The Selfless Health Plan Innovator
60
The Selfless Health Plan Innovator Manage Medical Spend by Solving Problems Beyond Those We Created Health Plan Advisory Council
Transcript of The Selfless Health Plan Innovator
The Selfless Health Plan InnovatorManage Medical Spend by Solving Problems Beyond Those We Created
Health Plan Advisory Council
© 2018 Advisory Board • All rights reserved • advisory.com
ROAD MAP2
The Diverging Demands to Come1
2 The New Competitive Standards
3 Plans Setting the Industry Agenda
© 2018 Advisory Board • All rights reserved • advisory.com
3
Are We Yesterday’s News?
1) American Hospital Association.
2) American Association of Retired Persons.
3) Pharmacy Benefit Managers.
“AHA1, AARP2 blast big
pharma for not doing enough
to curb drug price increases”
HEALTHCARE FINANCE
“Gundersen Health's $50K
knee replacement list price
is 5 times what it costs”
BECKER’S HOSPITAL REVIEW
“Insurers Seek Smaller Rate
Increases on ACA Plans”
THE WALL STREET JOURNAL
Source: Haefner M, “Gundersen Health’s $50K knee replacement list price is 5 times what it costs,” Becker’s Hospital CFO Report, August 2018; Mathews
AW, Walker J, “Insurers Seek Smaller Rate Increases on ACA Plans,” Wall Street Journal, August 2018; Sanborn BJ, “AHA, AARP blast big pharma for
not doing enough to curb drug price increases,” Healthcare Finance, April 2018; Twachtman G, “Azar blames PBMs for no drop in prescription prices,”
Oncology Practice, 2018; Pear R, “Trump Administration, in Reversal, Will Resume Risk Payments to Health Insurers,” The New York Times, July 2018;
Abutaleb Y, “U.S. healthcare spending to climb 5.3 percent in 2018,” Reuters, February 2018; Health Plan Advisory Council interviews and analysis.
“Azar blames PBMs3
for no drop in
prescription prices”
ONCOLOGY PRACTICE
“U.S. healthcare spending
to climb 5.3 percent in 2018”
REUTERS
“Trump Administration, in Reversal, Will
Resume Risk Payments to Health Insurers”
THE NEW YORK TIMES
Major Health Care Industry Scrutiny in 2018
Plans Getting Good News
© 2018 Advisory Board • All rights reserved • advisory.com
4
Beyond the Headlines, Demands Evolving
Purchasers Seek Lower Costs Through Diverging Techniques
Source: Health Plan Advisory Council interviews and analysis.
Purchaser’s
New Demand
for Plan
Unmet
Purchaser
Objective
Piecemeal
coverage
Lower
premiums
Individuals
Consumer
guidance
More cost-effective
decisions
Employers
Eligibility
monitoring
Predictable
trend
Medicaid
Supplemental
services
Fewer expensive
care needs
Medicare
Advantage
Emerging Standards Reveal Unmet Purchaser Objectives
© 2018 Advisory Board • All rights reserved • advisory.com
5
Reining in Spend—Before it Can Happen
States Adding Eligibility Restrictions and Monitoring to Manage Budgets
Medicaid
Source: Musumeci, M. et al, “Section 1115 Medicaid Demonstration Waivers,” Kaiser Family
Foundation, 2018; Japsen, Bruce, “Trump’s Medicaid Work Rules Hit States with Costs and
Bureaucracy,” Forbes, July 22, 2018; Health Plan Advisory Council interviews and analysis.
1) Section 1115 Medicaid Demonstration Waivers, as of August 2018.
2) Managed long term services and supports.
3) Examples include DSRIP and operating Uncompensated Care Pools.
Increase in Kentucky
Medicaid’s administrative
costs after implementing
work requirements
NEW REFORMS: COVERAGE RESTRICTIONS
PREVIOUS REFORMS: BENEFIT EXPANSIONS
40%
Waivers for behavioral health expansion, MLTSS2 expansion, and delivery system reform3
Recent State Medicaid Program Experimentation Initiatives1
• Work requirements
• Premium and cost sharing contributions
• Waive retroactive eligibility
• Time limits on coverage
• Lock-out for failure to timely renew eligibility
Sample waivers proposed and implemented:
© 2018 Advisory Board • All rights reserved • advisory.com
6
Online portal operating hours: 7 a.m.–9 p.m.
The Internet is Closed?
Medicaid
Source: “Arkansas Works Program”, Arkansas Department of Human Services, July 2018; Greene, J, “Medicaid Recipients’ Early
Experience with the Arkansas Medicaid work requirement,” HealthAffairs, September 5, 2018; Gangopadhyaya, Anuj, et al, “Medicaid
Work Requirements in Arkansas”, Urban Institute, May 2018; Access Arkansas website; “Medicaid Overview Booklet SFY 2017,” Division
of Medical Services, Arkansas Department of Human Services, 2017; Health Plan Advisory Council interviews and analysis.
1) Number of members who must report divided by total
Arkansas Works population as of July 1, 2018.
31% of estimated
required reporters with
no home internet access
Potential Work Reporting Hurdles in Arkansas
66% of interviewed
Medicaid recipients not
aware of requirement
Reported and satisfied work
requirementsReported but did not
satisfy work requirements
Did not report, thus at
risk of losing benefits
Arkansas Work Reporting, July 2018
6% of Arkansas Works
population required to report work1
Percentage of reporting-required population
1%
6%
93%
12,722Individuals at risk
of losing benefits
© 2018 Advisory Board • All rights reserved • advisory.com
7
How to Buy Less for Less
Individuals
Source: Healthcare Finance, “Up to 10% of healthy consumers could defect from ACA to association health plans, study shows”; Congressional Budget Office,
“Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2018 to 2028”; Porter, S, “Short term health plans allowed up to 3 years,” Health
Leaders, Aug 2018; The Washington Post, Trump administration widens availability of skimpy, short-term health plans; Collins SR, “First Look at Health Insurance
Coverage in 2018 Finds ACA Gains Beginning to Reverse,” To the Point Blog, May 1st, 2018; Congressional Budget Office, Washington, D.C.; King R, “The
Obamacare individual mandate is repealed. Here’s what’s next,” The Washington Examiner, January 14, 2018.; Andrews M, Read The Fine Print Before Picking
An Association Plan For Your Small Business, NPR, June 27, 2018; Hall, M and Brandt, C, “Network Adequacy Under the Trump Administration,” Brookings,
Sept 2017; Polsky, D, et al, “Narrow networks on the individual marketplace in 2017,” Penn LDI, Sept 2017; Health Plan Advisory Council interviews and analysis.
Expected reduction in enrollment by
2021 due to individual mandate negation
Healthy consumers that could
defect from ACA2 to AHPs
3%-10%Projected enrollment
in STHPs, 2021
1.6M3M-6M
Regulatory Actions Give Flexibility to Individuals in Coverage Options
Changing Enrollment Outlooks with Emerging Coverage Options
Consumers Likely to Reduce Coverage to Save in the Present
1) Health and Human Services.
2) Affordable Care Act.
