Consumerism is the new reality: 3 musts for the health plan of the futurePosted: November 1, 2012
By: Jon Cooper, CEO, LifeVest Health
The landscape for health plans is changing. With 30 million Americans purchasing insurance through exchanges,
and businesses shifting more of the burden of healthcare costs to their employees, consumers are front and center
in managing their health benefits. This is transforming what people expect from their health plan at every point of
the value chain.
As the industry grapples with the impact of consumerism, health plans are also facing increasing financial and
regulatory pressure. Driven by changes to coverage requirements and medical loss requirements, to be successful
in the future, health plans must:
1. Proactively engage members from contemplation to renewal
2. Deliver immediate value to all members, not just those who need care, but also healthy members who are
critical to balancing risk and maintaining competitive pricing
3. Deploy advanced analytics to identify high-risk members and assist them before they ever seek care
Health plans that succeed at these strategic imperatives will have a competitive advantage and be better
positioned to lead in this evolving market.
1. Proactively engage members from contemplation to renewal
Health plans must reinvent how they manage risk. With guaranteed issue, the elimination of annual and lifetime
limits, and narrowing actuarial bands, health plans must adopt new methods for controlling their medical
expenses. To be competitive in the future, plans must attract and retain healthy members who balance the
risk pool, and ensure that members who seek care are receiving the most appropriate care available. To do so,
the most innovative plans are going beyond traditional plan design and adopting new approaches to consumer
targeting and member engagement.
Health plans can no longer afford to standby and hope to attract the right members. Rather, health plans have
to start thinking and acting like direct-to-consumer companies. They must proactively engage individuals at key
moments in the consumer lifecycle:
This is the moment when individuals are contemplating whether and how to purchase. They are learning about
the market, determining what factors motivate their purchasing decision, and evaluating their options.
Health plans that engage members at this early stage have the opportunity to help frame how consumers view the
marketplace and can put forth their value proposition while consumers are largely receptive to new ideas.
At this stage, consumers usually have an understanding of the marketplace, a very clear idea of what factors
matter to them, and have narrowed their selection down to a few plans based on macro-level criteria such as cost,
plan type, and provider network. At the purchase stage, consumers compare plans head to head. They compare based on price and reputation. They turn to traditional resources like your plan’s website and US News and World
Report rankings, but also to non-traditional media such as Yelp!, Twitter, and Facebook.
In the future, plans that will stand out at the point of purchase will not only offer competitive pricing, but will
also understand how to thrive in a social economy. Hiring a social-media manager and putting a consumer-spin
on their brand is insufficient. Successful plans recognize that social media is the “great amplifier” and that the
only way to distinguish their brand across social channels is by delivering an authentically excellent customer
experience to all members. This requires much deeper process reengineering and a cultural focus on customer
Healthy members are highly valuable, and yet terribly underserved. In order to attract and retain these important
members, health plans must deliver value to them from day-one, while they are healthy. This is discussed in
greater detail below.
When seeking care
Traditionally, this is where health plans have had the greatest level of member engagement. Before care,
members routinely call their plan to understand whether a treatment is covered, whether a provider is in network,
and what their out of pocket expense will be. After care, members call to verify claim status or dispute denials.
While plans have moved some of these customer service features to the web and introduced other forms of self-
service, these resources are inadequate in a consumer-oriented market.
At the very least, plans that will be successful in a consumer-oriented marketplace must offer price and quality
transparency, and easy-to-use portals for tracking claims and healthcare expenses. Plans that will distinguish
themselves will go beyond this to offer tools to steer members to the appropriate level of care, allowing them to
easily schedule appointments online, while also ensuring that the provider receives all of the members’ relevant
data in advance of the encounter. These customer-friendly services are important in creating brand affinity and
delivering excellent customer experiences.
As the market becomes more consumer-focused and legislation around pricing goes into effect, competition for
healthy members will increase significantly. Health plans that will be successful in the future will take advantage
of the ten months of captive membership that precede the renewal period to engage and delight their members.
For these members, renewal should be a no-brainer. At the same time, these plans will focus on building brand
affinity with desirable members enrolled in other plans through other mediums such as social media, health
and wellness apps, community engagement, etc… They will use advanced psychographic analytics to better
understand their target markets and how best to engage these consumers. Come renewal, these plans will already
be a well-known brand and will have already established a relationship with their targeted consumers.
2. Deliver immediate value to all members, not just those who need care, but also healthy
members who are critical to balancing risk
The great irony of traditional plan design is that healthy members, who are instrumental to maintaining a balanced
risk pool and competitive pricing, often go an entire enrollment period without ever engaging with their health
plan. In the past, this was largely okay. Traditionally in the employer market, employers were making purchasing
decisions on behalf of the members, and in the individual market, plans had significant flexibility around pricing
and coverage to offer competitive prices to the most desirable members.
