Plan Selection

Obeo Health featured in Gartner report

The following article is taken from the recent Gartner report – Hype Cycle for U.S. Healthcare Payers, 2016, published: 1 July 2016.

 

Smart Health Plan Selector Tools – Analysis By Constance Sjoquist


Definition:
Smart health plan selector tools apply advanced analytics, such as machine learning
and cognitive computing, to large and diverse datasets to assist consumers in shopping for a
suitable health plan based on factors such as their health risk, financial risk tolerance, current
prescriptions and physicians, and experience preferences. These tools are in contrast to simple plan
selection tools that use rule-based scoring to sort and filter health plans.

Position and Adoption Speed Justification: Smart health plan selector tools are advancing to aid individuals in picking health plans that most closely align with their personal, financial, and health risk tolerance and goals, and are being adopted in response to the increase in:

 

■ Use of enrollment portals where individuals go through the plan selection process alone — with minimal knowledge of plan designs and little human support

 

■ Number of health plan designs that individuals choose from on enrollment portals, making the decision process for individuals overwhelming

 

■ Number of employers switching to defined contribution benefit designs to cap their benefit
costs and shift costs onto individual employees, with the assumption that more choices will
make up for higher individual out-of-pocket costs

 

■ The government’s, employer’s and payer’s desire to align an individual’s health plan selection
with their health history to determine the health plan that will result in the best health outcomes
Most health plan selection tools are embryonic and not truly “smart,” but rely on decision workflows and Excel worksheets to facilitate individual plan selection. Smart health plan selector tools are often coupled with online or mobile enrollment solutions. Expect their velocity along the Hype Cycle to closely align to the velocity of private exchange technologies and other online and mobile enrollment solutions.

 

Health plan selector tools are often integrated into payer, broker or group enrollment, or private
exchange portals. The limitations of Generation 1 (rule-based) plan selector tools are triggering
Generation 2 plan selector tool development and adoption. With the addition of smart technologies, such as virtual consumer assistants and recommendation algorithms, we expect the rate of adoption of smart health plan selector tools to increase.

 

User Advice: Healthcare payer CIOs and chief marketing officers (CMOs) should understand that
there are few vendors who actually use smart technologies — the use of data analytics and
algorithms — in their health plan selector tools. Most representative vendors we listed are largely
aspirational. Look for vendors whose solutions can perform perceptual tasks — classifying large
and variant data input streams in nonobvious ways — to inform decision making at a greater depth than using only member-, payer-, provider-, or employer-specific data. By combining health and financial data with behavioral, social, demographic, and other nonhealth data, payers can expect to more closely align individual plan preferences with health outcomes.

 

Payer CIOs and CMOs should:

■ Drive awareness and quantitative analysis of the growing impact of plan selector tools on payer revenue.
■ Track emerging vendors in this space, paying special attention to evidence of their incremental
growth in efficacy compared with Generation 1 tools.
■ Assess the opportunities for internally built cognitive solutions in this market. This begins with
an inventory of the structured and unstructured data available to train against, including claims,
products, provider network, member profitability, member satisfaction, and renewal.

 

Use the data from smart health plan selection tools as early in the enrollment phase as possible —beginning with post enrollment data from current plan years. Review how well individuals were
matched to plan selection and what modifications can be made for the next enrollment cycle.
Following the member’s health journey, look for over- or underutilization of benefits, customer
complaints or confusion of how to use their benefits.

 

Business Impact: All areas of the payer are impacted by the use of smart health plan selector tools.While the decision to implement these tools may reside with sales and marketing leaders, benefits derived will be evident beyond the enrollment stage of the member life cycle, as the payer’s success depends on members who understand how to choose and use their health benefits. Smart health plan selector tools help payers provide members with the optimal health plan that addresses members’ particular health and financial interests in a way that paper- or rule-based health plan selection tools cannot.

 

By incorporating data analytics and algorithms into the plan selection process, payers can go
beyond simple workflows and lead members along an enrollment path that is more personal and
results in a more suitable health plan match. Substantial consumer value can be unlocked using
cognitive approaches to match consumers to plans that improve their health outcomes and
experience, and lower their health costs. While payers may take a near-term hit on profitability, as enlightened members choose “skinnier” plans, their value will accrue value through improved
competitiveness, sales effectiveness, and member loyalty.