Negated Individual Mandate Penalty
Effectively eliminates requirement for
individuals to have insurance coverage
Short-Term Health Plans (STHPs)
Lengthens duration of plans with more
coverage flexibility and eligibility barriers
Association Health Plans (AHPs)
Easier access to plans with more
premium rating and coverage flexibility
Network Adequacy Delegation
Standards no longer determined by HHS1
(only 27 states have quantitative standards)
© 2018 Advisory Board • All rights reserved • advisory.com
8
HDHPs a Solution in Search of Another Solution
Employers Find HDHPs Ineffective and Demand Support at Minimum
Employers
Source: “The State of Employee Benefits Report-2018,” Benefitfocus, https://www.benefitfocus.com/sites/default/files/media/pdfs/%20Benefitfocus-Report-
State-of-Employee-Benefits-2018.pdf; Tozzi J, Tracer Z, “Sky-High Deductibles Broke the U.S. Health Insurance System,” Bloomberg, June 26, 2018,
https://www.bloomberg.com/news/features/2018-06-26/sky-high-deductibles-broke-the-u-s-health-insurance-system; “BLUE KC ANNOUNCES SPIRA CARE,”
Blue KC, https://www.bluekc.com/consumer/blue-kc/articles/89.html; Abelson R, “The Last Company You Would Expect Is Reinventing Health Benefits,” The
New York Times, August 31, 2018, https://www.nytimes.com/2018/08/31/health/comcast-health-insurance-employees.html; “2017 Employer Health Benefits
Survey,” KFF, https://www.kff.org/report-section/ehbs-2017-section-7-employee-cost-sharing/; Health Plan Advisory Council interviews and analysis.
We all thought high deductibles are
going to drive people to get involved—
'skin in the game.' […] They didn't get
the surgery they needed, when they
needed it, because they can't afford
the high deductible in one shot."
Jamie Dimon
JPMorgan Chase CEO
BlueKC offers SpiraCare
Product with no cost sharing at
dedicated primary care clinics
Comcast offers Accolade
Independent guides help employees
navigate their health benefits
Others Asking for High-Touch Support
Percentage of Workers in HDHPs1
Annual Deductible of $1,000 or More
2009 2017
51%
22%
Some Employers Giving Up
1) High-deductible health plans.
© 2018 Advisory Board • All rights reserved • advisory.com
9
The New Covered Benefit: Toothpaste
CMS Increases Coverage Flexibility to Reduce Medical Costs
Medicare Advantage
Source: “CMS Finalizes Policy Changes and Updates for Medicare Advantage and the Prescription Drug Benefit Program for
Contract Year 2019 (CMS-4182-F)”, CMS, April 2018 https://www.cms.gov/newsroom/fact-sheets/cms-finalizes-policy-changes-and-
updates-medicare-advantage-and-prescription-drug-benefit-program; “Direct Provider Contract Alternative Payment Model -
CMS/CMMI Issues Request for Information”, Foley & Lardner LLP, April 2018; “Rochelle S, “Should Medicare pay for toothpaste and
shoes”, Politico, September 2018, https://www.politico.com/agenda/story/2018/09/12/medicare-preventative-social-needs-000688;
Health Plan Advisory Council interviews and analysis.
CMS' Finalized Changes to Medicare Advantage 2019
• Plans can design disease-specific
benefits for enrollees with chronic or
high-risk conditions
Custom(ish) Benefit Design
• Supplemental benefits can cover
services that diagnose, prevent or
improve effects of health conditions
Supplemental Benefit Expansion
Example Plan Services
Reduced co-pays for
diabetic enrollees
Additional tobacco cessation
sessions for enrollees with COPD
Transportation to primary
care appointments
Temporary and portable mobility
ramps for in-home safety
“Should Medicare pay for
toothpaste and shoes?”POLITICO
© 2018 Advisory Board • All rights reserved • advisory.com
10
Divergent Needs Threaten Profit Stability
Little Margin Cushion with Diverging Admin Priorities
1) Commercial product-market segment MLRs were obtained from the CMS MLR 2016 dataset. MLRs
were binned by number of product-market segments into 4 bins using the lowest whole number as
a cut off. The bar graph represents the average MLR for product-market segments in each bin.
2) A “product-market segment” is a line of businesses offered within a state by the health plan. For
example, a plan offering a large group plan in Minnesota, small group plan in Nebraska and an
individual plan in Tennessee has 3 total product-market segments.
Percentage of Total Revenue 2012-2017, n=981 health insurer filings
Total
Medical
Spend
Admin
Expenses
Net Margin
Aggregate Health Plan Expenses and Net Profits
85.9% 86.3% 85.6% 86.1% 85.8% 85.6%
11.8% 12.1%13.6% 13.4% 13.1%
11.8%
2.7% 2.2%1.1% 0.6% 1.1%
2.4%
2012 2013 2014 2015 2016 2017
Average MLR by Plan Size1
n=232 commercial health plans
CMS MLR Data FY 2016
88%
105%96% 91%
1 - 2 3 4 - 8 9+
Number of Unique Commercial
Product-Market2 Segments
N=61 N=67 N=53 N=51
Source: Jenson, B et. al., “2017 Health Insurance Industry Analysis Report” NAIC, 2018,
https://www.naic.org/documents/topic_insurance_industry_snapshots_2017_health_ins_ind_report.pdf?6
7; Centers for Medicare & Medicaid Services (CMS), MLR Data 2016 Reporting Year,
https://www.cms.gov/CCIIO/Resources/Data-Resources/Downloads/MLR_DataFilesPUF_20171019.zip ;
Health Plan Advisory Council interviews and analysis.
© 2018 Advisory Board • All rights reserved • advisory.com
11
The New Purchaser-Defined Growth Levers
Source: Health Plan Advisory Council interviews and analysis.
Personalize
care journey
Personalized
matching
Population
efficiency
PRIORITY
CARE ACTIONS
Complete
essential tasks
PRODUCT SPECIFICITY
Medicaid
Ensure consistent
member eligibility
Individuals
Steer consumers to
leanest product
Employers
Prove impact of
consumer guidance
Medicare Advantage
Curate custom
support services
• Enrollment
• Member services
• Tools development
• Product design
• Actuarial analysis
• Marketing
• Member services
• Vendor managers
• Marketing
• Community partnerships
• Product design
• Program managers
Key Operational Capabilities for Future Growth Mechanisms
© 2018 Advisory Board • All rights reserved • advisory.com
12
Purchasers will dictate diverging
methods to achieve affordability—
threatening plan margins as
competition comes from new sectors.
© 2018 Advisory Board • All rights reserved • advisory.com
ROAD MAP13
The Diverging Demands to Come1
2 The New Competitive Standards
3 Plans Setting the Industry Agenda
© 2018 Advisory Board • All rights reserved • advisory.com
14
Fatigued from the Cost Problem We Haven’t Solved
Source: “Amazon has plans to open its own health clinics for Seattle employees,” CNBC, 2018; “Apple's first hires for its health clinics
show how it's thinking differently about health care,” CNBC, 2018; “Walmart in Early-Stage Acquisition Talks With Humana,” Wall Street
Journal, 2018; "Alphabet puts another $375 million into Josh Kushner's Oscar Health, just months after previous investment,” CNBC,
2018;“Seventy percent of Americans support 'Medicare for all' in new poll,” The Hill, 2018; “Amazon, Berkshire Hathaway and JPMorgan
health initiative sends industry shares plummeting,” Market Watch, 2018; Health Plan Advisory Council interviews and analysis.
