The health plan of tomorrow: How interoperable data and a renewed focus on wellness is transforming business models

My Take

The health plan of tomorrow: How interoperable data and wellness are transforming business models

By Doug Beaudoin, vice chairman, US Life Sciences & Health Care leader, Deloitte LLP

The health insurance industry has been continuously evolving over the past 170 years, but many of the changes we’ve seen have been incremental in shifting the focus to wellness. During the next 20 years, however, we expect to see a transformational change as existing silos are broken down and the health care sector transitions from a model based on treatment to a model focused on wellbeing and prevention.

The concept of health insurance has changed significantly since 1850 when the Franklin Health Assurance Company of Massachusetts provided coverage for travelers who were injured in railroad and steamboat accidents.¹ But the changes we see on the horizon for health plans could significantly alter the existing business model—and health plans should begin preparing for the future.

The Deloitte Center for Health Solutions recently conducted crowdsourcing research with 28 health care, policy, and tech experts to get a sense of what the health plan of tomorrow might look like. Members of the crowd generally agreed that disruption in the market is inevitable. They expect change to accelerate as health plans tap into multidimensional data. Health plans of the future will rely on new data streams and to ensure they receive high-quality care when needed. While data and data interoperability will likely be the secret sauce for this new model, consumers will own their data—and they might be unwilling to share with health plans unless they see value in return.

Business as usual might not be an option

The business model for most health plans today is built around claims processing and risk management. Our experts described a future in which health plans will focus on the care and wellbeing of their members—and rely on multidimensional data to accomplish this. Health plan products will balance traditional population-level risk with being hyper-personal and easy-to-understand, based on consumer need. Moreover, health plans will have learned how to use digital devices and other tools to engage with consumers and direct them toward better health.

As the entire health care industry transforms, Deloitte’s research found that health plans should focus on one or more of three fundamental roles that can drive value:

• Wellbeing and care delivery. If health plans are to assume the role of steward to members’ wellbeing, they should work more closely with care delivery teams. This could present opportunities for plans to manage health and become localized health hubs that enable the delivery of consumer-centered care models.
• Care enablement. New business models can move beyond claims processing to instead focus on enabling member wellbeing and care. This shift could lead to new product lines.
• Data and platform. Using the wealth of data they possess, companies can develop new revenue streams based on consumer insights, monetization of data, population health initiatives, and customized offerings.

Some health plans are already beginning to move to more consumer-focused business models. Here’s a look at some of the early movers we are seeing:

Anthem Inc.: The Blues plan operator launched its “Engage” tool in 2017. The integrated digital platform allows members to create a personalized experience. Engage integrates benefits information with the member’s clinical and claims data. The tool is also able to pull wellness data from members’ health and wellness apps. In addition, Engage provides price comparison tools to help members make better cost and quality decisions about their health care.²

WellCare of Connecticut: In 2017, the Connecticut subsidiary of WellCare Health Plans, Inc. partnered with Boston-based Iora Health to deliver “relationship-based care” to its Medicare Advantage (MA) members. Iora, which primarily serves the Medicare population, developed its own consumer-focused electronic health records (EHR) system, the Collaborative Care Platform (dubbed Chirp). Chirp helped Iora transition from an EHR system that gathered patient information solely for billing and coding to a system that more accurately documents a patient’s story. Iora says the customized platform allows it to more effectively manage and coordinate care. Chirp was also designed to help clinical teams care for patient populations. The system includes applications to help manage tasks and to emphasize patient communication. It also has a mobile-friendly, patient-facing portal. WellCare said the collaborative care platform was integral to the decision to work with Iora.³

UnitedHealth Group: The health plan operator recently partnered with DexCom, a manufacturer of glucose-monitoring systems, and Fitbit, the wearables maker, to provide real-time aid to their diabetic members. People participating in the pilot program received personalized diabetes coaching to help them understand and act upon the data gathered by both the devices. Together, these devices are empowering members to more effectively manage their health.⁴ The health plan operator expects the program will help improve adherence and reduce the use of medication in populations with this chronic illness. In addition, during an earnings call last October, UnitedHealth Group CEO David Wichmann told investors that the company intends to give 50 million members access to a “fully integrated and fully portable” EHR. Along with medical information, members would receive the “next best action detail” for maintaining or improving their health.⁵

