Here's why carriers are forced to sink or swim in a post-PPACA market

Capitalizing on data analytics 

With the post-ACA reimbursement model still taking shape, providers must focus on consumers. The ACA gives providers incentives to deliver healthier outcomes and quality performance metrics — in other words, by improving patients’ health. This requires the ability not only to identify at-risk patients, but also to monitor their progress and eliminate preventable episodic care and unnecessary emergency room visits. To meet those goals, providers will in effect be taking on a financial risk.

Predictive analytics — based on medical histories, basic demographics (such as education, age, race, and gender), and other predictors of evidence-based care — will certainly be a large part of the solution, but this will require scale and an abundance of rich, relevant data. Most providers have neither the scale nor the expertise to develop these analytic capabilities, especially since analytics depend on integration with so many other players.

Payers, however, are sitting on a treasure trove of data. Those that act now can help shape this new environment, ensuring that patients see healthier outcomes at a better price; further, as patients gain power vis-à-vis other healthcare channels, they will demand a better customer experience, including more transparency of costs, mobile services, clinical decision making, and behavior-based discounts.

Payers that hesitate to make a move risk losing a sizable chunk of their members, including the lowest-risk patients who will more easily be able to flee for efficient competitors offering discounts. We see two paths: one in which payers continue to focus on reducing costs and managing risk and another in which they create value in an outcomes-based marketplace where data is the currency and payers are the banks.

Forward-thinking payers have an opportunity to lead the ecosystem to its desired future state. Consider a couple of recent examples. Aetna teamed with analytics firm GNS Healthcare to assess detailed patient records, identifying patients at risk of metabolic syndrome. They can also offer patients guidance in terms of treatment and identifying the factors unique to them that increase their risk of disease. And WellPoint created analytic reports for providers in its Provider Care Management Solutions (PCMS) platform. PCMS reports are real-time, dynamic, based on current medical histories, and relevant to the provider.

Recognizing the importance of these developments and the looming threat on the horizon if drastic measures are not taken, some payers are taking unprecedented action. In California, competitors Anthem Blue Cross (a subsidiary of WellPoint) and Blue Shield of California have collaborated to create a health information exchange to analyze and share the data of more than 9 million patients. (A non-profit organization will govern the data.) In another example, Aetna, Humana, and United Healthcare have collaborated to standardize charge rates across most assigned services.

Thriving in the new landscape

Leading payers are making important strategic moves to prepare for a world dominated by analytics. Although they have mountains of data at their fingertips, what’s lacking is a dynamic, interconnected system of data stores. What will the healthcare system look like in 2020? What role will payers have? What will the dominant market players need to be good at, and how will they stay relevant? Who will bear the financial risk of healthcare costs?

If risk-sharing models such as accountable care organizations and patient-centered medical homes succeed, they will challenge the traditional roles of payers and providers by shifting the risk and calling into question the payer’s role as the middleman. Payers that act now can capitalize on this flux by embracing a new role and developing the capabilities necessary to thrive.