One year in: Ten ways to maximize opportunities as a result of healthcare reform
Just over a year ago, the healthcare reform bill became law. Despite the political rancor and misinformation on both sides of the aisle, its implementation is becoming a reality and with it both opportunity and peril for health care executives navigating through its many manifestations. Last April, we offered our perspectives on how to best maximize your organization’s opportunities with the then newly minted bill. Now with a year's worth of hindsight, we offer our updated and more seasoned opinion on the top ten ways to optimize your company’s performance in this new and ever-changing environment. Where appropriate, we’ve added links to additional information.
Figure out where your company fits with Accountable Care Organizations (ACOs)
Does your company have the provider linkages, data sharing capabilities and member engagement competencies necessary to begin looking at the ACO world? ACOs are clearly in the embryonic stage of their development but their combination of providers, quality measures and potential financial upside points in the right direction for managing costs and outcomes. The big question is where and how do payers find their sweet spot in these arrangements and how do you transition the ACO concept to other lines of business? A serious commitment to improving quality and patient outcomes through the sharing of formerly sensitive patient, plan and provider data with all parties will be a key to the success of an ACO.
Reduce unnecessary, wasteful and DANGEROUS utilization
One aspect of ACOs that could have a significant impact on health outcomes and costs is the focus on reducing hospital and doctor-caused medical problems, as well as the reduction of unnecessary and often dangerous testing. An enormous amount of money and human suffering can be attributed to unnecessary or poor quality healthcare that is often hidden in medical jargon. Nosocomial Infections, iatrogenic disease and gossypiboma are only a few of the ways that healthcare-caused problems are described. Health plans will also have to step up efforts to reduce inappropriate and wasteful utilization of radiology, pharmaceuticals and emergency department services. Provider and member engagement and education are keys to making a change.
Lower your administrative costs
Much of the administrative operations necessary to run a health plan are readily available and much less costly through vendors than by developing and maintaining these services in-house. The days of small plans creating and managing many of their administrative functions is rapidly coming to an end. It is time to decide what about your plan must be local and internally developed. You can begin with high-touch network services, marketing and sales and most management managed locally and determine what you can outsource at a lower cost and with better outcomes.
Manage the highest cost members with the bulk of your medical management dollars
If your plan has 100,000 members enrolled, you will have more impact on medical costs by identifying (not always easy) and implementing programs to manage the care for the highest cost 200 members than programs for the other 99,800. Far too many plans spend the bulk of their medical management resources on activities that don't provide heavily-focused efforts on the sickest members. The new world of managed care will include more focus on provider home visits, telemetry, telemedicine, palliative care, integrated behavioral health and much improved member engagement to better assist these high cost members through their serious health issues.
Increase your program integrity and fraud management capabilities
Sadly, healthcare fraud, particularly related to Medicare and Medicaid consumes an ever larger part of these programs’ budgets. There is and will be increasing pressure to better identify and punish perpetrators of illegal activity and plans will become increasing responsible for being part of the solution or seen as part of the problem. Strong program integrity initiatives will be a must for health plans in the future.
Accreditation will be critical
Since participation in the state health insurance exchanges will require some kind of plan accreditation, we believe more state insurance departments and/or state Medicaid agencies will generalize this requirement to include all health plans whether or not they participate in the exchanges. We recommend that, if your plan is not accredited by NCQA or URAC, you begin moving in that direction ASAP even if you don’t plan to participate in the insurance exchange market.
Bigger is better – Partner with similar plans
Over the next few years, we believe there will be increased consolidation of health plans and a variety of provider/plan acquisitions and mergers. While the axiom "bigger is better" has not always been true, we believe that the the ability to reduce administrative costs and better leverage vendor expenses through size, warrants taking a hard look at growing through partnerships or acquisition. In the non-profit plan world, there are a host of legal and governance issues that can make this a difficult proposition. The alternative–doing nothing in this case–may mean the demise of your health plan.
Add more legs to your stool
How many different revenue lines do you have on your balance sheet? For many non-profit plans in the government space, there may only be two or three revenue sources. If they are all tied to government payers, then the plan sinks or swims based on state and/or federal budgets. It will be increasingly important to diversify your revenue base going forward. Whether that includes commercial, exchange or provider revenue depends on your real and perceived competencies.
Yes, Medicaid rates are going down
The long term outlook on Medicaid rates is not positive. Reducing state budgets and increasing pressure from the feds on deficit reduction do not portend much in the way of rate increases. Several states are already have already implemented large rate reductions. If you haven't been a recipient of a reduction yet, you will be. Doing more with less, working more closely with your providers and diversification are critical to managing through the rate reduction process.
Don't miss the innovation around you or “What are you doing to attract new members?”
With so much going on in healthcare these days, most health plan executives are feeling a little too overwhelmed to stay up on the amazing transformation of healthcare through new waves of apps, telemedicine and member engagement innovation. The monies allocated by the healthcare reform legislation for demonstration projects and the pent-up demand by venture capital funds for innovative concepts is generating some exciting new tools to better meet the need for lower cost care that is higher quality and more accessible to members. Also key is making your plan appealing to the “young invincibles” whose premium dollars can offset much of your plan’s medical expense.