Surveyed Americans
support a Medicare for
All policy (August 2018)
70%
Purchasers Push for New Solutions to Health Insurance
Purchasers Looking Beyond Network Contracting for Cost Management
Apple, Amazon launching
employee onsite clinics
focused on population health
Walmart in preliminary
talks to acquire Humana
Offer Care Services Acquire Health Plan Industry Overhaul?
Amazon investing in range of
new health ventures
Alphabet investing in
individual and Medicaid
insurance
Major Insurer Stock Price ChangesDay of Amazon-Berkshire-Chase press release
4.4%UnitedHealth Group
5.3%Anthem
3.1%Humana
© 2018 Advisory Board • All rights reserved • advisory.com
15
Kaiser
The Largest Plans Moving Beyond Insurance
1) Completed, proposed, or rumored as of September 2018.
2) Advisory Board is an independent subsidiary of Optum.
3) Humana Pharmacy Solutions.
Major Vertical Integration Activity1
AMBULATORY
CLINICS
ACUTE CARE
HOSPITALS
PBM
POST ACUTE
PROVIDERS
RETAILER
PHARMACY
Aetna
MinuteClinic
Caremark
CVS
CVS
Anthem
Aspire
Health
IngenioRx
Cigna
Express
Scripts
Humana
Walmart
Clinics
Kindred,
Curo
HPS3
Walmart
Pharmacy
Walmart
United2
OptumCare
DaVita
OptumRx
Amazon
PillPack
Amazon,
Whole Foods
Iora Health
executive
Kaiser
Kaiser
Kaiser
Kaiser
Kaiser,
MedImpact
Source: Health Plan Advisory Council interviews and analysis.
Genoa
Healthcare
© 2018 Advisory Board • All rights reserved • advisory.com
16
Vertical Integration Creating New Must-Haves
Point-of-Care
Insights
Lower Drug
Spending
Ubiquitous Member
Touchpoints
Multiple conduits for
obtaining information
and delivering messages
Enterprise-Wide
Information Hub
Real-time, integrated
data sharing across all
business segments
Smart Network
Routing
Integrated and Expanded Data Conduits Empower New Competitive Standards
• Usable data
• Clinician training
• Member buy-in
• Rebate transparency
• Low-cost options
• Formulary steerage
• Dominant entry points
• Referral control
• Preferred path analysis
NEW COMPETITIVE STANDARDS
PREREQUISTES
Source: Health Plan Advisory Council interviews and analysis.
© 2018 Advisory Board • All rights reserved • advisory.com
17
Plans Translating New Standards for Partners
Source: Health Plan Advisory Council interviews and analysis.
Plan Requirements to Meet New Competitive Standards
MEMBERS
PROVIDERS
Leaning on Cost Accountability as the Chief Forcing Mechanism
Point-of-Care
Insights
Lower Drug
Spending
Smart Network
Routing
Start with
preferred network
providers
Choose (and
take) low
cost drugs
Choose appropriate
site of care and
treatment
Coordinate care
across multiple
providers
Prescribe
low cost
drugs
Deliver treatment
tailored to
whole person
Cost
Accountability
© 2018 Advisory Board • All rights reserved • advisory.com
18
Plans Asking for Fundamental Shifts in Behavior
Source: Health Plan Advisory Council interviews and analysis.
Plans’ Priorities for Health Care Utilization
MEMBERSPROVIDERS
Proactively manage costs by interpreting complex policies
to select appropriate care
Adapt to risk-based payment to manage populations at
lower costs
Plans Shift Cost Accountability to Change Partner Performance
Cost Accountability
© 2018 Advisory Board • All rights reserved • advisory.com
19
Plans are using cost accountability to
compel providers and members to help
plans achieve the new competitive
standards promised by integration.
© 2018 Advisory Board • All rights reserved • advisory.com
ROAD MAP20
The Diverging Demands to Come1
2 The New Competitive Standards
3 Plans Setting the Industry Agenda
© 2018 Advisory Board • All rights reserved • advisory.com
21
Plans Setting the Industry Agenda
Source: Health Plan Advisory Council interviews and analysis.
Plan wants
partner to:
Plan and Partner Health Care Priorities
MEMBERSPROVIDERS
Proactively manage costs by interpreting complex policies
to select appropriate care
Adapt to risk-based payment to manage populations at
lower costs
Plan-Partner Priorities Mismatched Leading to Poor Performance
Cost Accountability
Difficult to sustainably
reduce care costs
Unlikely to help manage
eroding provider margins
Implications
for partner:
© 2018 Advisory Board • All rights reserved • advisory.com
22
0%
2%
4%
6%
8%
10%
12%
14%
16%
Theoretical
break-even point
See You in 2252
Providers Not Compelled Nor Able to Reduce Costs Quickly Enough
Sustainably reduce care costs
1) See next page for methodology.
2) Medicare Shared Savings Plan.
ACO Savings and Medicare Expenditure Growth Projections1
Decrease in savings
per beneficiary for
ACOs that transitioned
from upside to
downside risk tracks
39%
No Room for
Latecomers?
Projected MSSP2
Track 1+2+3 savings rate
Projected Medicare
spend growth rate
Track 1 MSSP ACOs
indicate that
they would likely leave
the MSSP if required to
assume risk
71%
75%Proportion of business that Health Care Transformation
Task Force members want tied to value by 2020
PROJECTED
ESTIMATES
Source: Medicare shared savings program accountable care organizations 2013-2017 performance year results from “Shared Savings Program
Accountable Care Organizations (ACO) Public-Use Files,” Centers for Medicare and Medicaid Services, 2018; Seidman, J. et al, “Medicare ACOs Have
Increased Federal Spending Contrary to Projections That They Would Produce Net Savings,” Avalere, March 29, 2018; “Journey to Value: The State of
Value-Based Reimbursement,” Change Healthcare, 2016; Burns LR & Pauly MV, “Transformation of the Health Care Industry: Curb Your Enthusiasm?”
The Milbank Quarterly, 96(1):57-109; Miller M, “How to Fix the Medicare Shared Savings Program,” Center for Healthcare Quality & Payment Reform, June
2018; “PRESS RELEASE WASHINGTON, D.C., May 2, 2018,” National Association of ACOs, 2018; Health Plan Advisory Council interviews and analysis.
© 2018 Advisory Board • All rights reserved • advisory.com
24
$484 $464
$353 $366
87.2%
109.5%
Even Extreme Incentives Can’t Bend the Cost Curve
Sustainably reduce care costs
Source: Centers for Medicare & Medicaid Services (CMS), MLR Data
2016 Reporting Year, https://www.cms.gov/CCIIO/Resources/Data-
Resources/Downloads/MLR_DataFilesPUF_20171019.zip; Health
Insurance Exchange Comparison (HIX Compare), 2016 Individual
Market data, https://hixcompare.org/individual-markets.html; Health
Plan Advisory Council interviews and analysis.
1) Provider-Sponsored Health Plan.
2) A “product-market segment” is a line of businesses offered within a state by the health plan. For example, a plan offering a large
group plan in Minnesota, small group plan in Nebraska and an individual plan in Tennessee has 3 total product-market segments.
3) Average silver plan premium for 50 year-old data obtained from Health Insurance Exchange Comparison (HIX Compare) database.
4) Data obtained from 2016 Centers for Medicare & Medicare services (CMS) MLR data.
