It’s been nine years since the Affordable Care Act was enacted.
Since then IDNs, primary care physicians, health insurance plans, and virtually everyone connected with U.S. health care systems has been trying to keep pace with all the new reforms.
In particular, health plans have been called upon to help make insurance more available to all people while looking for innovative ways to lower costs. This is a challenge since around 85% of a health plan’s revenue is spent on writing claims, leaving only 15% to invest in the future.
For health insurance plans to conserve revenue, they need ways to improve member retention while lowering costs per patient. Here’s how patient engagement via digital platforms can help health plans conserve their resources.
Improving member retention
A challenge for all health plans is member loyalty. With low member satisfaction rates across the industry, health plans may struggle to retain members.
It normally costs around 5 times more to attract a new member than to retain an existing one. Since it’s much more cost effective to invest in retention than new member acquisition, health plans need a way to encourage loyalty.
But what if there was a way to improve member retention while encouraging lifestyle change?
Adding value improves retention
To get the whole picture, it’s important to consider the rapidly changing patient perspective.
More than ever before, patients want someone to help them be healthy while also giving them convenient access to health services. Similar to the consumer experiences in the online shopping industry, if health plans want to build loyalty, they need to incentivize members and add value through accessible, on-demand services.
Even though payers such as Medicaid are considered the ones pushing the health care revolution, they’re being held to the same standard as medical providers. Today, all health plans need to show that they’re planning for the future by incentivizing value based care.
Monetizing patient loyalty
In the past, health systems have operated with a Fee-for-Service model, making ED visits or additional tests and procedures ways to improve overall revenue. But that is all changing with reforms being made in Medicaid and Medicare. Now capitated payment models are becoming the norm. This is making it even more important to retain members and defray costs in order to keep revenue streams healthy.
How capitated payment models can be optimized
Capitated payment issues a pre-set monthly payment for each patient that calls a particular primary care facility “home.” So the more patients within a practice, the more overall compensation for clinicians on a monthly basis.
It’s also important to note that health plans withhold money from the risk pool until the end of the year. If health systems and clinics have kept costs low while improving outcomes, payers will increase providers’ compensation from these withholdings. If costs haven’t been kept low, health plans will keep those funds to offset costs.
To monetize in this new health care ecosystem, health systems need to be able to attract and retain more patients while proving that they can boost patient wellness. When they do this effectively, health plans can expect to see fewer claims.
How socioeconomic factors affect revenue streams
Medicaid and Medicare are confronted with other socioeconomic factors that impact health and revenue streams. These high risk situations lead to more claims and costs for health plans.
Take, for instance, patients with lower incomes. This population sector doesn’t normally have a primary care connection and often requires more ED visits. As a result, it’s more difficult to make the behavior changes necessary for long-term health.
Other expenses often riddle these patients and their health plans. Low health literacy, limited access to transport, poor housing can all impact a person’s ability to manage their health and get access to early intervention resulting in increased ED utilization. Over time, patients in these demographics incur greater expenses for providers and, by proxy, health plans.
Consider the elderly population. They’re often a higher risk for health plans, incurring greater medical expenses for long term care, medications and more frequent ED visits.
High risk claims for health plans are often caused by socioeconomic factors that may be prevented through education, support and lifestyle changes. If health plans incentivize or offer coverage for health services that help address the social determinants of health, patients will be able to more easily overcome these barriers to wellness. This will leave insurance agencies with more revenue for future investment.
How digital health tools can improve a health plan’s bottom line
In this revolutionized system of health care, collaboration between health plans, physicians, and large hospital systems has the potential to lower costs and improve patient value. While this may sound like a great solution, it’s often more difficult to achieve than it sounds.
For instance, since a health plan’s bottom line depends on cost effective health systems, value based care is making it worthwhile to help these organizations attract and maintain patients.
Digital platforms like Melon, can increase patient engagement and activate members to be partners in their care. We augment and extend usual care through scalable, cost effective supported self-management resulting in lower utilization and lower cost.
These wellness services can act as a magnet, drawing patients to reliable health systems and then keeping them active in their health. This in turn should result in fewer claims, allowing health plans to conserve resources in their risk pools.
Under a capitated contract such as HMOs, digital engagement platforms allow clinicians to keep up with patient needs while lowering the frequency of in-person visits. This means health systems can retain more revenue per patient and monitor patient conditions such as non-acute chronic illness.
Since patients won’t need as many in-person visits to the clinic or as many tests, health plans won’t be spending as much per member per year. And because risk pools aren’t spending as much money per member, clinicians can expect to see better compensation from capitated contracts.
Because PPO services are directed toward specific groups or associations, these health plans need a strong base of customers and a high-level of efficiency. By including value-added services such as patient engagement platforms, PPOs can increase medical efficiency and the number of patients they can serve while keeping staffing the same and reducing individual patient costs.
Plus, with supported self-management, patients can start making lifestyle changes and benefiting from feeling well. As a result, they’ll be more likely to stick with a single provider and health plan..
The end result of patient engagement is that clinicians under PPOs can better manage staffing costs while optimizing the value and services to patients.
Digital engagement platforms can help providers and health plans implement scalable health care and long term revenue growth.
Discover how to enable self-management with engagement platforms.