in the United States. One such instance is the requirement of plans sold through the Health Insurance Marketplace to cover treatment for pre-existing medical conditions. Because of this, payers can’t deny coverage to high-risk patients or charge them exorbitant premiums.
Another change is incentives offered under the ACA, which have prompted some health systems to create or acquire health insurance companies. According to the Robert Wood Johnson Foundation, provider systems in the U.S. established 37 new health insurance companies and acquired five existing health plans between 2010 and 2015. However, as of 2017, only four of them were profitable, and five had gone out of business.
One trend that we’ve seen across the industry is with payers and providers partnering with each other, as well as with large tech companies, to improve quality and reduce costs. In the past, payers have lagged behind in utilizing technology, such as artificial intelligence and automation, to lower costs and improve member satisfaction. Now, some of them, especially larger companies, are combining resources with technology to boost high-quality outcomes, enhance member satisfaction and improve access to pertinent data.
Because the National Committee for Quality Assurance (NCQA) urges payers to integrate electronic clinical data in their quality reporting, these types of ventures help payers play a larger role in improving patient outcomes through technology-enabled delivery of evidence-based practices and augmenting data, analytics and care coordination. Such partnerships allow both parties to combine assets while sharing financial risk and reward.
In the first quarter of last year, insurance technology startups raised $597 million, $280 million of which was garnered by health insurance companies. Payers have the lowest profit margins in healthcare, so collaborating with a tech provider to obtain access to clinical and financial data makes both financial and operational sense. They can then analyze the data for a better overall view of not only the cost but also the value of care.
Payer and Provider Partnerships
A survey by PricewaterhouseCoopers (PwC) of health insurer executives found that 33 percent of respondents believe increasing collaboration with providers will be most important to their organization’s success and 17 percent stated that they’d be fully integrating payer and provider functions into a single organization in the next five years. Much of this collaboration is due to the shift to value-based payment models. Payers bring their wealth of historical claims data to the partnership, and providers bring their clinical data.
As with payers, providers that combine their resources with technology businesses are better able to serve their patients while reducing costs. The use of innovative technology lets them develop a customized approach to care management and proactively perform population health management. As indicated by the PwC survey, tech companies help providers deliver quicker and more effective care than their non-digital counterparts. Specifically, it states that “vertical integrators, technology invaders and health retailers all have a leg up on many established health players in understanding consumers and tailoring experiences for them.”
Collaboration in Action
Following are a few examples of these types of partnerships:
- Aetna formed a partnership with Banner Health, located in Phoenix, that “was built on a previously formed ACO that had led to an 11.5 percent decline in overall medical costs and a 24 percent decrease in avoidable surgical admissions.” According to Aetna, the initiative is designed to “create more services for patients, such as a single site for tracking healthcare and insurance information, and access to customized health services within the Banner network.”
- Five healthcare organizations–insurers UnitedHealthcare and Humana and technology vendors Optum, Quest Diagnostics and MultiPlan–launched a blockchain pilot to help payers “improve the quality of data and reduce the administrative costs associated with insurers getting up-to-date healthcare provider demographic data.”
- Minneapolis-based Bright Health has been forming partnerships with health systems in the markets it serves. For example, last fall it announced that it would be offering individual health plans and Medicare Advantage with Prescription Drug coverage plans to residents in three key Tennessee markets.
The growing popularity of technologies like artificial intelligence and blockchain may increase the number of these partnerships. Both providers and payers are continually looking for ways to improve quality of care while reducing costs, and collaborating with technology firms may provide them with the necessary resources to accomplish that.