 

As this space matures and tools incorporate more cognitive capabilities, payers should expect to
improve product placement for desirable members, similar to search engine optimization. Cognitive plan selector tool algorithms can be used in the aggregate to determine whether a payer or an exchange vendor’s product portfolio has an appropriate mix of appealing and beneficial products for their prospective members.

 

Benefit Rating: High

Market Penetration: Less than 1% of target audience

Maturity: Embryonic

Sample Vendors: Array Health; ConnectedHealth; Obeo Health; Picwell
Recommended Reading:

 

“Predicts 2016: U.S. Healthcare Payers Are Challenged to Become Digital Health Payers”

“Industry Vision: Mass Personalization of Consumer Healthcare Engagement”

 

Did you pick the right health insurance plan?

Selecting a health insurance plan can cause considerable angst for a consumer and his/her family. Insurance plans are complex and there is a wide variety available on the market. Let’s try to simplify the decision making process. There are basically four areas that the consumer needs to assess for each plan offering;

1. The deductible.

2. The co-payment.

3. The co-insurance.

4. Out-of-pocket spending limits.

The complexity of plan choice arises in part from wide variation among plans across these four features that determine how health costs are shared between the insurer and consumer. And so consumers are faced with a dizzying number of permutations when trying to balance these four areas.

Lack of health literacy also plays a part in the process. A study done in 2013 found that only 14% of consumers could answer four simple multiple choice questions regarding the definition of these four cost sharing features. Also when presented with a simplified plan, most respondents were unable to accurately estimate the cost of their medical services. To confuse things further employees need to know if the plan covers their medications (formulary status) and whether their physicians are in or out of network.

The Affordable Care Act (ACA) organized plans were segregated into four ‘metal’ tiers – platinum, gold, silver and bronze. One investigation of hypothetical plan choices with plan menus designed to mimic those of the exchanges found that metal labels, rather than facilitating better decisions, worsened choices compared with generic labels (eg, plan A, plan B, plan C). This study also found that alternative plan labels that encouraged consumers to forecast how much care they anticipated needing did have a modestly beneficial effect, suggesting that participants may have misinterpreted metal labels as signals of quality, or the breadth of services covered, rather than the degree of cost sharing.

To make a financially efficient choice, employees, most of whom lack extensive prior experience with insurance, have to carefully consider the complicated relationship between plan cost, cost sharing, and their expected health risk. So what can be done to help employees navigate through these complex scenarios? I would like to suggest some possible solutions;

1. Provide decision aids. These may be scenario based examples or so called “people like me” illustrations.

2. The utilization of consumer historical data (claims, pharmacy etc) to help predict future costs should be encouraged. Prescriptive analytics tools can now help perform this task.

3. A more aggressive approach may be the use of plan “defaults” or restricted menus tailored to each consumer.

4. A more long term solution would be to simplify health insurance – period. Insurance products free of the complex features that consumers are least able to understand, such as deductibles and co-insurance,would more likely help consumers make informed decisions regarding plan choice and utilization.

Offering multiple plans seems like a good idea – the typical ACA enrollee is offered an average of 47 plans. One would hope that this large number of choices would help the consumer find an appropriate plan and may stimulate competition among insurers, leading to improvements in plan price and quality. However, these benefits are unlikely to emerge if consumers are not given the right tools and education.

To sign up for a free demo of the tools on offer at Obeo Health please click here.

Impact of Healthcare Underestimated by Many Advisors

There are some very good points raised in this article by Emily Brower Auchard. We agree that employees should approach healthcare with the same financial awareness they bring to buying a car or a home. The article is reproduced below….

The high cost of healthcare in the U.S. takes up an increasingly large portion of consumers’ financial resources, with health spending in the U.S. reaching $3.1 trillion—or nearly $10,000 per person per year, according to the Centers for Medicaid and Medicare Services. Even with long-term disability and health insurance, consumers who get sick can be hit with unexpectedly large out-of-pocket expenses.

Advisors say the unpredictable nature of healthcare costs requires creative planning and careful attention to the small print of health-related insurance. Over the course of his career, Anthony Domino, an advisor with Associated Benefit Consultants in Rye Brook, N.Y., with $2 billion under management, has seen big changes in how healthcare costs impact his clients.

