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Looking at Healthcare Through Payer Lenses: Part One

by John Moore | June 19, 2011

Attending the annual health insurers confab (AHIP Institute) last week gave one some insight as to the challenges this part of the healthcare industry is facing. There were plenty of sessions on addressing data analytics for everything from population health management to fraud, a number of other sessions on consumer engagement, disease management, health & wellness, and of course the ever ubiquitous sessions on Accountable Care Organizations (ACOs).

But what pervaded many a discussion, panel session, and even keynotes was the level of uncertainty in the market today. Though the Affordable Care Act (ACA) was passed and signed into law, its future is anything but certain. There is both legal and political uncertainty. Legal in the numerous lawsuits that have been filed, particularly regarding the individual mandate that will ultimately be a Supreme Court decision. Political in that numerous politicians and some presidential contenders have built a portion of their platform on repealing ACA. Such uncertainty makes it extremely difficult for payers and employers to effectively plan for the future. Regardless, there were a few key areas that seemed to attract the most attention: ACO, Consumer Engagement & HIX.

Following are some quick snapshots:

Accountable Care Organizations (ACOs): Plenty of talk on this subject, primarily from the consulting firms who seemed to have run most of the sessions at AHIP. Payers have been experimenting with the model for some time now, well in advance of CMS’s NPRM. In one session, Blue Shield of California (BS-CA) talked about their ACO with Catholic Healthcare West. A very challenging relationship that took 4 years to iron-out and stand-up the ACO and the only reason they kept at it: Calpers was supporting them with an enrollment of 40K new members and Kaiser-Permanente was beating the hell out of both of them in the market. More competitive necessity. This may foretell future attempts and challenges to move to this model. One other important point expressed many times over regarding ACO: data exchange is an ACO’s life-blood.

Consumer/Member Engagement: Numerous sessions drilled down on how payers will market to and serve their members in a deeper, more meaningful fashion but it all sounds just so superficial. Sure, payers are indeed trying to engage the consumer (marketing to new prospects via HIX – payers are really struggling here) and provide consumers with information they can use to make better “value” choices. There are also the ubiquitous efforts of payers to promote health & wellness and institute various disease management programs. Yet based on the sessions attended, seems more like a lot of hand waving and not convinced payers are seeing any meaningful traction in truly engaging their members.

Health Insurance Exchanges (HIX): In accordance with the ACA, a State must have its HIX operational by Jan. 2014. Each State in the country will have their own, slightly nuanced HIX to meet the needs of their citizens and in compliance with their laws. There is no commercial off the shelf (COTs) solution so each exchange will be a separate, custom build. The big winners here are consulting/system integrator (SI) firms (e.g., ACS, CSC, Deloitte, etc.) and they were out in force at this event. They are going to make a killing first standing up these HIXs and then of course keeping the HIX up and running over the years to come. The big challenge, however, is that these exchanges are slated to support Medicaid recipients and most States’ Medicaid IT infrastructures are so outdated that they need to be rebuilt. Even more $$$ to those SI/consulting firms.

What may have been the most bizarre aspect of this event was simply its isolation from the rest of the healthcare sector. This was a very insular event. There were no consumers/members giving presentations or keynotes on what they are looking for from this industry sector. There were few if any providers or representatives of provider organizations talking (either in sessions or keynotes) about what they were looking for from payers, how they wish to engage them, work together to improve health outcomes, improve the value of healthcare delivered.

All very, VERY strange.

If this sector of the healthcare industry is truly interested in improving the quality and value of healthcare delivered, it has its work cut out for them. In our next post we’ll delve into the three overarching challenges payers face with the coming changes brought about by ACA. Small hint, start with trust.

Addendum:

Consulting firm Perficient was also in attendance and wrote about the ACO issue as well that is worth a read.

18 responses to “Looking at Healthcare Through Payer Lenses: Part One”

  1. danmunro says:

    Great post – and insight (as always). Uncertainty makes perfect sense – especially for this group. With ACA repeal (partial or full) in the hands of the Judiciary – the lobbying door in D.C. is pretty well shut. Handicapping Supreme Court decisions is a spectator sport – not the least bit participatory. Looking forward to Part 2 (and Rory McIlroy’s win at the U.S. Open in the meantime 😉

    • John Moore says:

      Well Dan, You got your win in McIlroy but you’ll have to wait just a bit longer for part two.

      • danmunro says:

        McIlroy was fun to watch – but really more of a Coronation. Very rare wire-to-wire finish in a major – multiple records broken – 18 under par – all four rounds in 60’s – and won by 8 strokes (at age 22). Handicapping SCOTUS – a whole lot harder – and probably more like watching Phil Michelson. You know it’s going to be a wild ride – all over the course – and you won’t know how it’s going to end until the absolute last putt on #18.

  2. Gustave Glassl says:

    “What may have been the most bizarre aspect of this event was simply its isolation from the rest of the healthcare sector. This was a very insular event. There were no consumers/members giving presentations or keynotes on what they are looking for from this industry sector. There were few if any providers or representatives of provider organizations talking (either in sessions or keynotes) about what they were looking for from payers, how they wish to engage them, work together to improve health outcomes, improve the value of healthcare delivered.”

    What you see is what you have written (a 1000+ page health care bill is not for thinking about questions or acknowledging anything outside of the vernacular). Typical institutional players (inside and outside of government) making the Grand Outline with little regard to those nasty “externals” that make it all work. Centralized State Health Departments and all the small scale health offices that deal with real life. This also includes all those millions of non-profits that have to pick up the legitimacy of a failing health system. Participation has to do with scale. Sorry, Humpty Dumpty knew best, “The question is, which is to be master–that’s all.”

    • John Moore says:

      Gustave, you make a valid point, it is just too bad that for all the talk of wanting to work more closely together (payers+providers) the reality is, at least what this event implied is that we are a very long way from seeing that actually occur in any meaningful, systematic manner and if that doesn’t happen, nothing done in DC will bridge the gap.

  3. […] Looking at Healthcare Through Payer Lenses: Part One « Chilmark Research […]

  4. […] Research, who was also in attendance, analyzes this disconnect with some examples. While I was not in San Francisco for the “confab” last week, having been […]

  5. Insightful analysis–especially the comment on the insular world of payers. It has baffled me for some time that the gulf between payers and providers seems unbridgeable.
    Also a correction: there is no Blue Cross Blue Shield of California–in our state Blue Cross and Blue Shield are competitors. The ACO CHW project is a Blue Shield of California effort.

    • John Moore says:

      Catherine, thanks for contributing to the discussion and just as important, thank you for pointing out the error, re BCBS, vs just Blue Shield. Just another nuance to add to the mix. Speaking of which, was quite surprised to see just how many payers there are in this market. And to think, I thought the provider side was fragmented as well as the HIT side. Seems like the entire healthcare sector is nothing but fragments, cottage operations with a few big ones thrown in for legitimacy.

  6. Cyndy Nayer says:

    We were there with the exact message of “here’s what the purchasers are seeking, and how an insurer can be relevant.” We had over 70 folks in the room, but the question of, “did they hear us?” is an interesting one. We showed them the concepts of engagement at both the employer/plan sponsor level and the covered level, and the concept of outcomes-based contracting to align the incentives. We had a few wonderful questions, and some follow-up. We’re hoping our voice gets louder, working to make that happen.
    Cyndy Nayer
    President, CEO, Center for Health Value Innovation

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