Payer Innovations: How Payers Are Innovating Technology, Payments, & Delivery Of Care

March 20, 2016 | Featured Articles

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Payer Innovations in Technology

The healthcare marketplace is finally becoming more consumer driven, and consumers want apps! They want data! They want information . . . Insurance companies are meeting those demands by providing their members with innovative digital support tools such as digital coaches, online portals, mobile apps, telehealth services, and price comparison tools. And as a result, patients are becoming much more active in the choosing of their care.

Let’s take a look at a few Payer innovation programs that utilize technology.

Improving Health Goals through Digital Coaching

The most significant cost of healthcare in the United States are those patients that suffer from chronic care diseases (such as diabetes, heart disease and obesity). By promoting healthy goals and lifestyle choices, insurance companies hope to impact patient choices in a positive way and as a result reduce these costs in the long term. Accomplishing personal health goals can be a tough endeavor, especially when relying solely on willpower. By turning health goals into, say, online games, insurance companies are making this process fun while trying to improving the health of their members and save money on the cost of their care. As with most online games and coaching tools, there is a social component that serves to motivate patients by tracking progress and showing goals and targets set and met.

One example is Cigna’s Health Matters, an online rewards-based incentive program. To encourage healthy lifestyles, Health Matters participants fill out their health assessment through the online gamified application in half the time that a non-gamified health assessment would take. Once enrolled, participants receive access to tools, including reminders, inspirational messages, personalized coaching, and rewards.  Rolled out in January 2014, Cigna’s Health Matters paid out close to $193 million in perks by September 2015. 

Web Applications

Today’s consumers expect information at their fingertips and the web is the place to get it. By offering easy to use online tools and mobile apps, some insurance companies are able to increase engagement, and consumers are able to build a personal healthcare team, compare prices, and feel in control of their health and well being.

One example is Aetna’s iTriage healthcare app which helps consumers find easy-to-understand information in 20 different languages, in the palm of their hand. Consumers can find a doctor quickly, locate in-and-out-of-network providers and facilities, and even check in to select Hospital Emergency Rooms and Urgent Care facilities from their phone!

Not surprisingly, one of the most popular features is the enormous healthcare and medical database with information on thousands of symptoms, diseases, conditions, and medications, all reviewed by Harvard Medical School. Users also have instant access to their personal health record (PHR) and claims history, making this a truly essential healthcare tool. A quick glance at the reviews for the app in the iTunes store convey that users think it’s working well. In an effort to innovate their mobile platform even further, Aetna quietly launched a beta version of their new iTriage Essentials app this February, designed to be more appealing to the younger demographic of so-called digital natives who grew up using technology.

Another example is Cigna’s web application, Cigna Compass. Rather than wait for the member to request information, Cigna Compass pushes out data to members by anticipating their needs and preferences and offering solutions that have been personalized, complete with customer alerts to improve health and lower healthcare costs. For example, if a member does not have a designated primary care provider, the app uses the member’s current location to provide a list of nearby in-network healthcare professionals and facilities.


A rapidly growing method of care delivery area has been the use of telemedicine and virtual visits to eliminate barriers to access of care, particularly for patients who are home-bound or in rural communities. Services available through telehealth include dentistry, counseling, physical and occupational therapy, home health, disaster management and the monitoring and management of chronic diseases and much more.

At the University of Mexico, Medicaid health plans partnered with Project ECHO (Extension for Community Healthcare Outcomes), a collaborative model of medical education and care management where primary care providers are trained to treat chronic and complex diseases in rural and underserved areas via video conference. A report in the New England Journal of Medicine demonstrated that Project ECHO overcame healthcare access barriers, positively impacted patient outcomes, and was associated with high rates of cure for hepatitis C.

(For more on this subject, see our article in this issue ‘Telemedicine: A Roadmap’)

Using Data to Prevent Fraud

A consumer driven marketplace not only demands information, it also expects transparency and ethical behavior. In order to combat fraud and protect members, 95 percent of health insurance companies are now using anti-fraud technology, up from 88 percent in 2012, according the Coalition Against Insurance Fraud.

CMS’s Fraud Prevention Systems (FPS) screens Medicare fee-for-service claims (which includes all national Medicare Part A, Part B, and DME claims) and builds profiles that are aggregated by healthcare providers and suppliers to help CMS identify aberrant or suspect behavior. The FPS generates alerts based on billing behaviors, calculates a priority score, and assigns the alert to a program integrity contractor based on jurisdiction. CMS’s system added the ability to deny or reject claims prior to payment in its second year of implementation and has continued to expand.