“Today my clients can spend more on co-pays for drugs than they used to for their entire health insurance premium,” he says. While healthcare reform has changed the funding for health insurance it hasn’t impacted healthcare costs, he notes. With that in mind he encourages clients to shop carefully for their healthcare insurance. He also recommends they repeat the process for every annual enrollment period to be sure they are getting the best coverage possible. In addition to premium increases, other plan benefits and costs, such as drug benefits or coverage of out-of-network provider care, can change significantly from one year to the next. This can lead to what the healthcare industry now calls “surprise medical bills.”

Neal Slafsky, managing director of United Capital in Newport Beach, Calif., encourages clients to approach healthcare with the same financial awareness they bring to buying a car or a home.

Slafsky, whose firm has $15.4 billion under management, works with his clients to ensure they get the benefits they are due from their health insurance providers — which can mean taking a more active role in reviewing medical bills after a client’s hospital stay.

“Sometimes clients have to appeal their claim and go back more than once to get the benefits they are due,” he explains. If the process is too much for a client, he recommends they hire a medical claims processor.

“The fees are very reasonable and I’ve seen them get terrific results,” he says. The best way advisors can serve clients, he says, is to do a “deep dive” into the world of healthcare insurance.

Providers can be very opaque in their explanations of benefits and advisors can play a crucial role in translating that information for clients. “Where else is a client going to go to get that information?” he notes.

Long-term disability insurance is another element where clients typically need advisor guidance. “Clients need to plan well in advance to prepare for the possibility of being disabled,” explains Venita Zavidny, an advisor with Houston, Texas-based Kanaly Trust, which has $2 billion under management. Zavidny, who considers incurring a long-term disability to be one of her clients’ biggest risks, is well versed in the financial needs of long-term care. Zavidny works with clients to look closely and carefully at their long-term disability plans and to make sure they know exactly what coverage they are buying.

For instance, a plan that says it will provide 60 percent of a client’s income may look appealing on paper — but clients often neglect to factor in other costs. “Taxes will make that income considerably less,” notes Zavidny. Many plans include Social Security benefits in their formulas and will subtract any amount of long-term disability provided by Social Security from their payments. One piece of advice Zavidny offers her clients: avoid paying taxes on future long-term disability income by taking the benefit as imputed income. “This small decision on insurance choices can have big consequences for the future,” she notes.

Choosing the right health plan is a challenge

I have reproduced below an excellent article from NPR. It highlights the difficulties around picking a health plan. I have also included the healthcare terms that are explained as part of the article. Here you go……

Solicit opinions about health insurance and you’re almost guaranteed to find consensus: It’s mystifying and irritating.

“It just seems like a lot of the buzzwords are intended to just complicate the whole thing and make it more expensive,” says David Turgeon, 46, who’s sitting in a Minneapolis mall eating lunch.

Enrollment season rolls on, and people shopping on HealthCare.gov and the other marketplaces have until Jan. 31 to decide on a plan.

But even people trying to pick from their employers’ options can find the process complicated and difficult to understand. The jargon can be overwhelming, and it can lead people to make costly mistakes or to avoid care altogether.

Ronen Ben-Simon, 28, also eating lunch in Minneapolis, says some basic health insurance terms are lost on him — even though he’s a nurse. “I don’t even know what coinsurance is, to be honest,” he says.

Coinsurance, if your plan has it, kicks in after you’ve met your deductible and requires you to pay a set percentage of medical bills.

Over in St. Paul, Minn., Seanne Thomas, a 50-year-old real estate broker, says she has gotten good at figuring out how health insurance policies work. She’s had to, because her family members are covered under three different plans. “So I had to compare copays, I had to compare out-of-pocket, you know, deductible and maximum coverage.”

With all that grappling with insurance plans she’s done, Thomas is game for a quiz. Here’s a scenario, one of several, developed by American Institutes for Research:

A guy goes to the doctor to get a wart removed. The bill is $530. He has a copay of $30, a deductible of $100 and coinsurance of 20 percent. How much is he on the hook for?

Thomas nails the copay and deductible, but then runs aground.

“I don’t know what you mean by the term coinsurance,” she says. And without knowing that term, she’s out of luck.

Most people would be in the same position. A couple of years ago, American Institutes for Research, which is a social science research firm, asked hundreds of people and found that only 1 in 5 got the right answer, which is $210.

