Earlier this year, the Nolan Company conducted a market scan of the health insurance industry through targeted interviews and reviews of public information. The purpose of the scan was to develop a qualitative understanding of what health insurers will focus on over the next few years. The scan included national for-profits, regional not-for-profits, and the Blues.

Areas of focus identified through the scan include:

  1. Healthcare Reform (ACA): Although many of the major components of ACA haven’t been finalized, implementation for some components is already underway (for example, revised EOBs and MMLR reporting). We expect spending on Exchanges and other major programs to begin in earnest during 2012.
  2. Compliance: Most insurers are still working through 5010 and ICD-10, which continue to be major programs. In addition, given many politicians’ stance on the health insurance industry and the number of new regulations that are being released (think State reporting requirements for Medicaid), there are increased pressures on the industry around compliance. In this environment, insurers do not want to make the front pages because of compliance-related issues.
  3. Member Engagement: With changing benefits structures (high-deductible plans), product types (individual, Medicare, and so on), and the addition of voluntary benefits and health and wellness programs, members expect real-time access through multiple channels, including tablets and smartphones. Members need access to administrative and health and wellness management capabilities, and they need information real-time and in a way that they can make sense of it and act upon it.
  4. Provider Integration: With members taking on more financial responsibility for their healthcare, providers need real-time access to member-related data. Also, providers are beginning to take on more financial risk—spurred in part by the ACO regulations—and will need help managing their risk. As health and wellness management programs are formalized, providers will need access to more clinical data that may be aggregated and stored at the health plan.
  5. Health and Wellness: Many groups are now requiring health and wellness programs, as is the government for Medicare and Medicaid. The age-old question regarding whether there is an ROI associated with health and wellness programs has become somewhat irrelevant in today’s environment; purchasers are requiring those types of programs.
  6. Business Systems Consolidation and Modernization: With the amount of change resulting from product changes, the economy, shifting demographics, and the ACA, many plans are rationalizing their technology portfolios, such as by consolidating claims platforms. Many plans are developing separate budgets for this item (sometimes it is the single largest budget item) and categorizing it as a cost avoidance issue (vs. trying to develop a CBA based on the consolidation itself). Some organizations have other key business initiatives (such as member engagement) that will advance more briskly once their application environments are rationalized. Completion of this initiative will free up budget dollars and prepare the applications environment to support other programs.
  7. Infrastructure: We include in this category things like mobile technology, analytics, and web infrastructures. Given the fundamental changes in the industry and the move to an on-line, real-time, information-based platform, many organizations are having to invest significantly in infrastructure, which has traditionally been transaction-focused and batch-based.

Health insurers have a lot to deal with and a challenging business environment to live in. In general, commercial membership is down and—although there have been membership gains in government programs like Medicaid—there is significant pressure on reimbursement rates. Most of the people we have talked to in the industry agree that it is unlikely that the ACA will be repealed; and all agree that even if the ACA were repealed, many of its key components would still move forward (for example, providers would once again move toward assuming risk) and there would be significant change in the industry over the next several years. Insurers have to find a way to do more with less. One of the techniques being employed in the industry is to create a change enablement framework for the organization. Insurers that have been thoughtful about the future have prepared their organization for change by:

  • Getting their house in order: assessing the integrity of their current environment to ensure that they have a solid foundation to build upon.
  • Documenting the current situation: for insurers, ensure that the environment is well-documented to minimize the time required to understand where changes must be made and what downstream impacts will have to be addressed.
  • Defining how documentation will be managed: many organizations have documentation that is out of date and hard to access. Determining how documentation will be curated can help save time over the long term.
  • Implementing standard program management tools: it doesn’t make sense for every executed initiative to define a unique project management approach and tools, documentation standards, governance model, etc.
  • Outlining guidelines and how capabilities should be acquired: define the criteria that will drive the organization toward a build, buy, or partner strategy for acquiring new capabilities.

Health insurers can’t afford to do nothing at this point. Making progress in the face of many unknowns about the future is critical. Developing a change enablement framework is one way to make progress without having to make a major bet on a program that still contains many uncertainties.