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New Wave of Health Insurers Driving Change for Members and Incumbent Plans

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A new generation of health insurers has appeared in recent years, gradually gaining momentum in key markets in part by claiming to offer a more modern, digital consumer experience.

The advent of these modern, tech-driven upstarts bodes well for members of plans new and old alike, who are looking for health insurers to finally begin to offer the levels of customer experience, personalization and convenience they have long experienced in other markets like finance and consumer goods.

Consumers clearly want and expect their health insurance provider to offer the same quality of experience they enjoy in other areas of their lives, and plans that can meet that expectation will enjoy a significant competitive advantage.

Companies like Oscar and Clover arguably pose a serious threat to the status quo.  Oscar Health, widely seen as a leader in this new wave of companies, recently topped one million members and has reported north of $6 Billion in revenues for 2021Clover Health, another new wave exemplar, targeting the lucrative Medicare Advantage (MA) segment, reported a 25% increase in its MA enrollment for this year.

They are growing fast, expanding their coverage areas (Oscar has recently expanded to cover 22 states), and successfully creating the impression that they leverage modern technologies, process automation and business cultures in ways that traditional health insurers have not.

However, the reality is that their customer experience innovations have not been particularly sophisticated, and many of the advantages they claim today – such as adopting mobile first strategies for member engagement — can be replicated by incumbent plans.

In fact, large health plans have been moving quickly to adopt new, digital customer experience technologies and business process automation (BPA), and the small- to mid-sized plans are poised to follow suit. Cultural change will likely be the toughest area for traditional health plans to transform, but technology may have a role to play there as well.

Oscar Health presents itself as a technology company as much as an insurance company, and often touts its “full stack technology platform.” That stack is built to not just automate many traditionally manual business functions, like processing billing and eligibility or aggregating member and contract data, but to make personalized member-engagement a core function which is also highly automated.

Because their stack is not based on legacy claims and administrative systems, it can take full advantage of the modern technology ecosystem of companies and services. As an early Oscar blog post says: “The problem is that the technology powering health insurance is, for the most part, old and outdated, and it wasn’t built to play nicely with other systems.”

While the modern tech stacks employed by new wave health plans are indeed an advantage, they are not as inaccessible to established insurers as they might seem. The large US health plans got big in large part by buying up smaller health plans, netting them valuable market share and economies of scale, but burdening them with a messy mix of legacy systems, siloed data bases and customized employer group offerings each with its on specific payment rules.

Legacy complexity at that scale can be debilitating, but health plans have been working to update and streamline their systems, and recent regulatory changes, like the CMS interoperability rule, have provided a strong incentive to further accelerate tech modernization. These investments have created a foundation that makes it possible to more easily add modern technology to their infrastructures, and take advantage of more sophisticated business process automation and customer engagement solutions long employed in other industries.

Health plans are primarily focusing on those two technology categories to provide a better member experience through digital consumer engagement and increasing efficiency and responsiveness through BPA/automation.  Specific examples include:

Consumer Engagement

  • Building out integrated multi-channel communications, leveraging mail, email, telephone, web, SMS and mobile apps in combination, and adjusting the communications mix dynamically based on response patterns to connect with members based on individual needs and preferences.
  • Developing “Digital Front Door” strategies that identify visitors to any and all digital communication points and provide smart, personalized response.
  • Seamlessly blending automated and human consumer engagement modes for richer interactions and faster response times.

Business Process Automation (BPA)

  • Strategically identifying labor-intensive workflows across business units that can be enhanced or replaced by BPA relationships with trusted partners via Business Process as a Service (BPaaS) engagement models.
  • Leveraging data lakes for advanced population-level analytics to stratify membership for specific care management or consumer engagement strategies.
  • Creating role-specific dashboards of mission-critical data for staff managing core operations – including member engagement – to continuously improve performance metrics and facilitate troubleshooting of specific issues.
  • Developing specialized workflows and training programs to transform core business functions such as claims adjudication or prior authorizations, to ensure efficiency accountability, and paper-trail.

BPA and digital consumer engagement are robust and mature technology areas, well understood by CIOs, consultants and solutions providers working across a wide range of industries. For US health insurers looking to successfully compete with newcomers like Oscar and Clover, tapping into this expertise is critical to successfully selecting and implementing the best technologies in the most impactful ways.

Strategic partners can not only help plans select and implement the right mix of technology and BPaaS deployment, they can also provide useful insight into the often larger challenge of effecting meaningful cultural change.

Adapting traditional payer cultures to new ways of operating and dealing with customers may be the biggest hurdle insurers face as they seek to meet the threat of new competitors. Where companies like Oscar and Clover have been purposely built for the modern marketplace, traditional health plan cultures are often mired in outdated ideas and attitudes.

The good news is that technology can often create a framework for – and help catalyze the transition to – new ways of thinking and working. Technology and culture go hand-in-hand, and with the right approach, health plans may find that meeting the technology challenge of their new competitors will help them meet the cultural challenge as well.

This article was written by Venkatgiri Vandali, Head – Healthcare & Lifesciences at Firstsource and was originally published on Electronic Health Reporter.

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