“People really struggle with understanding health insurance for a variety of reasons,” says Kathryn Paez, who researches health insurance literacy for the organization. “One is just the volume of information. There’s a lot to know. The other is because the language is unfamiliar to them, and they don’t really understand health insurance terms and concepts.”

And that unfamiliarity, Paez says, is greater among African-Americans, Hispanics and people with low incomes and low levels of education. Highly educated people struggle, too.

“We’ve created a monster, and it’s not surprising to me that there’s literacy issues,” says Kathleen Call, a professor in the University of Minnesota School of Public Health. “I’ve studied this stuff, and sometimes I make mistakes.”

Call has grown increasingly concerned that the complexity of insurance could compromise public health by keeping people away from the doctor.

“People are treating it more like car insurance: You don’t use it until something happens,” she says. “You have an accident, then you use it. Otherwise you’re trying not to use it. And that’s not the way we want health insurance to be used.”

And, Call says, not understanding what’s covered and what’s not can leave people on the hook for big medical bills. “That mistake can mean the difference between paying that medical bill or paying rent,” she says.

Surveys confirm that growing numbers of Americans avoid care because of the cost.

Remember that quiz? We ran it by the industry group that represents health insurance companies, American’s Health Insurance Plans.

Clare Krusing, a spokesperson for AHIP, accepts the challenge and then wishes she had a calculator in front of her.

“I totally understand why this is confusing and can be challenging,” she says. But the low $100 deductible was the biggest stumbling block for her. “I just don’t know of anyone that would have a $100 deductible to be totally honest with you.”

So who’s to blame for all the confusion? Krusing says the industry is using increasingly complicated cost-sharing schemes to hold down the cost of monthly premiums.

She also says plans are trying harder than ever to help consumers understand their policies: “Whether it’s on mobile apps, whether it’s on email reminders, whether it’s easy-to-understand videos, health plans are doing all of that.”

The industry and consumer advocates agree, if something’s unclear, demand clarification from the insurance company.

Health care glossary

  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic
  • Meg Martin/MPR News Graphic

 

 

Evaluating health insurance plans can be daunting and confusing, and most people don’t get much guidance, research shows

The following is taken from an article written by Austin Frakt at the New York Times. It highlights the challenges around picking a health plan…….

It’s open enrollment season for almost every kind of health insurance in America. Millions of Americans using Medicare plans, employer-sponsored health insurance or Affordable Care Act marketplaces select health plans each fall. Many consumers face numerous options, and research shows that they make many mistakes, often paying more than they need to.

Some err by selecting deductibles that are too low. Lower deductibles can be a fine choice for some consumers, but trying to save money with a lower deductible can be a poor choice if a person pays even more in premiums. For instance, at one large American company in 2010, employees could reduce their deductible by $250 — to $750 from $1,000 — by paying $500 more in premiums. Trading $500 for $250 is clearly a bad deal for the consumer.

Yet a majority of the firm’s workers made bad deals like this, according to a study by Saurabh Bhargava, a Carnegie Mellon economist, and his colleagues. Workers were offered a choice of 48 plans that were identical except in cost sharing and premiums. Though no plan would have been optimal for every employee, a $1,000 deductible plan would have been better for many and at least a no-worse choice for 97 percent of employees who chose a lower deductible.

People make mistakes like this for a variety of reasons. Some don’t understand basic health insurance concepts. In an experiment accompanying Mr. Bhargava’s study, 71 percent of people couldn’t identify fundamental cost-sharing features of health insurance plans. This type of illiteracy was highly predictive of mistakes like overpaying for a lower deductible.

Another study, led by George Loewenstein, a professor of economics and psychology at Carnegie Mellon, found that people misunderstood plan features and costs. Even with plan details right in front of them, only 40 percent of privately insured Americans could identify how much they’d have to pay for anM.R.I. scan. Only 11 percent could report what a four-day hospital stay would cost them. Yet study subjects were overconfident. All said they understood what a “co-pay” was, but 28 percent could not correctly answer a question testing their understanding of the term; only 7 percent would admit to not knowing what “maximum out-of-pocket” meant, but 41 percent couldn’t define it.

