The landscape is changing rapidly for payers. To be successful, insurers must adapt to new reimbursement models and forge new partnerships with providers.
It is that time of the year when we like to take measure of where things stand.
For health plans this year has been something of a mixed bag. Many of them have posted big profits, but there's no disguising it—healthcare is in the midst of a major shift from an emphasis on volume to value and that is affecting the health insurance industry.
The new focus in healthcare is on care coordination and population health. To be successful insurers must adapt to new reimbursement models and forge new partnerships with providers. Opportunities abound, but competition is getting tighter.
See Also: 1 in 5 Health Systems to Become Payers by 2018
Here are three key ways the health plan game is changing:
1.New Competitors
Hospitals and health systems are beginning to launch their own health plans. Sure, they've tried this before and failed, but this time healthcare reform and the emphasis on the care continuum and population health have created a perfect storm of opportunity.
Tufts Medical Center in Boston, Catholic Health Partners in Cincinnati, North Shore-Long Island Jewish Health System in New York, and Piedmont Healthcare and WellStar Health System, two powerful Atlanta-based health systems, are among the hospitals and health systems preparing to or already competing with the likes of Aetna and WellPoint.
Their niches are local, small employer groups and their networks are narrow—typically their own hospitals and physicians, who can be easily managed to control costs and outcomes.
2. The Launch of the Federal Health Insurance Exchange
More than 2.8 million people tried to access healthcare.gov, on launch day (Oct.1). Their efforts were met with long, frustrating waits, security concerns, and inaccurate data. In short, the launch was a mess.
Two months later the system is not quite humming along but it is showing improvement. Bloomberg reports that the 800,000 people accessed the site one day last week. Around 100,000 successfully enrolled in a health plan during the month of November.
Health plan executives are cautiously optimistic about the online marketplace. Many are participating at a decidedly modest level. Humana, for instance has offerings in 14 states where it already sells insurance products. UnitedHealthcare has a presence in 12 exchanges.
With millions of uninsured people potentially enrolling in HIX this year, insurers see the demand for medical care exploding. Insurance executives say it is better to let those folks get all that care (and costs) behind them before they step in.
3.The Rise of Private Exchanges
Private HIX (created by health plans, brokers, or other groups) offer health plans more freedom than public exchanges in terms of their level of participation and the products they offer. Employers are using private HIX as a vehicle to transition employees from self-funded plans to a defined-contribution model offering, where the employer contribution to healthcare benefits is capped.
The shift means more revenue for insurers because fully insured memberships typically generate four to five times the profit contribution of self-insured memberships.
Aetna is among the insurers developing their own proprietary HIX where only its products will be offered to employers. The insurer plans to focus on population management and will allow consumers to customize products and services for their individual needs.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