PSHPs Charge Less—Despite Lower Profits and Higher Expenses
Mean MLRs4
PSHPNon-PSHP
p<0.05
Mean Monthly Premiums3 PMPM Medical Costs4
Health Plan Performance Within Individual MarketPSHP1 vs non-PSHPs
n=58 PSHP, 108 non- PSHP
health plans
n=102 PSHP, 153 non-PSHP product-
market segments2 in the individual market
© 2018 Advisory Board • All rights reserved • advisory.com
25
Consolidation Thrives When Risk Is Shared
Sustainably reduce care costs
Risk Contracting Investment and Workload Pressures Impact Provider Integration
Of physicians would be more
likely to accept risk-based
compensation if they were
part of an organization
58%
Our biggest opportunity will be accomplished through the
efficient delivery of health care, focused on population health.”Nick Turkal, Co-CEO
Advocate-Aurora
HOSPITALS MEDICAL GROUPS
1) Calculated from Decision Resources Group’s 2015 Market Overview
Interactive Database. Data has not been normalized for health
system size and does not necessarily reflect a causal relationship.
Source: Health Care Advisory Board analyses of “Market Overview Interactive Database,” Decision Resource Group, 2015,
http://www.healthleaders-interstudy.com/rhd/; “Practicing value based care: What do doctors need?,” Deloitte Center for Health Solutions,
2016, https://www2.deloitte.com/content/dam/insights/us/articles/3140_Practicing-value-based-care/DUP_Practicing-value-based-care.pdf;
Anderson L, “Health care consolidation expected to continue in 2018,” BizTimes, 2018, https://www.biztimes.com/2018/industries/healthcare-
wellness/health-care-consolidation-expected-to-continue-in-2018/; Health Plan Advisory Council interviews and analysis.
23.5%
29.7%
Without CommercialACO
With CommercialACO
Health System Market Share
n=150 health systems in 20151
© 2018 Advisory Board • All rights reserved • advisory.com
26
2009 2010 2011 2012 2013 2014 2015 2016 2017
Revenue growth
Expense growth
Providers Steeling for a Tough Fiscal Road Ahead
Provider Expenses and Bad Debt Continue to Outpace Revenue
Manage eroding provider margins
Health Systems’
Uncollected Revenue
n=133,000 pateint accounts
from all payers for 12 facilities
Revenue and Expense Growth for Non-Profit Hospitals
2009-2017 Median Growth Rates
1.7%
4.7%
2008 2015
6.5%
5.7% 5.8%
4.6%
Outstanding Patient Balance as
Percentage of Total Charges
Source: Hayford T, “Projecting Hospital’s Profit Margins Under Several Illustrative Scenarios,” Congressional Budget Office, September 2016,
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/51919-Hospital-Margins_WP.pdf; “Revenue Growth and Cash Flow Margins
Hit All-Time Lows in 2013 US Not-for-Profit Hospital Medians,” Moody’s Investors Service, August 2014, https://www.calhospital.org/sites/main/files/file-
attachments/moodys_2013_us_nfp_hospital_medians.pdf; Moody’s Investors Service, “Preliminary Medians Underscore Negative Sector Outlook,” Moody’s
Sector In-Depth, April 2018, https://www.researchpool.com/provider/moodys-investors-service/not-for-profit-and-public-healthcare-us-preliminary-medians-
undersco; Financial Leadership Council interviews and analysis, Health Plan Advisory Board interviews and analysis.
© 2018 Advisory Board • All rights reserved • advisory.com
27
Hospital
Closure
For-Profit Operating
Corporation
Future Network Options Can Reduce Plan Influence
Margin Pressures May Lead to Dramatic Network Reshaping
Manage eroding provider margins
1) Congressional Budget Office.
60%Percentage of hospitals
projected by CBO1 to
have negative margins
in 2025 if productivity
does not improve
System-Owned
Care Continuum
Source: Hayford, Tamara et al, “Projecting Hospitals’ Profit Margins Under Several Illustrative Scenarios”,
Congressional Budget Office, 2016, https://www.cbo.gov/sites/default/files/114th-congress-2015-
2016/workingpaper/51919-Hospital-Margins_WP.pdf; Health Plan Advisory Council interviews and analysis.
Potential Future Hospital Responses to Strained Margins
Focused
Factory
Market Concentration
Scope of
Services
© 2018 Advisory Board • All rights reserved • advisory.com
28
Providers Searching for Novel Revenue Sources
Manage eroding provider margins
Source: Health Care Advisory Board analyses of “Health
Systems Financial Database,” Modern Healthcare, 2018,
http://www.modernhealthcare.com/section/system-financials;
Health Plan Advisory Council interviews and analysis.
1) Compound annual growth rate of revenue from 2011 to 2017 for 289 health systems, comparing top quartile of proportion of non-net
patient revenue (NPR) to bottom quartile. Calculated from Modern Healthcare’s Healthcare Financial Database in 2018.
Example Health System Opportunities for Revenue Diversification
Increased Volumes
• Reduce leakage
• Capture new volumes
from competitors
• Contract new segments
• Expand to new geographies
Higher Prices
• Rate negotiation
• Revenue cycle capture
• Quality and risk incentives
Non-Traditional Business
• Venture capital and
social services investing
• Specialty pharmacy
• Health insurance
• Post-acute care
Current Business Model New Business Model
2.1%Percentage point
growth rate premium
for diversified systems1
Coverage
limitations
Data
sharing
Network
steerage
Reporting
metrics
Rate
reductions
POTENTIAL PLAN
BARRIERS TO
PROVIDER GROWTH
New Asset Applications
• Intellectual property
• Consulting
• Brand licensing
© 2018 Advisory Board • All rights reserved • advisory.com
29
Providers Scrambling for Security
Source: Health Plan Advisory Council interviews and analysis.
Plan wants
partner to…
Partner
wants to…
Unlikely to sufficiently
reduce total medical spend
Leads to adverse
network transformation
Implications for Plans
Impacts of Plan-Provider Disconnect
PROVIDERS
Adapt to risk-based payment to manage populations at
lower costs
Manage eroding margins amid increasing workload
What defines successful provider performance??PROVIDER QUESTION
© 2018 Advisory Board • All rights reserved • advisory.com
30
Selfless Plans Instill Provider Confidence
Source: Health Plan Advisory Council interviews and analysis.
Respect Current
Successes
Strengthen Nascent
Vulnerabilities
• Pathway Authorization
• EMR-Authorization Swap
• Homelessness Detection
• Rapid Price Spike Response
• Realtime Price Insights
• Pharmacy Care Extenders
Demonstrate Comparative Advantages
What defines successful provider performance??
Selfless Health Plan Answers to Providers’ Key Question
1 2
PROVIDER QUESTION
PLAN ANSWER
© 2018 Advisory Board • All rights reserved • advisory.com
31
Program Incentives
Access to pathways tool
to monitor adherence
Participate in value based
payment arrangement
PA1 waived for
40 cancer drugs
Pathway Adherence to Reduce Prior Authorization
Highmark’s Pathway Program Improves Access and Eases the PA Burden
Highmark’s Oncology Pathways Program
Adherence to
Part B drugs PROBATIONARY PHASE
Ongoing quarterly reviews
6 months to meet or return to
80% compliance rate
1) Prior authorization.
2) Results analyzed for 10% of providers in the program.
Hour reduction in time
to initiate treatments36-48 Reduction in medical spend
for providers in program210%
80%
OR OR
Program
Results
Pathway Authorization
Source: Highmark Inc., Pittsburgh, PA; Health Plan Advisory Council interviews and analysis.
