Monday, December 8, 2014

Why This Matters to Me: Challenges Facing Health Plans

The Affordable Care Act is making great strides in improving America’s access to health insurance; however, this is also creating new challenges for health plans. Below, I’ve outlined some of the pressing challenges health plans are facing and will identify potential solutions in an upcoming post.

Management of the health care of formerly uninsured patients who may have more complicated care needs

The influx of new consumers with difficult to manage conditions is requiring plans to implement population management and look at unique ways to manage the health – and cost – of these patients. It is also important for these patients to have plans that cover preventive oral health care on an ongoing basis, as chronic disease correlates strongly with dental hygiene. The role of dentists in managing chronic disease is explained in my recent blog post here.

On-going costs associated with sustaining and continuously improving new systems

Whether considering introducing a new ancillary line, expanding capacities in a new market, or finding administrative efficiencies, it is important for health plans to evaluate the time, scope and money required. This analysis leads to three potential solutions: build, buy or partner. We’ll dive into the benefits of partnering in my next blog post.

Regulatory pressure is increasing and medical loss ratio (MLR) requirements are placing additional burdens on margins

The Medical Loss Ratio requires insurance companies to spend at least 80% or 85% of premium dollars on medical care and new provisions are imposing tighter limits on health insurance rate increases. Failure to meet these standards triggers a requirement that insurance companies provide a rebate to their customers. As a result, health plans need to find a way to grow their market share without significantly increasing their administrative costs.

The costs associated with the need for investments in advertising and marketing, customer service, and IT and enrollment systems to prepare for the surge in consumer demand.

To capture and manage the influx of new consumers entering the market as a result of the Affordable Care Act, insurance companies are investing in marketing, advertising and IT, and will have to continue to develop more comprehensive outreach programs.

In addition, the growth is requiring the industry to explore new ways to communicate, interpret and store information, requiring the dedication of resources to test, acquire, and implement the latest technological innovations which likely includes mobile technologies to reach patients wherever they are. 

As members’ financial situations change, the channels by which they access insurance will change as well.

Churn is a term often used to describe people moving back and forth between health insurance plans. For example, people often move between eligibility for Medicaid and eligibility for federal subsidies for private insurance bought on the ACA’s exchanges. Churn in the market increases costs, making it imperative to create products that can be easily managed regardless of how the member accesses benefits. The process puts pressure on already strained health plan administrative resources.

Healthcare has made significant advancements under the ACA; however, we need our systems, regulations and business models to evolve to ensure we can remain as productive and effective as possible.

Interested in learning more about ancillary benefits? Read more here.