Volatility Drives Payer Technological Innovation, Partnerships

Best’s Special Report, which HealthPayerIntelligence obtained by email, has discovered that healthcare payer technological innovations and partnerships often thrive under change and urgency, providing a much-needed sliver of hope during a tumultuous time.

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“‘AM Best’s Innovation Capability Assessment Profiles’ looks at the characteristics of our five innovation assessment categories: Leader, Prominent, Significant, Moderate, and Minimal. More innovative companies (Leader and Prominent) differentiate themselves by quantifying the results of their innovation efforts over the long term,” Jim Gillard, executive vice president and chief operating officer, explained in the report’s introduction. “The health, reinsurance, and auto lines stood out as the most innovative lines, with external pressures driving the need for transformation.”

The report spells good news for the health payer industry, which is defined by its innovations and is slated to thrive in a precarious market.

More than a fifth of the health insurance segment was either a Leader or Prominent in innovation—the top two designations that the Best’s Special Report awards.

Four percent of the payers reviewed were classified as Leaders. These companies’ scores indicated that these payers not only pursued an official innovation strategy that was integrated into their mission and culture, but also that the payers pushed the limits and set the industry’s standard.

Another 17 percent were in the second highest category as “Prominent.” These companies commit a portion of their budgets to innovation, have executives in leadership that promote innovation, and have a history of innovative performance.

Overall, the health payer industry proved to be at the forefront of innovation among insurance markets.

The average innovation output score—or the tangible results of an industry’s efforts in innovation as calculated by Best’s Special Report’s rubric—proved higher among healthcare payers than any other insurance industry, including reinsurance, life/annuity, and property/casualty.

The healthcare payer industry received a 9.2 out of 10, whereas the runner-up—reinsurance—received a 7.7 score for innovation.

Between the new interoperability rules, which will force payers to adopt new APIs and reporting processes, and the incoming coronavirus outbreak, payers’ innovation will be tested now more than ever. They will need to build on the strengths of their leading and prominent innovators in order to meet complex clinical and policy and regulation needs.

This level of urgency, however, is exactly the environment that gives healthcare payers an edge on innovation.

“The health insurance market continues to change rapidly owing to regulatory and legislative changes, market demand, and medical advances,” the report explained. “As a result, health insurers are quite receptive to new technologies and are usually early adopters that have produced quantifiable results.”

Even the ever-evolving policy and regulation landscape plays a role in making healthcare companies more receptive to new technologies and shapes them into early adopters.

Payer-provider collaboration is key to innovation. The report underscored integrated delivery models, value-based reimbursement models, population health management, and care coordination as driving influences.

To no one’s surprise, the Best’s Special Report discovered that data lies at the heart of a payer’s ability to thrive in innovation.

Understanding and leveraging the advantages of cloud computing, the Internet of Things, and artificial intelligence are central to a payer’s ability to manage claims data and innovate new ways to employ that information.

Wellness programming and wearables have also given payers a space to advance innovation. Remote monitoring, virtual provider visits, and online wellness programs have been part of the advancements in that arena.

Cost management is another area that has spurred greater healthcare innovation.

“Claims imaging, auto adjudication, claims editing, and voice recognition technology were game changers for the health segment. Innovative technology also allows health insurers to detect fraud and abuse by identifying abnormal claims patterns,” the report pointed out.

These advancements in billing as well as enrollment, customer service, and other processes are steppingstones to a more streamlined approach to healthcare.

Vertical integration has also been a part of the industry-wide efforts streamline. There is no template for vertical integration. Every vertical integration agreement has been a unique collaboration between payers and providers through means such as traditional merger and acquisitions or risk-sharing advanced payment models.

“Innovation isn’t limited to technology,” the report reminded readers. “It also includes a company’s ability to generate ideas that can be incorporated into—and even lead to—new business models.”

The researchers pointed to large health payer collaborations with smaller health payers. Cigna’s recent partnership with Oscar Health, for example, did not rely on a digital vendor but, rather, innovated a new approach to managing small business health insurance plans.

Key factors to driving forward payer industry innovation include:

• Focusing on the consumerism in healthcare and patient-centered care solutions
• Improving administrative efficiency
• Increasing patient engagement, including using predictive analytics to warn payers of high-risk patients and channel them into appropriate treatment as early as possible
• Expanding on payer, provider, and vendor relationships to fuel innovation
• Leveraging “digital ecosystems”—networks of platforms that patients use which can become touchpoints for connecting patients with the right services to meet their needs 

“As both medical treatment and delivery of care continue to advance, the health segment will remain open to new ideas and continue to evolve,” said the report.