© 2018 Advisory Board • All rights reserved • advisory.com
33
12%
83%85%
All Respondents
(n=7 facilities per percentile)
Sharp
Healthcare
Assumed Authorization Lowers Burden on Providers
Open Access EMR Allows Health Plan Completed Prior Authorization
EMR-Authorization Swap
Source: Sharp Healthcare, San Diego, CA; “10 Findings from the 2017 Hospital Revenue
Cycle Benchmarking Survey,” Financial Leadership Council, 2017; Revenue Cycle
Center interviews and analysis; Health Plan Advisory Council interviews and analysis.
Physician orders same-day
or ER-to-inpatient
admission for patient
• Admission is preemptively
authorized if plan does not
communicate a decision
• Plan notifies Sharp Health of
intent to deny admission
Health plan completes review via
open access to medical records
under separate contract
Treatment
history
Diagnosis
records
Lab
results
Physician Initiates Admission Plan Conducts Medical Review Plan Renders Decision
Sharp Health Open Medical Records Pilot
48 hours
Patient: John Smith
ID #: 012345678
0Notification denials
from partner plan
after pilot launch
4Additional plans
now participating in
similar arrangements
Open Records Pilot Performance
Appeal Success Rates for Denials
10th 90th
n=63 acute-care facility
respondents in 2017
© 2018 Advisory Board • All rights reserved • advisory.com
35
Selfless Plans Instill Provider Confidence
Source: Health Plan Advisory Council interviews and analysis.
Respect Current
Successes
Strengthen Nascent
Vulnerabilities
• Pathway Authorization
• EMR-Authorization Swap
• Homelessness Detection
• Rapid Price Spike Response
• Realtime Price Insights
• Pharmacy Care Extenders
Demonstrate Comparative Advantages
What defines successful provider performance??
Selfless Health Plan Answers to Providers’ Key Question
1 2
PROVIDER QUESTION
PLAN ANSWER
© 2018 Advisory Board • All rights reserved • advisory.com
36
Homing In on the Right Codes
Help Physicians Identify and Manage Homelessness
Homelessness Detection
Sources: Breslin, E, et al, “Medicaid and Social Determinants of Health”, Health Management Associates, July 2017;
“Medicaid Accountable Care Organizations, National Health Care for the Homeless Council, March 2018; Ash, A, et al,
“Social Determinants of Health in Managed Care Payment Formulas”, JAMA Internal Medicine, 2017; “Ask and Code:
Documenting Homelessness Throughout the Health Care System”, National Health Care for the Homeless Council, October
2016; University of Massachusetts Medical School, Worchester, MA; Health Plan Advisory Council interviews and analysis.
MassHealth’s New ACO Reimbursement Model with Homeless Codes
Increase in homelessness
coding (Z59.0)
Extra reimbursement PMPY1
for homeless members
$550
1) Per Member Per Year.
Traditional Additional
• Diagnostic risk scores
• Age
• Disability
• Mental illness
• Substance use disorders
• Unstable housing
• Neighborhood stress score
Traditional and Additional Risk-Adjustment Factors
© 2018 Advisory Board • All rights reserved • advisory.com
37
Decoding the Stigma
Break Down Non-Financial Barriers While Setting Up Financial Incentives
Sources:“Ask and Code: Documenting Homelessness Throughout the Health Care System”,
National Health Care for the Homeless Council, October 2016; University of Massachusetts
Medical School, Worchester, MA; Health Plan Advisory Council interviews and analysis.
“Patients don’t reveal they’re
homeless because of stigma.”
“I can’t help even if they
say they’re homeless.”
“I forget to ask because
visits are already so busy.”
Providers’ Non-Financial Barriers to Homelessness Coding and Potential Solutions
EMR Reminder
Please fill in patient details.
Name
Phone number
Address
No fixed address
X1. What is the reason for
your visit today?
2. In the past two months,
have you been living in
stable housing that you
own, rent, or stay in?
3. Are you worried or
concerned that in the next
two months you may not
have stable housing that
you own, rent, or stay in?
Pre-visit Questionnaire Connection to Support
Who would you like to sign
up for support services?
Patient name:
Patient phone number:
Requested services:
Housing support
Care management
Submit
Potential Solutions
Non-Financial Barriers
Homelessness Detection
© 2018 Advisory Board • All rights reserved • advisory.com
39
2017 2018
A Quick Response to Price Spikes
Selective PBM Delegation Enables Responses Tailored to Membership
Rapid Price Spike Response
Sources: Group Health Cooperative of South Central Wisconsin, Madison, WI; Health Plan Advisory Council interviews and analysis.
GHC-SCW’s1 Coordinated Pharmacy Price Spike Response
Member or pharmacist complains
about price spike on refill
(usually before meeting deductible)
PBM2 SERVICES RUN BY GHC-SCW
Utilization ManagementCustomer Service
Price Spike Response Results
Doxycycline Spending
Topical Steroids Spending
$250K
$117K
Rapid UM Tailoring
Adjust formulary design
and prior authorization
protocols to promote
cost-effective drug options
Rapid information
sharing
1) Group Health Cooperative of South Central Wisconsin.
2) Pharmacy Benefit Manager.
$242K
2012 2013 2014 2015 2016
$10K
$174K
$65K$100K
Provider Education
In-person and written
information on price
spike and cost-effective
alternatives
© 2018 Advisory Board • All rights reserved • advisory.com
41
Prescribing for Members’ Costs
Member-Specific Drug Cost Information at the Point of Prescription
Realtime Price Insights
Sources: “CVS Health Fights Back on High Cost Drugs by Launching Industry’s Most Comprehensive Approach to
Saving Patients Money”, PR News Wire, April 11, 2018; Monica, Kate, “CVS Offering Prescription Benefit Information
Through Surescripts”, EHR Intelligence, November 28, 2017; Health Plan Advisory Council interviews and analysis.
1) The drug costs are for illustrative purposes only.
Frequency of prescriber
switching to drugs on formulary
85%
Average difference per
prescription when prescriber
switches to lower-cost drug
$75
There are three clinically appropriate alternatives:
Illustration1 of Real-Time Pharmacy Cost Tool
An Ecotrin prescription will cost $170.00
and this patient will pay $14.99.
X
Switch
Lovenox costs $24.00; patient pays $4.00
Plavis costs $11.99; patient pays $1.60
Coumadin costs $50.99; patient pays $9.20
Switch
Switch
CVS’s Pilot Results
© 2018 Advisory Board • All rights reserved • advisory.com
43
The New Pre-Requisite is Drug Cost Information
To Avoid Falling Behind, Join the Move to Real-Time Drug Costs
Realtime Price Insights
Sources: Health Plan Advisory Council interviews and analysis.
1) Pseudonym.
2) Electronic Medical Record.
3) Pharmacy Benefits Manager.
4) Out of pocket.
Plan Steps
PBM3 Drug Data Provider Adoption
Pumpernickel Plan’s1 Steps to Implement an EMR2-integrated Drug Cost Tool
Implementation
Requirements
Ask PBM for access to
real-time drug data
Advocate for PBM to work with
collaborative, aligned providers1
Finance technology vendors
to implement the EMR updates
Show value to clinicians by
including patient OOP4 costs
as well as overall drug costs
Offer to oversee provider
selection and education
Select high-impact drugs
to start the program with
pharmacist advisers
2
3
1
2
3Key Plan
Value Add
© 2018 Advisory Board • All rights reserved • advisory.com
45
Primary Pharmacy Care
Incentivize Pharmacists to Provide Comprehensive Care for Members
Pharmacy Care Extender
Sources: Health Plan Advisory Council interviews and analysis.