Oscar Health: Customers are asked a few personal questions online to help them choose the most appropriate coverage option. Information that is important to the customer is displayed in easy-to-understand language. This approach helps ensure that customers aren’t overwhelmed with too many options or coverage details that could cause them to give up. Oscar also provides members with financial incentives for meeting fitness goals. Each member receives a fitness band that tracks physical activity and sleep patterns and sets individualized fitness goals.⁶

Our research predicts that the next transformation for health plans will occur as the health care industry transitions from a focus on acute events and chronic illness to using data-driven precision insights to decrease acute events and address illness early. Greater emphasis on wellness and identification of health risks early could result in fewer—and less severe—diseases. Our expert participants suggest that health plans should now consider boosting operational efficiencies and increasing the value they offer to plan sponsors and members. These changes might also help incumbent players partner with, or compete against, a wave of companies that are beginning to disrupt the health care system.

Over the next 20 years, the health care system overall, and health plans specifically, will undergo tremendous transformation. Given that the changes ahead appear imminent, the time is likely now for health plans to reevaluate their existing business models and decide how to get ready for the changes ahead.

For more on Deloitte’s broader Future of Health perspective, visit our resource hub.

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¹ Monthly Labor Review, The development and growth of employer-provided health insurance, March 1994
² Business Wire, Anthem Blue Cross to launch integrated digital benefits and health engagement platform, October 19, 2017.
³ PR newswire, WellCare of Connecticut and Iora Health announce partnership to improve care and outcomes of WellCare Medicare members, Business Insider, September 6, 2017; Iora Health, The birth of Chirp: Why we built our own electronic health record, June 2016
⁴ Digital Trends, Managing Type 2 diabetes gets easier thanks to UnitedHealthcare and Dexcom, January 18, 2018; HIT Consultant, UnitedHealthcare, Dexcom launch wearable glucose management pilot, January 12, 2018
⁵ UnitedHealth Group third-quarter 2018 earnings call transcript, October 2018
⁶ Oscar Health home page; Wired, Health care is broken. Oscar Health thinks tech can fix it, August 14, 2018

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In the News

Senate Finance Committee hearing addresses drug rebates, list prices

On February 26, the Senate Finance Committee held its second hearing on efforts to curb rising drug prices. The seven witnesses, all of whom are executives for large pharmaceutical manufacturers, expressed similar support for eliminating drug rebates for “middlemen,” increasing price transparency, and shifting toward a value-based drug-pricing system.

Some of the topics discussed during the hearing include:

• Addressing pharmacy benefit managers (PBMs) and rebates. All the witnesses expressed support for eliminating rebates negotiated by PBMs to lower the cost of drugs for plan sponsors. However, none of the witnesses committed to lowering list prices if the recent proposal to remove PBMs’ abilities to claim rebates for brand-name drugs gets enacted. The proposed rule, which the US Department of Health and Human Services (HHS) issued on January 31, seeks to remove safe-harbor protections for PBMs by changing the definition of “discount” to exclude the price reductions drug manufacturers give to PBMs, Medicare Part D plans, and Medicaid managed care plans (see the February 5, 2019 Health Care Current).
• Discussing list prices. Committee Chair Charles Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.) urged the witnesses to commit to lowering drug list prices if HHS’s proposal to remove rebates from government programs passes. One witness expressed interest in lowering list prices if the commercial sector reduces list prices. Another witness indicated support for shifting toward a value-based system that pays drug manufacturers based on the effectiveness of a drug, rather than number of pills sold.
• Supporting the CREATES Act. All of the witnesses expressed support for the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act, a bipartisan bill reintroduced by House and Senate lawmakers to increase generic-drug and biosimilar competition (see the February 12, 2019 Health Care Current). The CREATES Act targets drug manufacturers that misuse safety guidelines or refuse to provide samples to generic drug makers, which can hinder development of less-costly generic alternative therapies. The same day as the hearing, the trade group Pharmaceutical Research and Manufacturers of America (PhRMA) announced its intent to collaborate with generic drug manufacturers to modify the act’s provisions, and to work with bipartisan lawmakers to advance this legislation.
• Discussing drug prices overseas and patents. Several senators pointed to price disparities between drugs sold in the US and drugs sold overseas. According to some of the witnesses, terms vary by market—and over-regulation of US prices could negatively impact research and patient access. Several lawmakers and witnesses discussed use of patents to prevent market competition in the US.