In the future, this will no longer be the case. Employers are shifting more of the responsibility (both financial and
decision-making) to workers, and in the individual and small group markets, health plans have much less flexibility
around pricing variations (3:1 actuarial bands) and member selection (guaranteed issue and renewal) than before
the passage of the Affordable Care Act.
What this means for health plans is that attracting and retaining healthy members is of utmost importance. As
these members are spending more on coverage (because employers are offering less support and premium
spreads are converging) they are becoming increasingly discriminating consumers. Health plans that offer rich
benefits for all members, including the healthy, will be at an advantage. Some examples of these benefits include
gym memberships, healthy eating cards, weight management programs, wellness programs, etc… By creating
value for all members from the very start of their coverage, these health plans will be better positioned to attract
and retain a balanced risk pool.
3. Deploy advanced analytics to identify high-risk members and assist them before they become
As described earlier, since the passage of the Affordable Care Act, many of the tools previously deployed by health
plans to manage risk (exclusions, maxes, and price discrimination) are no longer available. Hence, other than
attracting a balanced risk pool, the only other tools available to plans for managing medical expense are plan
design, medical management and analytics.
For a long-time, plan design has been focused on directing members to the right level of care and to providers
within the network. Medical management has largely focused on managing costs once care is being delivered, and
trying to prevent future episodes of care.
Since the Affordable Care Act passed, plan design and medical management are converging around new care
models such as Accountable Care Organizations, Patient-Centered Medical Homes, and Centers of Excellence
where providers are sharing in the risk. This is an area of tremendous innovation in the industry, and at the center
of the migration from a fee-for-service to fee-for-value.
Health plans that will be most successful in the future are not only adopting these new care models, but also
introducing new analytic capabilities to achieve the following goals:
- Identify high risk members and steer to the appropriate care model
- Enroll high risk members in disease management programs
- Extend analytic capabilities to the provider network to assist providers with sharing in the risk
Traditionally, analytics in the payer industry have largely been retrospective and claims-based. While this is an
important source of information, in many cases a retrospective analysis is too late. Increasingly, innovators are
looking to other sources of data to prospectively identify high risk members and address their needs before an
episode of care ever takes place. One such example is the use of health risk assessments and biometric screenings
which health plans and employers have used for years to identify high risk members. As the industry evolves,
innovators will leverage real-time information from additional sources such as personal health trackers, monitors,
and health apps to get real-time information and have the ability to intervene at the moment a member becomes
high risk, before they ever seek care.
The macro environment for health plans has changed significantly since the passage of the Affordable Care Act.
Millions will be purchasing insurance through public and private exchanges, not just the previously uninsured,
but also the individual market and small group markets. Even some large employers are migrating from a defined
benefit to a defined contribution model.
Health plans must make consumerism a top priority for the future. This will require process changes, cultural
changes, changes to the delivery model and the sales model. Moving fast toward consumerism is important,
but of equal importance will be putting in place processes to attract and retain a balanced risk pool, and manage
medical expenses. To do so, health plans must learn how to engage all members at every point in the consumer
lifecycle; demonstrate value to all members, not just those seeking care; and make use of advanced analytics to
identify high-risk members before they ever seek care.
ABOUT LIFEVEST HEALTH
LifeVest is a health incentive program that allows individuals to invest in their own health. Structured as a stock
tied to your health, the value of your LifeVest (your health stock) is determined by how much you improve your
controllable health metrics. When you improve your health metrics, your LifeVest’s value increases. When you
neglect your health, your LifeVest’s value declines. LifeVest creates an engaging platform for members to track
their metrics, and ultimately a highly effective, market-based health incentives program that fundamentally
changes the way members value their health.
With LifeVest, health plans build strong brand affinity and promote health by:
- Making a very visible investment in the health of all members, not just those in need of care
- Engaging members on a regular basis through the LifeVest platform to bring awareness to value-added services provided by the health plan
- Identifying high risk members and intervening before they ever seek care
Health plans that deploy LifeVest Health will have a competitive advantage in the new marketplace.
LifeVest Health, Inc.
LifeVest is a patent-pending solution to create better health incentives based on market economics. LifeVest was
formed as a spinout from The TriZetto Group, a leading health technology company, and is backed by leaders in
the healthcare industry including TriZetto, WellTok, and Jeff Margolis, an industry thought-leader.
LifeVest combines the speed and flexibility of a startup, with the strength and resources of its larger partners to
offer its clients cutting-edge innovation and world class reliability.