Pretzel Health Plan’s1 Pharmacy Home With Retail and Independent Pharmacies
Ask for prescriber
approval via phone, fax,
or email for modified
prescriptions
Immediately change
prescriptions that fall
under Collaborative
Practice Agreements set up
in advance with providers
1) Pseudonym.
2) Medication Therapy Management.
3) Proportion of Days Covered.
High Utilizers Only Pharmacist Adopts Care Management
Pharmacist must interact with members monthly to hit metrics including:Limited to members with:
• Diabetes
• Hypertension
• Asthma
• MTM patient
consultation: $20
• Annual outcomes
bonus: $1000
Consult member
for MTM2
Recommend prescription
modifications based on:
• Comprehensive MTM review
• Patient’s clinical presentation
• Plan’s formulary benefit
• Diabetes PDC3 >90.2%
• Statins PDC >86.9%
• Asthma suboptimal control <9.6%
• Generic dispensing rate >85%
© 2018 Advisory Board • All rights reserved • advisory.com
46
70%
66%
44%
Educated patient
Consult with prescriber onbehalf of patient
Patient will consult withprescriber
Top Three Interventions for Drug Omission Gaps
Growth of the Pharmacy Home Program
High-Impact Community Consults
Pharmacists Catch Treatment and Adherence Gaps
Pharmacy Care Extender
Sources: Health Plan Advisory Council interviews and analysis.
1) Pseudonym.
2) For diabetes members.
3) Proportion of Days Covered.
4) Medication Therapy Management.
Increased Statin Use2
60%65%
73%79%
2015 2017 2015 2017
Increased PDC3
MTM4 consultations
completed, 2016-2017
5470Allotted to the next, expanded
iteration of this program
$5MParticipating
pharmacies, 2017
400
Clinical Results of Pretzel Health Plan’s1 Pharmacy Home Program
© 2018 Advisory Board • All rights reserved • advisory.com
48
Plans must help providers understand
how they can be successful under risk
by instilling provider confidence in
their distinct advantages.
© 2018 Advisory Board • All rights reserved • advisory.com
49
Plans Setting the Industry Agenda
Source: Health Plan Advisory Council interviews and analysis.
Plan wants
partner to:
Plan and Partner Health Care Priorities
MEMBERSPROVIDERS
Proactively manage costs by interpreting complex policies
to select appropriate care
Adapt to risk-based payment to manage populations at
lower costs
Plan-Partner Priorities Mismatched Leading to Poor Performance
Cost Accountability
Implications
for partner: Difficult to manage financial
and health priorities
Unlikely to get
affordable care easily
© 2018 Advisory Board • All rights reserved • advisory.com
50
Member Cost Sharing Not Curbing Total Spend
Increasing “Skin in the Game” Insufficient to Inflect Health Care Costs
Get affordable care easily
Sources: “Wage Growth Tracker,” Federal Reserve Bank of Atlanta, https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx;
Kamal R, Sawyer B, “How much is health spending expected to grow?” KFF, https://www.healthsystemtracker.org/chart-
collection/much-health-spending-expected-grow/#item-start; Girod C, et al., “2018 Milliman Medical Index,” Milliman Research
Report, http://us.milliman.com/uploadedFiles/insight/Periodicals/mmi/2018-milliman-medical-index.pdf; Rae M, et al., “Do
Health Plan Enrollees have Enough Money to Pay Cost Sharing?” KFF, https://www.kff.org/health-costs/issue-brief/do-health-
plan-enrollees-have-enough-money-to-pay-cost-sharing/; Health Plan Advisory Council interviews and analysis.
1) Projected for 2017.
2009 2017
Health Economic Indicators, 2009-2017
Indexed to 100% in 2009
123%
139%
169% Maximum out-of-pocket
limits for in-network
services in most private
family coverage plans,
as of 2017
$14,300
Percent of non-elderly multi-
person households without
liquid assets above
$15,000, as of 2016
69%
100%
Low Cash Flow
Wages
Private health
insurance spending1
Employee
contribution
© 2018 Advisory Board • All rights reserved • advisory.com
51
You’re Hired!—As Your Own Care Navigator
Navigating Care a Full Time Job for Members
Get affordable care easily
Source: AHIP Institute & Expo 2017; Health Plan Advisory Council interviews and analysis.
1) Explanation of benefits.
Skill Only Comes with Practice
HIRING: Health Plan Member
The purpose is to navigate the health system for care
that is both high quality and low cost
Responsibilities:
• Identify appropriate treatment and provider
– Review quality information about providers
– Inform treating providers about benefit considerations
– Seek second opinions on treatment plan
• Contact providers to schedule appointments
– Utilize provider finder tools and directories
– Alter schedule to fit into provider’s availability
– Travel to and from appointment and be prompt
• Calculate out-of-pocket costs from benefit design
– Understand health plan contract
– Read mail from plan on any updates
– Understand multiple EOBs1 and billing statements
Plan Member Job Description
Apply Now
“People who are good at
navigating health care
are spending their
whole days doing that.”
Charu Juneja
Design Director
Design Institute for Health
Dell Medical School
University of Texas
© 2018 Advisory Board • All rights reserved • advisory.com
52
Cost Sharing Targets Wrong Members and Services
Members Faced with Extreme Cost Sharing Blindly Reduce Care
Get affordable care easily
Source: Fronstin P, et al., “Medication Utilization and Adherence in a Health Savings Account-Eligible Plan,” American Journal of Managed Care, December
2013; Kozhimannil K, et al., “The Impact of High-Deductible Health Plans on Men and Women: An Analysis of Emergency Department Care,” Med Care,
August 2013; Brot-Goldberg, Z., “What Does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics,” UC
Berkeley, 2017; “Health Policy Brief: High-Deductible Health Plans,” Health Affairs, February 2016; Health Plan Advisory Council interviews and analysis.
1) High Deductible Health Plan.
2) Relative to HMO controls.
But Not Always in Cost-Efficient Ways
Members with High Cost Sharing Reduce Care Spending
-24%
30%
Year 1 Year 2
Change in hospitalizations for male
HDHP members compared to Year 01
12-14%
18-22%
All members Sickest quartile
Reduction in overall spending
by HDHP1 members
Workers with Annual Deductible of $1,000 or More
Reduction in health
care services
13.8%Reduction in
ED spending
18%Reduction in physician
office spending
25%
© 2018 Advisory Board • All rights reserved • advisory.com
53
Clear Prices Over Low Prices
Consumers Are Willing to Pay For Upfront Price Transparency
Manage financial and health priorities
Source: Marketing and Planning Leadership Council, “What do Consumer Want from Primary Care”, Advisory Board, 2014, https://www.advisory.com/-
/media/Advisory-com/Research/MPLC/Research-Study/2014/What-Do-Consumers-Want-from-Primary-Care/28878_Research_Brief_PDF061614%20(2).pdf;
“Health plans must communicate differently with members”, Health Edge, September 28, 2016, https://www.healthedge.com/health-plans-must-
communicate-differently-members-part-i; Beaton T, “Senators Propose Limits on Surprise Healthcare Billing,” HealthPayer Intelligence, September
2018, https://healthpayerintelligence.com/news/senators-propose-limits-on-surprise-healthcare-billing; Florko N, “Senate passes bill to ban ‘gag clauses’ and
free pharmacists to discuss drug pricing options,” STAT News, September 2018, https://www.statnews.com/2018/09/17/senate-passes-bill-to-ban-gag-
clauses-and-free-pharmacists-to-discuss-drug-pricing-options/; Health Plan Advisory Council interviews and analysis.
