Payer 2.0 Model and Technology

The Payer 1.0 Model

For the longest time, payers were considered “high quality” if they passed four basic criteria:

·      administered benefits effectively;

·      processed claims quickly and accurately;

·      offered a broad network of physicians, hospitals and additional facilities with fairly aggressive discounts;

·      and provided multiple channels for member inquiries (call centers, IVRs, web portals, etc.).

Even additional offerings (wellness products, disease management services, etc.) were only considered important add-ons to ensure the payer continually moved up the value chain in terms of services offered. Today, however, none of these services are considered differentiators anymore—they are merely core “check the box” capabilities. In this Payer 1.0 model, monolithic technology platforms with basic data integration capabilities did just fine. Tight-coupling of functional capabilities ensured that everything worked in a relatively synchronous fashion thereby ensuring quality and process adherence. Innovation in the Payer 1.0 model was usually organic and relied more on the organization’s product development and IT organizations having a deep understanding of the dos and don’ts of the platform…essentially ensuring that any innovation was safely handled within the confines of the platform’s limitations. This continues to be the technology strategy deployed at the majority of large and regional payers across the country. Smart payer CIOs and talented enterprise architects across the country’s payers are trying to push technology strategies that while good on paper are hamstrung by the dinosaurs that are their technology platforms and existing architecture.

The payer business model has been forced to rapidly evolve and payer technology hasn’t kept pace. Let’s call this the Payer 2.0 business model. Payers are now expected to lead the charge as the industry landscape continues to evolve rapidly, while still delivering on the Payer 1.0 model and its expectations in terms of core competencies. Expectations from the Payer 2.0 model include:

·     high degree of digital health sophistication;

·     drivers of the change to value-based care not just from a provider contracting standpoint but in terms of materially setting the provider up to be successful;

·     act as a data and analytics powerhouse, either analyzing or serving up data to the rest of the healthcare continuum;

·     and finally, enablers of the payvider movement.

Even with this pressure on payers today, they continue to rely on Payer 1.0 technology strategies and platforms. The monolithic platform that is all things to all people continues to rear its ugly head and continually gets jerry-rigged in an attempt to satisfy the needs of the Payer 2.0 model. “Plugging-in” external technology continues to be a significant challenge and the fact that it finally gets done after years of trying to make it work, ensures that the “let’s think differently about our technology” can gets effectively kicked down the road. Some of the larger payers have made some interesting moves over the years to buy technology companies or Payer 2.0 technology solutions, but have struggled to invest, upgrade or effectively integrate those investments. Payers have also over the years organically developed some extremely sophisticated capabilities that only function effectively within the confines of their native technology platform(s) and with a captive client/membership base.

Payers will need to manage a patient’s data holistically and seamlessly integrate with other critical players

To successfully deliver on the promise of the Payer 2.0 model which truly could improve the trifecta of challenges associated with healthcare in this country (cost, access, quality), payers need to be thinking about the following:

1.  Power the Payer 2.0 model via a technology ecosystem vs. a monolithic platform that allows for the seamless coexistence of internal and external technology solutions…all operating off the same ecosystem chassis.

2.  Invest in a best-in-class data integration hub as the core strategy enabler - let’s call this data integration hub a “power-strip” for simplicity. Data integration excellence is the silver bullet as it pertains to delivering on the promise of the Payer 2.0 model. Seamlessly exchange data with other players in the healthcare continuum while making data consumption and production a core competency of the organization. Simplifying the data sharing operation with others in the continuum is also a key factor here. Legacy platform(s) would plug into the power-strip as well.

3.  The Payer 2.0 model forces a new way of thinking about provider and population analytics. Payers need to stop investing more time and money in improving traditional Payer 1.0 analytics needs which have plateaued in terms of differentiation and ROI. Instead investments need to be made in advanced provider and population analytics in tandem with a simplified consumption experience for providers, powered by data visualization strategies.

4.  Machine Learning needs to be a part of the payer’s analytics strategy and toolkit. The machine learning competency for the organization needs to span across both supervised and unsupervised categories and be guided by a team of data scientists.

5.  Finally, payers need to leverage the power-strip to exhaustively partner, test and learn with the niche healthcare technology solutions that continue to crop up on a regular basis. Health IT is arguably one of the fastest-growing and most exciting aspects of the start-up arena. Payers need to be able to carve-out a part of their power-strip to plug-in new technologies and innovate with some of the newer players on the block that may have different answers for age-old payer questions.

The Payer 2.0 model in its simplest form is about improving healthcare across all its dimensions (cost, access, quality) and materially improving the provider’s ability to provide the best care. Payers will know they are truly ready to embrace the Payer 2.0 model and need to appropriately invest in it, when they start thinking of their members as patients of their providers. As much as this article was about technology strategies that need to be deliberately deployed, there needs to be a fundamental shift in how payers view the importance of their business model evolving from 1.0 to 2.0. Once that shift takes place in the business mindset, the investments in people, process and technology will follow.