Innovations in Payment and Delivery of Care Models

As consumers demand more information on the quality of their care and associated costs, payment models will continue to evolve to incentivize providers who are able to demonstrate this. CMS, Medicaid plans, private Payers, policymakers and provider systems are relying heavily on financial incentives (and penalties) to change provider behavior to improve quality of care and reduce costs.

Private Payer PCMH Incentives

Some Insurance companies have been incentivizing practices to achieve patient-centered medical home (PCMH) recognition. The details of these plans vary greatly by state, but as more practices achieve PCMH recognition, it is rapidly becoming a standard rather than a distinction for contracted practices.

A detailed listing of the available programs by private insurance companies in each state is available on the Patient-Centered Primary Care Collaborative’s website.

Federal Program Incentives

Current federal programs include the Pioneer ACO program, the Bundled Payments for Care Improvement, the Agency for Healthcare Research and Quality (AHRQ), and the Medicaid Shared Savings Programs. Over the next three years, CMS will greatly expand the use of financial incentives and penalties, with quality and cost control making up half of Medicare spending by 2018, according to Obama Administration officials.

With the passage of the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA), Medicare payments were dramatically reformed by:

  • Ending the Sustainable Growth Rate (SGR) formula for determining Medicare payments.
  • Combining existing quality reporting programs such as the Physician Quality Reporting System (PQRS), the Value Modifier (VM or Value-based Payment Modifier), and the Medicare Electronic Health Record (EHR) incentive program into one new system.
  • Rewarding health care providers for giving better care, not more care, through the Merit-Based Incentive Payment System (MIPS) or Alternative Payment Models (APMs).

Providers who proactively participate in APMs (such as Accountable Care Organizations, Patient Centered Medical Homes, and bundled payment models) will receive an incentive payment and be excluded from adjustments based on quality scores in the MIPS program.

State Programs Incentives

In 2015, nearly 60 percent of Medicaid directors across the country spent half or more of their time working on major payment, delivery system or program reforms, according to a survey by the National Association of Medicaid Directors. Now that the Affordable Care Act is nearly fully implemented, many Medicaid directors say they plan to turn their attention to other reform goals in 2016. Here’s what the survey showed:

  • Payment and delivery system reform is at the top of Medicaid agency innovations.
  • Agencies are moving to performance-based reimbursement models within both traditional fee-for-service care delivery and managed care.
  • High priorities for states include patient-centered medical homes, health homes, alignment of physical and behavioral health, super-utilizer programs and population health.
  • Top issues for four-fifths of the agencies include managed long-term services and support and managed behavioral health programs.

The State Innovation Models (SIM)  provide federal grants to states, under cooperative agreements, to design and test innovative, state-based multi-payer health care delivery and payment systems. A recent overview of the SIM model describes it this way, “The purpose of the SIM initiative is to test whether new models with potential to improve care and lower costs in Medicare, Medicaid, and CHIP will produce better results when implemented in the context of a state-sponsored plan that involves multiple payers, broader state innovation, and larger health system transformation to improve population health.”

While innovation is taking place at the state level, most directors cite factors such as limited staffing, data and systems infrastructures, administrative budgets and complex procurement processes as barriers to innovation.

Challenges with basing financial incentives on measured outcomes

A financial incentive program works best when there is a strong relationship between effort, performance and reward. These programs face the following challenges, some of which may be addressed by the Core Quality Measures Collaborative  as programs move forward:

  • The effort component is hard to quantify, measure and incentivize, especially for pilot programs.
  • It is important to select the best measures for performance. Too often, incentives for quality are tied to performance on irrelevant measures. Incentive programs must measure the quality and outcome factors that matter most.
  • Financial incentive may be too small to facilitate and sustain long term change.
  • Medicare & Medicaid Issue: there is a legal requirement that CMS demonstrations either reduce federal costs or at least curb spending growth. The link between effort and reward is weakened because rewards and penalties must be budget-neutral. Thus, participants don’t know until all results are in what their performance will be worth financially.

As market and policy forces continue to shape tomorrow’s healthcare marketplace, insurance companies will continue to develop programs that meet the needs and demands of their members. Providers who can evolve and adapt will be best positioned to take advantage of opportunities that these programs can provide. By easily providing information to patients through the use of technology (link to JL’s article on tech tools) and providing patient-centered care by participating in alternative payment models that incentivize quality, you can utilize the investments that various Payers are making and differentiate your practice from the laggards.