Another study found that less than a third of respondents could correctly answer questions about coverage features of their own plan. Yet anotherfound that only a minority of workers at a large firm could answer questions about plan characteristics or their own, recent health care spending.

Without a doubt, choosing a plan can be daunting. A shopper in the Affordable Care Act marketplace can choose from 40 plans, on average. A typical Medicare beneficiary can choose from among nearly 20 Medicare Advantage plans and 30 stand-alone prescription drug plans.

In selecting plans, consumers are prone to mental shortcuts that often lead to poor choices. Plan labels — like the “gold,” “silver” or “bronze” — can fool people. To some, “gold” sounds better than “bronze,” even if it isn’t. In one study, people were asked to select hypothetical plans with these labels, but the researchers reversed the meaning of “gold” and “bronze” for half of them. It didn’t matter. Most people picked “gold” anyway.

The ordering of choices also matters. Consumers tend to select plans near the top of a list, a phenomenon that arises in other contexts: Economists download more papers from the tops of lists of new studies, as my colleague Neil Irwinreported; politicians at the top of ballots receive more votes.

Eric Johnson, a Columbia business professor, led a study that found that without substantial additional assistance, a consumer’s likelihood of selecting the lowest-cost plan is no better than chance. The researchers conducted a series of experiments on people similar to those who would shop for marketplace coverage. Each study participant was asked to presume he’d use a certain amount of health care and, based on that, to choose the lowest-cost plan from among eight choices, which varied by premium, doctor co-pay and deductible.Only 21 percent could accomplish this task, a figure not statistically different from chance. The annual cost of errors was about $250. A separate analysis showed that participants had a stronger aversion to an increase in costs in deductible or co-pay than to the same increase in premium. Because a dollar is a dollar, no matter how you spend it, this is another indication of irrational decision making.

But when study subjects were provided with a tutorial or with a calculator that revealed the full cost of each plan, or if they were placed in the lowest-cost plan by default (from which they could voluntarily switch), their chance of selecting the cheapest plan was much higher, upward of 75 percent in some experiments.

Though some Medicare beneficiaries switch to lower-cost drug plans over time, another way consumers get stuck with bad deals is by staying in plans as their premiums increase, a status quo bias. One study found that New Jersey enrollees in Medicare prescription drug plans paid an average of $536 more over three years because of this kind of inertia. Some insurers strategically enter marketswith low prices and increase them over time, exploiting consumers’ inertia. This “invest then harvest” pricing strategy has been observed in markets for Medicare Advantage planscommercial health insurance and others.

Providing consumers with easier access to cost comparison information can help. A study published in The Journal of Economics in 2012 found that when a random sample of Medicare beneficiaries got letters that compared prescription drug plan costs, they were more likely to switch plans and to save money, relative to nonrecipients. When pharmacy students helped California Medicare beneficiaries understand drug plan costs, 60 percent switched plans.

Few consumers get this much help. When researchers at the University of Pennsylvania examined the Obamacare online marketplaces last year, they found only a few that provided some of the tools consumers need. Most marketplaces presented plans in order of the cost of the premium, which doesn’t take other cost sharing into account. (However, California ranked plans according to total cost, Kentucky listed them randomly, and Minnesota ranked them based on best match according to a series of preference questions, similar in spirit to an approach recommended by University of California, Berkeley economists in a recent Brookings policy paper.)

Only three states offered cost estimators. The federal government’s site, HealthCare.gov, will offer more information about plans — like which physicians are in plan networks — and cost comparison tools.

If last year is any guide, once again few consumers will actively shop for a more beneficial plan. An analysis by the Department of Health and Human Services showed that more than 70 percent could have found a cheaper plan. The research is clear: Most won’t find that cheaper plan without a great deal more help.

Austin Frakt is a health economist with several governmental and academic affiliations. He blogs at The Incidental Economist, and you can follow him on Twitter at @afrakt.

Can Consumers Make Affordable Care Affordable?

Eric Johnson, a Columbia business professor, led a study that found that without substantial additional assistance, a consumer’s likelihood of selecting the lowest-cost plan is no better than chance….But when study subjects were provided with a tutorial or with a calculator that revealed the full cost of each plan, or if they were placed in the lowest-cost plan by default (from which they could voluntarily switch), their chance of selecting the cheapest plan was much higher, upward of 75 percent in some experiments.