State and regional healthcare plans can use tech to stay competitive

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"Megahealth" organizations with national footprints are buying medical groups, clinics, home health agencies and more so they can offer services across the continuum of care. These organizations promise better experiences and greater value through economies of scale.

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As you would expect, these heavyweight competitors, when combined with compliance challenges and population trends, create a difficult business climate for smaller and medium-sized plans. Size matters in the healthcare payer business. Big health plans have larger financial cushions for managing riskier populations and launching new lines of business.

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Nonetheless, there is a path to success for single-state and regional plans; they can still improve member retention and attract new business, with the aid of modern technology. The key is to zero in on the quality of the member experience through innovative engagement techniques, well-managed costs, high-quality care and satisfactory outcomes. These plans can build on their investments in interoperability and other regulations to develop new products and capabilities that meet needs in their local markets and support them with digital consumer-grade service.

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Here we'll look at key industry trends and ways smaller and single-state payers can respond to them. Then we'll zoom in on the customer experience, which is where relatively small players can excel.

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Go on offense to respond to key trends

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While small and regional plans lack the financial might of national competitors, they can nevertheless make use of the same modern technology through "as a service" models. Cloud-based services effectively deliver capabilities that will help smaller plans find opportunities in the following trends.

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Trend 1: Demographic shifts. Many members born between 1960 and 1964 will soon be eligible for Medicare coverage. Slightly more than half of today's 67.2 million Medicare recipients have enrolled in Medicare Advantage (MA) plans, according to monthly federal statistics. That trend is projected to continue, although some large plans have reported thinner margins from MA business as members use services more heavily than anticipated. Still, many healthcare systems are launching MA plans, effectively becoming "payviders" that blend healthcare services and health coverage.

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How to respond: For payviders to succeed, they must deliver on the promise of a friction-free experience across their continuum of care. Effective partnerships and enhanced collaboration with providers are the keys to small and medium-sized plans' success as payviders. The member-patient should perceive the service as coming from a single entity.

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And that's the payvider's innate advantage: a cohort of its plan members are also the organization's patients, so more premium revenue stays within the organization. Payvider MA plans can also earn bonuses for quality. Closing care gaps, improving outcomes and increasing member satisfaction requires tight data integration and building a comprehensive view of patient-members.

\r\n

To those ends, we helped a regional West Coast plan create a virtual 360-degree view of its members that makes clinical and claims data available in the same portal. This gives members a more useful self-service option and greater transparency into their health spending.

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Trend 2: Member moves. Members are always shifting in and out of lines of business-from commercial coverage to exchange coverage, from commercial to Medicare, from Medicaid to exchange plans, from self-pay to Medicaid, etc.

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How to respond: Payers can reduce member attrition by using analytics to monitor plan performance and member satisfaction. Analytical insights can inform "predict and prevent" strategies, such as identifying and reaching out to members nearing retirement age or developing a strategic response to a local increase in unemployment. Plans may need to diversify their lines of business so existing members have health coverage choices appropriate to their life stages.

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Regional and single-state plans should have a strong sense of their local populations' health needs; using these edges, they must develop hyperlocal networks and offerings to meet those needs. Products and services could address prevalent chronic conditions or a specific demographic. This local expertise can help plans compete effectively for states' managed Medicaid contracts. Plans can also build stronger relationships with local and regional employers, creating programs specific to their employee base and helping them contain healthcare costs.

\r\n

Trend 3:Vertical integration of the giants. Deep-pocketed healthcare organizations with national reach are vertically integrating. These Fortune 50 companies are building networks that span most of the continuum of care. By acquiring primary care practices, they control the traditional gateway into care and can funnel member-patients into their broad networks, promising a seamless experience and higher quality and value.

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How to respond: Single-state, small and regional health plans can pursue virtual vertical integration strategies of their own. Instead of owning practices, they can form close partnerships with the dominant healthcare system or systems in their state or region. It's critical for plans to partner with a healthcare system or ecosystem of providers that can meet comprehensive member care needs, some of which may be overlooked by larger plans.

\r\n

Plans also can make it easy for members to manage and contain their prescription drug costs by working with alternatives to traditional pharmacy benefit managers, such as Cost Plus Pharmacy and Amazon. Fluid data flows and integration will be critical for coordinating care and services to ensure members have a unified experience across the virtual organization.
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"Megahealth" organizations with national footprints are buying medical groups, clinics, home health agencies and more so they can offer services across the continuum of care. These organizations promise better experiences and greater value through economies of scale.

As you would expect, these heavyweight competitors, when combined with compliance challenges and population trends, create a difficult business climate for smaller and medium-sized plans. Size matters in the healthcare payer business. Big health plans have larger financial cushions for managing riskier populations and launching new lines of business.

Nonetheless, there is a path to success for single-state and regional plans; they can still improve member retention and attract new business, with the aid of modern technology. The key is to zero in on the quality of the member experience through innovative engagement techniques, well-managed costs, high-quality care and satisfactory outcomes. These plans can build on their investments in interoperability and other regulations to develop new products and capabilities that meet needs in their local markets and support them with digital consumer-grade service.