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FDA to assess opioid effectiveness, take new action against opioid crisis

The US Food and Drug Administration (FDA) is taking several steps to address the opioid crisis, according to a February 26 statement by FDA Commissioner Scott Gottlieb. These include:

• Requiring modified packaging to deter misuse and ensure appropriate prescribing. The agency plans to exercise its new authority through the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) Act, which was signed into law last October to increase funding and provide greater flexibility to government programs to address opioid-use disorders. The law allows FDA to require “certain packaging, such as unit-dose blister packs, for opioids and other drugs that pose a risk of abuse or overdose,” according to an October 24 press release. FDA also plans to require unit-dose packaging—short duration, small-quantity packing for treatment of acute pain—to reduce over-prescribing practices. Other efforts being pursued include developing disposal technologies for unused opioids, considering a new evaluation framework for candidate opioids, and assessing the effectiveness of Risk Evaluation and Mitigation Strategies (REMS) programs for opioids.
• Encouraging development of effective medication-assisted treatment (MAT) and increasing the availability of naloxone in the over-the-counter (OTC) market. FDA also plans to release guidance to support the development of MAT medications and medical devices, and to advance policies that strengthen the use of MAT to support addiction recovery. Additionally, the agency plans to work closely with manufacturers and industry partners to develop OTC naloxone products that could broaden access to the lifesaving treatment.
• Supporting the research and innovation of non-addictive pain treatments by issuing new guidance on the development of non-opioid drugs. FDA also plans to advance the development and evaluation of opioid formulations that are abuse-deterrent.
• Strengthening enforcement against illicit opioids by increasing the number of investigators and boosting efforts to curb the illegal shipment of opioids coming into the US. Strategies could include collaborating with internet stakeholders to shut down illegal purchasing portals and creating a large database to evaluate social and clinical trends related to drug use.

Gottlieb recently told The Washington Post that FDA might require drug makers to research whether opioids are effective for alleviating long-term chronic pain. The key issue is whether opioids’ efficacy declines over time, and whether that decline leads to opioid addiction. Depending on the results, the agency could modify labeling for some opioids and impose rules for prescribing and utilization, according to the article.

(Source: FDA, Statement from FDA Commissioner Scott Gottlieb, M.D. on the agency’s 2019 policy and regulatory agenda for continued action to forcefully address the tragic epidemic of opioid abuse, February 26, 2019)

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Consumers have established 25 million HSAs, hold nearly $54 billion in assets

As of December 31, health savings accounts (HSAs) collectively held $53.8 billion in assets—up 19 percent from the end of 2017, according to a semi-annual report from the Devenir Group, which collects data from the 100 largest HSA administrators (see the August 28, 2018 Health Care Current). Last year, consumers contributed almost $33.7 billion to their HSAs—up 22 percent from 2017—and withdrew about $26 billion. Employers also increased their contributions to an average of $839 per employee—up from an average of $604 in 2017. HSAs became available in 2004 after enactment of the Medicare reform law. Since then, more than 25 million accounts have been established. Devenir projects that by the end of 2020, the HSA market could approach $75 billion in assets—covering roughly 30 million accounts.

Related: In a February 27 speech to the National Association of Health Underwriters, HHS Secretary Alex Azar discussed pursuing a policy that would allow people to use ACA-mandated federal subsidies for HSAs to help pay for premiums and out-of-pocket costs in the individual market.

(Source: Devenir, The Number of Health Savings Accounts Exceeds 25 Million, February 27, 2019)

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More state Medicaid programs are approved for outcomes-based drug contracts

On February 25, the US Centers for Medicare and Medicaid Services (CMS) approved Colorado’s request for its Medicaid program to enter into outcomes-based contracts with drug manufacturers. Outcomes-based (or value-based) contracts allow health plans to negotiate drug prices with pharmaceutical manufacturers based on how patients respond to specific therapies. Two other states, Michigan and Oklahoma, have also received approvals to incorporate value-based drug-purchasing plans into their Medicaid programs (see the November 20, 2018 Health Care Current).

