Is the Era of the Traditional Health Insurer Dead?

Becker’s Hospital Review

Annual Meeting

Last updat ed: Eric Dahlberg 4/6/16

Is the Era of the Traditional Insurer Dead?

“There's a big difference between mostly dead and

all dead. Mostly dead is slightly alive.”

What does a “Traditional Health Insurer” do?

Traditional Health Insurer

Collect premiums.

Adjudicate and pay claims.

Contract with providers.

Set and administer benefits and cost-sharing.

Take on and manage risk.

Transition to “value” accelerating Movement away from FFS underway

Target percentage of Medicare FFS

payments linked to quality and alternative payment models

4

2016

All Medicare FFS

85%

30%

2018

All Medicare FFS

90%

50%

All Medicare FFS

FFS linked to quality

Alternative payment models

Sources: Medicare: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-01-26-3.html Commercial: http://www.hcttf.org/

Medicare leading the charge…

… with commercial market following suit.

Pledge of the

Health Care Transformation Task Force

75% Portion of business to be in

“Value” arrangements by 2020

• Includes some of the nation’s largest

payers and health systems.

• Pledge focuses on implementation of “Triple Aim”(better health, better

care and lower costs).

Changing payer mix More Medicaid patients may impact performance

5

More providers seeing more

Medicaid patients1

13%

of providers accepted

Medicaid patients for the

first time in 2014

But 2016 Medicaid payers’ performance

lagging2

Sources: 1. athenaResearch / 2. 2016 PayerView analysis

94.8%

93.2%

96.6%

88.7%

Blues Commercial Medicare Medicaid

FPR by Payer Type, 2016

Changing players Payers consolidating, adding technology capabilities

6 Sources: (top graphic) The Wall Street Journal, http://www.wsj.com/articles/anthem-agrees-to-buy-cigna-for-48-billion-1437732331 (Bottom graphics): Oliv er Wyman, http://issuu.com/oliverwymangroup/docs/oliver_wyman_ahip_vertical_integrat

• And back to the future –

payers and providers are

dipping their toes in the

waters of narrowed

networks and vertical consolidation

• Lots of industry thinking on

what’s fueling ongoing

merger and consolidation

activity: pursuit of

economies of scale, market share, risk mitigation as

population health takes off?

1. Source: Kaiser/HRET Survey of Employer Sponsored Health Benefits, 2006-2015 2. Source: AHIP 2015 Census of Health Savings Account (HSA) - High Deductible Health Plans (HDHP)

More cost sharing Rising deductibles in employer-sponsored plans fueling HSA growth

19.7M

Americans enrolled in

HSA/HDHP’s

up 146% since 2009

$1,318

Average employee deductible

up 60% since 2009

Deductibles steadily rising…1

… and HAS/HDHP enrollment skyrocketing1

8

Retail and urgent care clinics

Marketplace reacting Consumers prioritizing access & convenience

Telehealth

The organization makes every effort to honor its commitments

6 5

6 4

5 6

5 4

4 9

4 7

4 4

This organization is accurate & honest in representing itself & its intentions

6 4

6 2

5 6

5 4

5 1

4 9

4 2

N A T I O N A L H E A L T H S Y S T E M E X E C U T I V E P E R S P E C T I V E

62.7 /100

59 /100

54.8 /100

51.3 /100

46.9 /100

40.5 /100

NOT SO MUCH

Do health systems trust health plans?

This organization balances its interests with ours & doesn’t routinely take advantage of us

5 9

5 2

5 1

4 5

4 4

4 2

3 5

2015 PAYOR TRUST

INDEX

SM

NOT SO MUCH

Do physicians trust health plans? 58.6

/100

60.5 /100

58.2 /100

56.5 /100

57.6 /100

57.1 /100

2015 PAYOR TRUST

INDEX

SM

N A T I O N A L P H Y S I C I A N P E R S P E C T I V E

Which of the three statements best describes the six largest national health insurance companies (Cigna, United, Aetna,

Anthem, Humana, and state BlueCross plans)?

When it comes to ethical behaviors, health plan employees rate their competitors worse than Wall Street firms rate theirs.

N A T I O N A L H E A L T H P L A N E M P L O Y E E P E R S P E C T I V E

75.1%

Health Plan Employees Payor Trust Index

FEEL SOME COMPETITORS HAVE ENGAGED IN UNETHICAL BEHAVIOR

57%

TRUST THEIR EMPLOYER, BUT FEEL THE INDUSTRY HASN’T CHANGED FOR THE BETTER IN THE PAST FIVE YEARS

65%

2015 PAYOR TRUST

INDEX

SM

PayerView 2016 Full results coming May 10th

12

Blues Commercial payers

Medicaid payers Medicare payers

• At the forefront of transition to value.

• Strong performers across the

board again this year.

• Best practices, refined processes yield strong results.

• Top scores on key metrics like

Days in Accounts Receivable, Denial Rate.

• Despite unique challenges, these payers score best on

Provider Collection Burden.

• But - continued expansion may strain future performance.

• Standardized claims adjudication systems and rules

drive top performance on First-

Pass Resolution Rate, ERA Transparency.

How to respond? How do payers and providers respond to these changes and

challenges?

Payer

Priorities

Provider

Priorities

In this evolving healthcare marketplace, collaboration

is essential for success.

Payers and providers can effectively tackle today’s challenges by working with one another and with partners to:

Transition to “value”: Plug in to clinical data sharing and report ing capabilit ies to manage risk.

Changing payer mix: Work with industry partners to develop effective administrat ive processes.

Market consolidation: Strive to smooth transit ions to the new platforms and technologies that consolidation activity may spur.

More cost-sharing: Improve transactions to provide accurate eligibility, patient liability, pre-determination, and coverage information at ToS.

Focus on access/convenience: Joint ly develop the processes and systems necessary to support new models of care delivery like telehealth and beyond.

To learn more about harnessing the power of athenahealth’s network to drive insights and tackle the

challenges of today’s evolving healthcare marketplace, visit: ATHENAHEALTH.COM/PAYERVIEW

Questions