Are Health Plans The Future Of Public Health?
The transition from old-guard payer to wellness company is underway – and moving rapidly.
Changes to health plan payment policies encourage accountability to improve clinical performance to a much greater extent than ever before. Due to federal policymakers’ relentless drive to improve outcomes and reduce spending growth, plans have significantly more flexibility to care for beneficiaries in new ways. These efforts allow managed care companies to revolutionize healthcare again – this time by addressing public health issues such as population cholesterol levels, glycemic control for diabetic patients, environmental issues that cause asthma, and nutritional needs of the frail elderly.
Managed care organizations were first introduced broadly in the 1990s as a response to rising healthcare costs. Their focus was on the fee-for-service model, which encouraged clinicians to pursue volume in medical procedures, regardless of their expense. Managed care revolutionized the healthcare landscape by switching up the financial incentives. Instead of paying for the number of procedures completed, healthcare providers were to be paid on a per-member, per-month basis. The transition away from paying for volume brought a new focus that continues to gain in popularity: paying for quality.
It’s logical that health plans should focus on improving public health to enhance both broader clinical performance and their quality ratings in today’s pay-for-quality environment. By helping people become healthier, and preventing the onset of sickness and disease, plans are at less risk of incurring healthcare costs, while commanding more in reimbursements.
Promoting wellness is a win-win-win: beneficiaries stay or become healthier, health plans reduce their financial exposure, and public healthcare programs realize cost savings.
And the best way to ensure that plans focus on health outcomes? Create strong financial incentives for them to do so. A great example of this is the Star Ratings program, contained in Medicare Advantage. Medicare Advantage is the managed care portion of Medicare that many beneficiaries choose as an alternative to traditional fee for service Medicare. In 2018, over 20 million beneficiaries in 2018, accounting for 34 percent of the program. The Star Ratings program requires plans to report on health outcomes and pays the plans based on their attainment. This program has helped transition payers into public health champions – as plans know that it is impossible to have a financially viable Medicare Advantage offering without doing well on their Star Ratings.
New flexibility from federal regulators gives health plans license to get more creative with how they provide care. Medicare Advantage is leading the way by allowing plans to consider covering innovations that manage the total cost of care, including supplemental benefits that are not primarily health related but that nevertheless encourage public health. For example, Medicare will soon allow health plans to cover so-called “daily maintenance” services like fall prevention devices that can keep seniors healthy, but which had never previously been considered direct medical costs.
And health plans will also be permitted to tailor benefits and deductibles to enrollees who meet specific medical criteria. This is important because the plans can give specific financial incentives to individuals to take actions to improve their own health. Many of the interventions that will ultimately reduce cost depend on individual choices – such as compliance with medication that we know will improve an individual’s health and reduce total system costs.
Woven into plans’ new identities as wellness and public health advocates is a more deliberate focus on social determinants of health like food and housing. The quality (or lack of quality) of these social needs plays a major role in clinical health. CVS Health has committed $100 million over five years focused on community health and wellness after its purchase of Aetna. The Humana Foundation recently invested $7 million in contributions to programs that specifically address social determinants. Both insurers are looking at food security issues and promote access to healthy food, among other initiatives.
While investments by plans to date are significant, it’s important to note that plans are in no way a substitute for existing public health resources that have been developed over the past few decades. And in fact, plans rely on the presence of a strong public health infrastructure, and the core activities of federal, state, and local government assistance in housing, food, and heating assistance. Health plans will never replace these efforts, but increasingly will coordinate and supplement them.
And of course, it’s also important to acknowledge that health plans will always focus on core operations – which will include management of benefits, restrictive networks of providers, enforcing copay structures, and in some cases the denials of claims. None of this will go away just because the plans are focusing on wellness, and in fact must be regulated and improved simultaneously.
So how can we ensure that plan efforts to improve public health continue, and that they have a meaningful impact? First, we need to ensure that public programs – Medicare and Medicaid – lead the way in driving quality-based payments. Second, we need to allow plans to deliver social services and supports as part of their core offerings, and make sure that they are compensated appropriately for these services. Third, we need to measure the most important outcomes for patients – and pay for them explicitly. And finally, we need to hold plans strictly accountable for improvement in quality for their insured populations.
What started out as interest in wellness is quickly becoming the next major health care transformation, a focus on public health. Health plans are now partners to government and the public in achieving health outcomes. And they will increasingly do so in the future.