(Source: Colorado Department of Health Care Policy & Financing, CMS Approves Colorado Medicaid Plan for Value-Based Pharmaceutical Contracts, February 26, 2019)

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‘Medicare for All’ bill introduced in the House

On February 27, a group of House Democrats released a proposed “Medicare for All” bill (H.R. 1384). The bill seeks to expand Medicare eligibility to ensure insurance coverage for all Americans—and to prevent private health plans from offering benefits that duplicate those covered by Medicare. It would provide each hospital an annual prepaid budget—which hospitals and directors could negotiate—to cover all health care costs for the year. Nursing homes, home health agencies, independent dialysis facilities, and health centers would also receive annual budgets. Physician offices would continue to receive fee-for-service payments, though certain physicians in group practices could opt to receive salaries from hospitals that get annual budgets. Additionally, the bill calls for HHS to appoint regional directors to oversee the local hospitals and physicians.

Though the bill does not include cost estimates or financial plans, H.R. 1384’s lead sponsor, Pramila Jayapal (D-Wash.), proposed financing options such as a new tax for individuals with high incomes or mandated employer contributions. According to House Energy and Commerce ranking member Greg Walden (R-Ore.), the provisions in the bill, if enacted, could cost taxpayers $32 trillion over ten years, a number calculated by the think tank Urban Institute.

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Senators begin bipartisan investigation into insulin pricing

A bipartisan group of Senate Finance Committee members launched a probe into rising insulin prices on February 22. This investigation is one of several recent efforts targeting high insulin costs. Last month, the Senate Finance Committee and the House Committee on Oversight and Reform held hearings with witnesses whose children rationed insulin because of its high cost (see the February 5, 2019 Health Care Current). Senators Grassley and Wyden sent letters to the three largest insulin manufacturers requesting justification for increasing the price of insulin in recent years. The letters also inquire how the companies set their list prices—and how PBMs and insurers negotiate rebates. The senators have asked the three companies to disclose revenue and profit amounts from sales, to outline how much they’ve spent on research and development, production, and advertising, and to share how much they’ve given to patient-assistance programs to help patients with diabetes acquire insulin.

Related: Senator Grassley revived his oversight investigation into the question of whether not-for-profit hospitals provide sufficient charity care to justify their tax-exempt status. In a letter sent last week to the Internal Revenue Service (IRS), Grassley specifically targeted tax-exempt hospitals’ debt-collection practices, particularly for patients who need financial help.

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Breaking Boundaries

Smart thermometers could provide enhanced real-time flu surveillance

As we head into peak flu season, public health officials are urging Americans to get their flu shots if they haven’t already. While this year’s flu season has been milder than last year’s, it is still dangerous. According to federal data, more than 22,000 adults and 41 children have died of influenza-related complications as of the end of February.

Unfortunately, for people who are interested in real-time data to determine where the illness is spreading, official flu maps from the government do not yet exist in real time. Some commercial surveillance systems track the sale of cold and flu medicine, and others use data from electronic medical records (EMRs), but these services also have delays. San Francisco-based Kinsa, Inc. is stepping in to provide real-time tracking capabilities through its smart thermometers. The company says its devices are now in about one million households—and are providing 40,000 temperature readings every day. The thermometer has an app that gathers data on symptoms and can offer advice about whether to visit a physician. In a pilot with one provider, the company found that app users were less likely to make unnecessary trips to the emergency room (ER). Reducing hospital visits could help reduce flu exposure in communities. Kinsa is also partnering with elementary schools to provide families with thermometers, which can help track the spread of the flu. The company is aiming to have its data used by public health officials to track the flu by ZIP code rather than by state.

Related: HHS is supporting the development of two over-the-counter diagnostic tests for influenza. Today, flu diagnosis typically occurs in centralized laboratories, public health laboratories, or sometimes in emergency care settings. At-home flu tests could help reduce exposure by keeping flu sufferers out of health care facilities. Instead, they could connect with their physicians through telehealth technology and have prescriptions sent electronically to their pharmacies, if appropriate.

(Source: Adele Peters, Watch the flu spread across the U.S. in real time, Fast Company, February 22, 2019)

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