Here we'll look at key industry trends and ways smaller and single-state payers can respond to them. Then we'll zoom in on the customer experience, which is where relatively small players can excel.

Go on offense to respond to key trends

While small and regional plans lack the financial might of national competitors, they can nevertheless make use of the same modern technology through "as a service" models. Cloud-based services effectively deliver capabilities that will help smaller plans find opportunities in the following trends.

Trend 1: Demographic shifts. Many members born between 1960 and 1964 will soon be eligible for Medicare coverage. Slightly more than half of today's 67.2 million Medicare recipients have enrolled in Medicare Advantage (MA) plans, according to monthly federal statistics. That trend is projected to continue, although some large plans have reported thinner margins from MA business as members use services more heavily than anticipated. Still, many healthcare systems are launching MA plans, effectively becoming "payviders" that blend healthcare services and health coverage.

How to respond: For payviders to succeed, they must deliver on the promise of a friction-free experience across their continuum of care. Effective partnerships and enhanced collaboration with providers are the keys to small and medium-sized plans' success as payviders. The member-patient should perceive the service as coming from a single entity.

And that's the payvider's innate advantage: a cohort of its plan members are also the organization's patients, so more premium revenue stays within the organization. Payvider MA plans can also earn bonuses for quality. Closing care gaps, improving outcomes and increasing member satisfaction requires tight data integration and building a comprehensive view of patient-members.

To those ends, we helped a regional West Coast plan create a virtual 360-degree view of its members that makes clinical and claims data available in the same portal. This gives members a more useful self-service option and greater transparency into their health spending.

Trend 2: Member moves. Members are always shifting in and out of lines of business-from commercial coverage to exchange coverage, from commercial to Medicare, from Medicaid to exchange plans, from self-pay to Medicaid, etc.

How to respond: Payers can reduce member attrition by using analytics to monitor plan performance and member satisfaction. Analytical insights can inform "predict and prevent" strategies, such as identifying and reaching out to members nearing retirement age or developing a strategic response to a local increase in unemployment. Plans may need to diversify their lines of business so existing members have health coverage choices appropriate to their life stages.

Regional and single-state plans should have a strong sense of their local populations' health needs; using these edges, they must develop hyperlocal networks and offerings to meet those needs. Products and services could address prevalent chronic conditions or a specific demographic. This local expertise can help plans compete effectively for states' managed Medicaid contracts. Plans can also build stronger relationships with local and regional employers, creating programs specific to their employee base and helping them contain healthcare costs.

Trend 3:Vertical integration of the giants. Deep-pocketed healthcare organizations with national reach are vertically integrating. These Fortune 50 companies are building networks that span most of the continuum of care. By acquiring primary care practices, they control the traditional gateway into care and can funnel member-patients into their broad networks, promising a seamless experience and higher quality and value.

How to respond: Single-state, small and regional health plans can pursue virtual vertical integration strategies of their own. Instead of owning practices, they can form close partnerships with the dominant healthcare system or systems in their state or region. It's critical for plans to partner with a healthcare system or ecosystem of providers that can meet comprehensive member care needs, some of which may be overlooked by larger plans.

Plans also can make it easy for members to manage and contain their prescription drug costs by working with alternatives to traditional pharmacy benefit managers, such as Cost Plus Pharmacy and Amazon. Fluid data flows and integration will be critical for coordinating care and services to ensure members have a unified experience across the virtual organization.

\r\nBuilding blocks for better regional health plan member experience

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Central to succeeding with the above strategies is zeroing in on the member experience. Healthcare players are in a race to deliver intelligent, frictionless, intuitive service to consumers. Local and regional plans should have an edge in understanding their local population's health needs and habits. They may then couple that knowledge with the following recommendations to create great experiences:

