Tech partnerships give traditional insurance a shot in the arm

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So-called BUCAH plans from Blue Cross, Blue Shield, UnitedHealthcare, Cigna, Aetna and Humana have been maligned by independent producers who loathe the status quo and the public at large, but they’re busy burnishing their value proposition by embracing technology.

One of the latest examples is Cigna’s partnership with technology-focused Oscar whose tech platform will help draw more small and midsize customers. Others include UnitedHealthcare’s UMR provider engine, which features transparent cost and quality data, and Humana teaming with Microsoft and Accolade, as well as launching a new digital health and analytics unit to improve member experiences and health outcomes.

Innovation, including technological strides, is at the core of how Humana does business, according to a company spokesman. “As we study insights and bring together our service model with innovative tech partners, the results yield personalized service for employers based on the specific healthcare and benefits needs of their entire employee and family populations,” explains Marvin Hill, Jr., Humana’s national public relations manager. “We enhance the business of our employers and our members benefit from powerful tools such as price transparency, wellness and telemedicine.”

Regional and Blues plans have taken the plunge as well. Minnesota-based PreferredOne now offers an interactive digital tool that can provide members with evidence-based cognitive behavioral therapy. Blue Shield of California also has tapped Accolade’s personalized member engagement experience for self-funded employer customers to help strike a better balance between technology and human expertise.

Blue Cross and Blue Shield companies searched for new ways to harness technology to improve the member experience, according to Jennifer Atkins, vice president, network solutions for the Blue Cross Blue Shield Association. She notes that more than $575 million has been earmarked to help local startups drive innovation across several industry sectors such as health IT and interoperability. One example is an investment in Payfone, a mobile and digital identity authentication solutions provider whose technology reinforces an ongoing commitment to ensuring members benefit from leading security solutions and protections.

Could these initiatives and partnerships be turning the tide on how BUCAHs are perceived?

In a recent commentary, Kaiser Family Foundation President and CEO Drew Altman noted that the average family premium for fully insured firms last year was actually less than larger self-insured firms ($20,627 vs. $20,739). What’s surprising is that “self-insured firms would seem to have an advantage because they cut out the middleman,” he argued.

But that’s not to suggest BUCAHs are necessarily doing a better job. The bottom line is that both funding mechanisms have failed to control healthcare costs, he hastened to add.

Fully insure or self-insure?

The age-old debate about whether to fully insure or self-fund health benefit plans has been raging across the brokerage and advisory landscape for years. It has become heated at times with Nelson Griswold’s NextGen Benefits Mastermind group of elite producers and Dave Chase’s Health Rosetta calling out peers who recommend BUCAHs to their clients and enlisting independent brokers or advisers as trusted foot soldiers in this battle.

They want nothing short of a revolution, and their scathing critique is that fully insured BUCAHs are stingy about sharing member data, hiding behind the claim that it involves proprietary information. Another knock on these plans is that they simply line the pockets of their shareholders and broker partners seeking easy commissions at the expense of their clients and patient care.

The issue is such a lightning rod that several large benefit brokerages or advisory firms, many of which recommend BUCAH plans on behalf of their employer clients, declined to be interviewed for this story. A self-funded product specialist with a regional Blues plan believes brokers who “want the most amount of gain with the least amount of work” will place business with a BUCAH. “Carriers have more turnkey kind of solutions,” she said, speaking on the condition that her identity not be revealed. However, her overall assessment is far more even-handed.

Many healthcare tech startups have been purchased by BUCAHs, allowing them “to be super innovative, cutting edge and seen as taking risks to better serve their health population,” she observes. Driving forces include improving member experience and innovation, as well as protecting patient information.

Indeed, BUCAHs are identifying opportunities to invest in new technologies that move the needle on innovation and sustain their growth while also improving patient outcomes, says Andrew Batman, VP of payer/provider research at KLAS, an independent research firm specializing in healthcare technology.

For example, insurance companies and providers increasingly use portals to streamline ease of access, billing and scheduling for patients who are used to technology making their daily lives much easier. Another area is automating claims, with artificial intelligence expected to expedite approvals in the years ahead.

“If there’s an error in coding of some documents and processes, that becomes a challenge, and I think the AI piece eliminates that in 5% to 7% of cases that have to be looked at in a second run,” he observes.

While BUCAHs bring economies of scale to healthcare, they’ve also been targeted for wasteful spending, which is why the Affordable Care Act imposed a medical loss ratio that caps spending on nonmedical-related areas such as administration and marketing.

“The more layers there are between the patient and physician, the more complicated it becomes,” points out Craig Lack, a best-selling author who Forbes once described as “the healthcare broker whisperer.” Since BUCAH plans operate in a nearly $4 trillion industry, he suggests that “institutions will try to preserve the problem to which they are the solution.”

With millennials expected to account for 76% of the commercial health insurance marketplace market by 2025, Lack says the need to continue embracing technology is crystal clear. The sooner BUCAHs can position themselves to be in alignment with the next massive demographic that’s going to be using their delivery system, he says the better positioned they’re going to be.

But what good is the technology five years from now, he explains, if someone like himself who lives in a major metropolitan area still doesn’t know what an appendectomy is going to cost from one of eight different choices within a five-mile radius of home?

Harnessing tech for future growth
As someone who has been on both the third-party administrator and carrier sides of the business, the Blues plan product specialist doesn’t think TPAs can compete with BUCAHs from a capital investment perspective. That financial firepower no doubt will shape future investments in tech.

For example, she believes it’s only a matter of time before telematics, which auto insurers use to monitor driving patterns, will be applied to healthcare in the form of wearable technologies that impact not just a BUCAH member’s risk score in setting monthly premiums, but also identify health risks before they turn into serious incidents.

The way payers and providers interact also will shape the successes and failures of BUCAH plans. Batman acknowledges provider frustration with insurance carriers in terms of following correct billing procedures, medical coding and clinical approval protocols to maximize their offerings but also mitigate risk. A continued lack of trust between payers and providers inevitably harms patient care, he cautions, but there’s an intriguing trend afoot that may resolve this issue along the way to helping employers improve outcomes and lower costs.

Batman noted the emergence of “payviders,” which as the name suggests, involves a collaboration of healthcare payers and providers to achieve joint goals, referencing SelectHealth and Intermountain Healthcare as examples of this hybrid model in his home state of Utah. “They can really control cost and understand real time by using really good tools to understand their viability long term,” he says.

The ultimate aim of these organizations in sharing resources is to help transition from a fee-for-service to value-based care model, according to Batman, who doesn’t see that happening for at least another decade.

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