1) An unexpected bill for medical services after their
insurance had paid their share, n=2,500 members.
2) Out of pocket.
Senators propose limits on surprise
healthcare billing [with the Protecting
Patients from Surprise Medical Bills Act]
September 19, 2018
Senate passes bill to ban ‘gag
clauses’ and free pharmacists
to discuss drug pricing options
September 17, 2018
74%Of members would rather pay
$50 OOP2 than not know how
much the visit costs upfront
38%Of members would rather pay
$100 OOP than not know how
much the visit costs upfront
40% Of members have
received a surprise bill1
Members are Willing to Pay for Upfront Prices
Recent Headlines in Price Transparency Legislation
© 2018 Advisory Board • All rights reserved • advisory.com
54
0%
5%
10%
15%
20%
25%
30%
35%
0% 5% 10% 15% 20%
Members Think Beyond ‘Appropriate’ Care
Health-Care Expected to Include Social Support
Manage financial and health priorities
2016 Expenditures as a Percent of GDP
Health
Social
Services
United
States
n=14 OECD countries plus United States
HEALTH DETERMINANTS
Community
engagement
Language
Geography
Employment
Social
support
Debt
Transportation
Literacy
Safety
Hunger
Skills training
Housing
Income
Ranking
Education
Stress
Discrimination
Hours
Wait time
UrgencyWork schedule
Insurance
PCP referral
Online reviews Quality
of care
Member Priorities that Determine
Care Decisions and Wellbeing
Source: “Health spending,” Organisation for Economic Co-operation and Development, 2016, https://data.oecd.org/healthres/health-spending.htm#indicator-
chart; “Social spending,” Organisation for Economic Co-Operation and Development, 2016, https://data.oecd.org/socialexp/social-spending.htm; Artiga S,
Hinton E, “Beyond Health Care: The Role of Social Determinants in Promoting Health and Health Equity,” KFF, https://www.kff.org/disparities-policy/issue-
brief/beyond-health-care-the-role-of-social-determinants-in-promoting-health-and-health-equity/; Health Plan Advisory Council interviews and analysis.
© 2018 Advisory Board • All rights reserved • advisory.com
55
Members Confused by Choice
Source: Health Plan Advisory Council interviews and analysis.
Plan wants
partner to…
Partner
wants to…
What should members expect from health care?
MEMBERS
Proactively manage costs by interpreting complex policies
to select appropriate care
Easily get affordable care with limited bandwidth
Impacts of Plan-Member Disconnect
Implications for Plans
Unlikely to sufficiently
reduce total medical spend
Steer toward frustration
and desperation
?MEMBER QUESTION
© 2018 Advisory Board • All rights reserved • advisory.com
56
Selfless Plans Give Members Answers
Source: Health Plan Advisory Council interviews and analysis.
• The Next Best Action
• Doctor Matchmaking
• Dynamic Appointment Pricing
• One Final Price
Guarantee Clear Choices
What should members expect from health care??
Selfless Health Plan Answers to Members’ Key Question
3
MEMBER QUESTION
PLAN ANSWER
© 2018 Advisory Board • All rights reserved • advisory.com
57
One Best Recommendation for Your Overall Health
Medical Data Improves Gap Targeting of Timely Customer Interactions
The Next Best Action
Source: OptumRX, Irvine, CA; Health Plan Advisory Council interviews and analysis.
1) Net-present value.
2) Customer relationship manager.
3) Savings generated from closing
member care gaps.
Diabetes
Program
Offer
Past-Due
Statin Refill
Reminder
Diabetes
Eye Exam
Reminder
Member: John Smith ID #: 0123456789
Next Activity Options
Results and Features of Next Best Action
Savings
Opportunity
5-year NPV1 calculated
from combined medical
and pharmacy claims
data and peer-reviewed
clinical literature
Propensity to
Engage
Likelihood that specific
member will follow
recommendation,
calculated from
demographic segment
trends
$0.70 PMPMCharge to participating
clients for Total Health
Care Advising Services
OptumRX’s Next Best Action Algorithm
CRM2 SCREEN
30%Increase in member
acceptance rate of top offer
since 2016
$46MGap value3 captured through
Next Best Action as of mid-2017
© 2018 Advisory Board • All rights reserved • advisory.com
59
Paging Dr. Right
Doctor Matchmaking
Personality
Quiz
Members
choose
preferred
attribute for
each of 30
pairs of
questions
Top Match
Highmark
returns list
of most
compatible
physicians
Emulating a
Hospital’s
Success?
12%Volume growth for
Pardee Hospital’s
network of
physician practices
for similar tool
Highmark Delaware’s Doctor Match Tool
Highmark Delaware Quizzes Members to Find Compatible Physicians
Source: Highmark, Pittsburgh, PA; ”Highmark’s new website helps patients find 'Dr. Right‘, ”
Advisory Board, https://www.advisory.com/daily-briefing/2018/07/05/doctor-match; Zuehlke E,
“Date a doc: How Pardee Hospital created an online 'dating' site for patients and physicians,”
Advisory Board, https://www.advisory.com/research/market-innovation-center/the-growth-
channel/2014/07/date-a-doc; Health Plan Advisory Council interviews and analysis.
© 2018 Advisory Board • All rights reserved • advisory.com
61
Picking Practiced Providers
Amino Matches Consumers with Doctors Who Treated Similar Patients
Source: Amino, San Francisco, CA; “Amino raises $25 million to match patients with doctors best qualified to help them,” Concierge Medicine Today,
https://conciergemedicinetoday.org/2017/04/12/business-amino-raises-25-million-to-match-patients-with-doctors-best-qualified-to-help-them/; Lomas N,
“Amino Launches A Consumer Healthcare Search Platform, Backed By $19.4M From Accel, CRV, Others,” TechCrunch, October 20, 2015,
https://techcrunch.com/2015/10/20/amino/; Market Innovation Center interviews and analysis; Health Plan Advisory Council interviews and analysis.
Amino’s Search Engine for Physicians with Custom Experience
User inputs:
• Condition
• Age
• Gender
• Proximity
• Insurance
Company
Statistics
Fee charged
to employer clients
$4 PMPM
Claims analyzed
by Amino
9BPhysician’s
level of
experience
with similar
patients
Physician’s
experience
relative to
other
providers
951KProviders in
database
Doctor Matchmaking
© 2018 Advisory Board • All rights reserved • advisory.com
63
Peak Hours
Anti-Surge Pricing
Oscar’s New In-house Claims System Could Allow for Dynamic Pricing
Dynamic Appointment Pricing
Source: Thompson N, “Healthcare is Broken. Oscar Health Thinks Tech Can Fix it,” Wired, Aug 2018,
https://www.wired.com/story/oscar-health-ceo-mario-schlosser-interview/ ; Health Plan Advisory Board interviews and analysis.