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• \r\n
• Create a comprehensive framework for complete care. It's essential for payers to eliminate friction and obstacles in their value chains that prevent members from receiving unified, intelligent experiences. Payers can leverage interoperability and price transparency regulations to help achieve this. The key is to focus on care and outcomes first, then costs. For example, 90% of prior authorizations are approved, so payers can easily sand that friction point with "gold card" programs streamlining or eliminating the practice for some providers.  
  \r\n
  \r\n
• \r\n
• Subscribe to a modern technology backbone. Platform as a service (PaaS), business processes as a service (BPaaS), software as a service (SaaS), and other hosted services provide smaller plans with a cost-effective means of using leading technology, including modern core platforms, analytics tools and generative AI. Modern platforms are essential to orchestrating data flows, while generative AI has rapidly become a force multiplier for managing myriad administrative tasks at scale.
  \r\n
  \r\nThe hosted services provider is responsible for system upgrades and regulatory compliance-another advantage for smaller plans. Using hosted services makes it possible to launch a new offering at a much lower cost, thereby reducing risk. That enables smaller plans to respond quickly to market opportunities and give new services time to grow enrollment and contribute to the bottom line without huge capital costs. 
  \r\n
  \r\n
• \r\n
• Develop a cost containment strategy. Using as-a-service models and/or upgrading existing platforms to current versions are prerequisites to improving productivity and cutting costs. Plans should work toward retiring obsolete systems and their technical debt. They also should ensure they use the full capabilities of existing systems and tap the potential of automation and generative AI to tackle rote administrative tasks. When we evaluated a regional plan's administrative processes, we identified many that the plan's core system could perform with low or no configuration costs. Replacing the manual procedures with functions built into the core platform enabled the plan to redeploy resources and avoid hiring additional staff even as it added 5,000 members over 12 months.
  \r\n
  \r\n
• \r\n
• Create better engagement strategies to retain members. Personalization is a powerful engagement tool, and modern analytics deliver individualized insights. Health plans can use these to better understand their member cohorts and population health needs. Then plans can execute engagement tactics tailored to meeting those needs, whether personalized coaching or education programs for managing specific conditions. They can also share insights with employers and state agencies, helping them meet their objectives. When we worked with another health plan to activate eligibility features in its platform, its sales and marketing teams could access member data more quickly and create targeted campaigns for a successful open enrollment period.
  \r\n
  \r\n
• \r\n
• Use investments in regulatory compliance to create valuable new services and experiences. Going beyond mere compliance can net important data and new capabilities. When we worked with a smaller state-based plan on a compliance solution for the Transparency in Coverage rule, the plan quickly recognized the potential for implementing predictive pricing modeling. That extension of its compliance investment enabled the plan to give members even more comprehensive pricing data while also streamlining provider negotiations.
• \r\n

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As regulations and population and cultural shifts reshape healthcare, one constant is that consumers have increasing freedom to choose plans and providers. Tapping modern technology services can help small plans gain economies of scale, while expertise in their local markets should help them offer more tailored, personalized products and services. The combination of virtual scale and superior experiences should help these plans find winning niches even as healthcare options expand on a national scale.
\r\n 

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Building blocks for better regional health plan member experience

Central to succeeding with the above strategies is zeroing in on the member experience. Healthcare players are in a race to deliver intelligent, frictionless, intuitive service to consumers. Local and regional plans should have an edge in understanding their local population's health needs and habits. They may then couple that knowledge with the following recommendations to create great experiences:

• Create a comprehensive framework for complete care. It's essential for payers to eliminate friction and obstacles in their value chains that prevent members from receiving unified, intelligent experiences. Payers can leverage interoperability and price transparency regulations to help achieve this. The key is to focus on care and outcomes first, then costs. For example, 90% of prior authorizations are approved, so payers can easily sand that friction point with "gold card" programs streamlining or eliminating the practice for some providers.
  
  
• Subscribe to a modern technology backbone. Platform as a service (PaaS), business processes as a service (BPaaS), software as a service (SaaS), and other hosted services provide smaller plans with a cost-effective means of using leading technology, including modern core platforms, analytics tools and generative AI. Modern platforms are essential to orchestrating data flows, while generative AI has rapidly become a force multiplier for managing myriad administrative tasks at scale.
  
  The hosted services provider is responsible for system upgrades and regulatory compliance-another advantage for smaller plans. Using hosted services makes it possible to launch a new offering at a much lower cost, thereby reducing risk. That enables smaller plans to respond quickly to market opportunities and give new services time to grow enrollment and contribute to the bottom line without huge capital costs.
  
  
• Develop a cost containment strategy. Using as-a-service models and/or upgrading existing platforms to current versions are prerequisites to improving productivity and cutting costs. Plans should work toward retiring obsolete systems and their technical debt. They also should ensure they use the full capabilities of existing systems and tap the potential of automation and generative AI to tackle rote administrative tasks. When we evaluated a regional plan's administrative processes, we identified many that the plan's core system could perform with low or no configuration costs. Replacing the manual procedures with functions built into the core platform enabled the plan to redeploy resources and avoid hiring additional staff even as it added 5,000 members over 12 months.
  
  
• Create better engagement strategies to retain members. Personalization is a powerful engagement tool, and modern analytics deliver individualized insights. Health plans can use these to better understand their member cohorts and population health needs. Then plans can execute engagement tactics tailored to meeting those needs, whether personalized coaching or education programs for managing specific conditions. They can also share insights with employers and state agencies, helping them meet their objectives. When we worked with another health plan to activate eligibility features in its platform, its sales and marketing teams could access member data more quickly and create targeted campaigns for a successful open enrollment period.
  
  
• Use investments in regulatory compliance to create valuable new services and experiences. Going beyond mere compliance can net important data and new capabilities. When we worked with a smaller state-based plan on a compliance solution for the Transparency in Coverage rule, the plan quickly recognized the potential for implementing predictive pricing modeling. That extension of its compliance investment enabled the plan to give members even more comprehensive pricing data while also streamlining provider negotiations.

As regulations and population and cultural shifts reshape healthcare, one constant is that consumers have increasing freedom to choose plans and providers. Tapping modern technology services can help small plans gain economies of scale, while expertise in their local markets should help them offer more tailored, personalized products and services. The combination of virtual scale and superior experiences should help these plans find winning niches even as healthcare options expand on a national scale.

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