Illustration of How Oscar’s Dynamic Pricing Model Could Work
Number of
Appointments
at Clinic
(Baseline)
8.00am 10.00am 12.00pm 2.00pm 4.00pm 6.00pmDynamic
Co-Pay
Off-Peak Hours
“[Discounts at off-peak hours] literally wouldn't work right now because the most common claims format, by which your
provider submits claims to the insurance companies, does not have a time of day field on the claim.”
Mario Schlosser, CEO of Oscar Health
© 2018 Advisory Board • All rights reserved • advisory.com
64
Bind to Just One Price
Predict Procedure Costs to Guarantee Prices for Members Upfront
One Final Price
Sources: Bind Health, Minneapolis, MN; Health Plan Advisory Council interviews and analysis.
Here are back surgery
add-in options near you:
Hospital X$3,259
Hospital Y$7,118
Hospital Z$15,309
Or check out these
alternative therapies:
Physiotherapy
Starts at $0
Bind Health’s Simplified Product Design Differentiates Elective Care
Bind Health’s
Performance
Funding raised
as of June 2018
$82M
Savings for
employers compared
to original plans
10%-15%
Of members with
an account on
Bind’s portal
75%
Copays range from $15-$100 Copays vary by member choice
Add-in Coverage
Core Coverage
• Preventative care
• Primary and specialty care
• Urgent, emergency, and
hospital care
• Chronic care
• Pharmacy needs
© 2018 Advisory Board • All rights reserved • advisory.com
66
Plans must help members
understand what they can
expect from health care by
guaranteeing clear care choices.
© 2018 Advisory Board • All rights reserved • advisory.com
67
Selfless Plans Instill Confidence and Give Answers
IMPROBABLE INEVITABLE
Members proactively
manage costs by
interpreting complex policies
to select appropriate care
Providers adapt to risk-
based payment to manage
populations at lower costs
Members free to pursue
their care preferences
without fear of unknown
consequences
Providers lean on
comparative strengths to
manage population health
Overburdened members
and providers averse to
changing care patterns
Empowered members
and providers actively
reduce care costs
SELFLESS PLAN INNOVATOR
Strategic Roadmap for Partner Collaboration in Cost Reduction
Source: Health Plan Advisory Council interviews and analysis.
Respect Current
Successes
Strengthen Nascent
Vulnerabilities
1
2
Guarantee
Clear Choices3
© 2018 Advisory Board • All rights reserved • advisory.com
68
#35
Source: Health Plan Advisory Council interviews and analysis.
IMA
GE
CR
ED
IT:
nsarc
hiv
e.w
ord
pre
ss.c
om
.
© 2018 Advisory Board • All rights reserved • advisory.com
69
#37
Source: Health Plan Advisory Council interviews and analysis.
IMA
GE
CR
ED
IT: P
RO
LIB
ER
TY
.CO
M.
© 2018 Advisory Board • All rights reserved • advisory.com
70
#1
Source: Health Plan Advisory Council interviews and analysis.
IMA
GE
CR
ED
IT: N
EW
SW
EE
K.C
OM
© 2018 Advisory Board • All rights reserved • advisory.com
71
Solving Beyond the Problems We Created
Begin with Fundamental Needs of Key Partners
Source: Health Plan Advisory Council interviews and analysis.
The Proactive Member
Engagement Mandate
The Low Cost
Provider AdvantageTODAY TODAY
RELATED RESOURCES TO UNDERSTAND PARTNER PRIORITIES
2018 Health Care CEO Survey
What 146 C-suite executives told
us about their top concerns—and
how they've changed this year
Services Preference Portal
Survey of over 4,800 consumers on
their preferences for and satisfaction
with various health care services
Targeting Plan
Actions on Members’
Motivating Priorities
Why Plans Should Incent, Invest,
and Inform Providers’ Quest to
Lower Operating Expenses
How to Build the Selfless Health Plan Foundation
© 2018 Advisory Board • All rights reserved • advisory.com
LEGAL CAVEAT
Advisory Board has made efforts to verify the accuracy of the information it
provides to members. This report relies on data obtained from many sources,
however, and Advisory Board cannot guarantee the accuracy of the information
provided or any analysis based thereon. In addition, Advisory Board is not in the
business of giving legal, medical, accounting, or other professional advice, and its
reports should not be construed as professional advice. In particular, members
should not rely on any legal commentary in this report as a basis for action, or
assume that any tactics described herein would be permitted by applicable law or
appropriate for a given member’s situation. Members are advised to consult with
appropriate professionals concerning legal, medical, tax, or accounting issues,
before implementing any of these tactics. Neither Advisory Board nor its officers,
directors, trustees, employees, and agents shall be liable for any claims, liabilities,
or expenses relating to (a) any errors or omissions in this report, whether caused
by Advisory Board or any of its employees or agents, or sources or other third
parties, (b) any recommendation or graded ranking by Advisory Board, or (c) failure
of member and its employees and agents to abide by the terms set forth herein.
Advisory Board and the “A” logo are registered trademarks of The Advisory Board
Company in the United States and other countries. Members are not permitted to
use these trademarks, or any other trademark, product name, service name, trade
name, and logo of Advisory Board without prior written consent of Advisory Board.
All other trademarks, product names, service names, trade names, and logos used
within these pages are the property of their respective holders. Use of other
company trademarks, product names, service names, trade names, and logos or
images of the same does not necessarily constitute (a) an endorsement by such
company of Advisory Board and its products and services, or (b) an endorsement
of the company or its products or services by Advisory Board. Advisory Board is
not affiliated with any such company.
IMPORTANT: Please read the following.
Advisory Board has prepared this report for the exclusive use of its members.
Each member acknowledges and agrees that this report and the information
contained herein (collectively, the “Report”) are confidential and proprietary to
Advisory Board. By accepting delivery of this Report, each member agrees to
abide by the terms as stated herein, including the following:
1. Advisory Board owns all right, title, and interest in and to this Report. Except
as stated herein, no right, license, permission, or interest of any kind in this
Report is intended to be given, transferred to, or acquired by a member.
Each member is authorized to use this Report only to the extent expressly
authorized herein.
2. Each member shall not sell, license, republish, or post online or otherwise this
Report, in part or in whole. Each member shall not disseminate or permit the
use of, and shall take reasonable precautions to prevent such dissemination
or use of, this Report by (a) any of its employees and agents (except as stated
below), or (b) any third party.
3. Each member may make this Report available solely to those of its employees
and agents who (a) are registered for the workshop or membership program of
which this Report is a part, (b) require access to this Report in order to learn
from the information described herein, and (c) agree not to disclose this
Report to other employees or agents or any third party. Each member shall
use, and shall ensure that its employees and agents use, this Report for its
internal use only. Each member may make a limited number of copies, solely
as adequate for use by its employees and agents in accordance with the
terms herein.
4. Each member shall not remove from this Report any confidential markings,
copyright notices, and/or other similar indicia herein.
5. Each member is responsible for any breach of its obligations as stated herein
by any of its employees or agents.
6. If a member is unwilling to abide by any of the foregoing obligations, then
such member shall promptly return this Report and all copies thereof to
Advisory Board.
Health Plan Advisory Council
Project DirectorNatalie Trebes
Research TeamSandra Agik
Gregory Iovanel
Sally Kim
Program LeadershipRachel Sokol
Russell Davis
Design ConsultantStefanie Kuchta
