Healthcare Payers Pivot As Pandemic Changes Member Behavior - Bain & Company

15/10/2020 Healthcare Payers Pivot as Pandemic Changes Member Behavior | Bain & Company
Brief
Healthcare Payers Pivot as

Pandemic Changes Member
Behavior
Covid-19 has made telehealth a critical service, forcing payers to rethink
their strategies.
By Joshua Weisbrod, Michael Brookshire and Erin Ney, MD
September 14, 2020 • 6 min read
At a Glance
 As telehealth booms, payers need to integrate digital health into bene it

design, which may require different approaches for each member
segment.
 Payers are adjusting reimbursement policies to accelerate the shift to

lower-cost outpatient care settings.
 Forward-looking payers are making new investments in care management

and primary care.
This article is part of Bain's report US Healthcare Trends 2020: Insights from
the Front Line. Explore more insights from the report here.
As Covid-19 reshapes the healthcare landscape, successful payers are

considering new strategies and approaches to capitalize on the favorable shift
in care management and delivery to lower-cost settings to telehealth. Most
prominently, payers are thinking about the best ways to deploy telehealth for
https://www.bain.com/insights/healthcare-payers-pivot-as-pandemic-changes-member-behavior/ 1/5
their members, considering both cost and convenience. They are rethinking
provider reimbursement to motivate a greater shift to lower-cost care settings.
And payers are seeking to defend their roles as care managers through
investments in innovative care management tools and, for some, primary care
ventures. We explore each of these trends below.
Telehealth strategy. Before Covid-19, most payers offered telehealth services,

but uptake was limited. In 2019, 80% of commercially insured employees had
access to telehealth services, but fewer than 5% used them. The pandemic
transformed patient behavior. In March, Teladoc reported a 201% increase in
active telehealth users, and in April 2020, nearly half of all Medicare primary
care visits were via telehealth, compared with fewer than 1% in February.
Prior to the pandemic, most patients using telehealth were willing to “see any
doctor.” That allowed the payer (and its telehealth partner) to enable that care.
During the pandemic, however, providers accelerated their move into
telehealth, allowing patients to “see my doctor” for ongoing care and creating
new engagement models between physicians and patients that deepened
those relationships. For example, some primary care physicians began offering
telehealth appointments during off hours and weekends, filling a role often
played by urgent care clinics today. Many consumers prefer this “see my
doctor” approach, calling into question payers’ prepandemic strategy.
To determine the right strategy going forward, leading payers start by

segmenting telehealth visits into two categories: cost-related cases and
convenience-related cases.
Cost-related cases are those that allow payers to reduce costs through
telehealth, mainly by adjusting incentives to shift in-person care to digital
visits. These include episodes of care where telehealth can successfully replace
an emergency department visit (e.g., diverting Level 1 or Level 2 acuity care to
telehealth), where a follow-up appointment can be conducted digitally, or
where specialized services such as mental health assistance or difficult-to-
access specialties for rural members can be delivered through telehealth. In

these cases, telehealth can provide a similar quality of care at a significantly
lower cost.
Convenience-related cases are those in which payers use telehealth services to

generate loyalty even if the care is complementary and, therefore, increases
costs. In fact, 82% of clinician respondents to Bain’s 2020 US Front Line of
Healthcare Survey reported that telehealth will complement and not
substitute for in-person care. Payers must be deliberate about where to make
investments in convenience to foster member loyalty vs. where the increased
convenience generates a low return on investment given the added cost. This
is likely to differ across member segments.
A payer’s decision on the right mix of cost vs. convenience and members’
desire to “see a doctor” vs. “see my doctor” will help determine whether the
company should buy or build telehealth services, or partner with an existing
telehealth vendor. Payers that want to offer “see my doctor” telehealth options
to members may consider partnering with local medical groups. Those that
prefer to offer “see a doctor” are likely to build a platform or partner with a
scale telehealth vendor.
Reimbursement innovation. Covid-19 has had a profound effect on patient

behavior. Many patients decided to forgo care entirely, with visits to outpatient
practices down by 60% in March and April according to some estimates;
others have grown even more wary of inpatient settings.
Forward-looking payers are reacting to these shifts in three ways. They are
adjusting reimbursement policies to further encourage use of lower-cost care
settings. One example is site-neutral reimbursements (both fee-for-service and
bundled). Payers are also seeking to shift reimbursement to value-based care.
Historically, providers have been reticent to move to value-based care given
profit pool compression. That may persist for many health systems, but our
research found that 39% of primary care physicians are more willing than ever
to consider value-based arrangements with payers. These models offer more

predictable cash flows and limited risk of profit pool compression because
value-based savings will come from outside the primary care physician
sphere. Finally, payers are redoubling their efforts to educate members and
providers on the value of moving down the care continuum where
appropriate.
Expanded business models. To win in the postcrisis era, leading payers are
making investments, building partnerships and exploring acquisitions that
will further expand their business models. Two areas, in particular, stand out:
innovative approaches and platforms for care management and increased
participation in primary care.
Digital pioneers in care management such as Omada Health and Quantum

Health have filled gaps in the healthcare system by offering simple and
customer-friendly interfaces allowing members to more easily navigate the
system and manage care more proactively. Now, virtual health technology
providers and digital third parties increasingly have their sights on owning
relationships with chronic patients through a digital-first monitoring and care
approach. One example is the recent announcement of a merger between
Teladoc and Livongo. As these third parties build relationships with providers
and self-insured employers, payers could be squeezed out of one of their most
important roles.
To compete with third parties and preserve their historic care management
role, leading payers are starting to play more active roles managing member
relationships and make investments or acquisitions to reclaim these
touchpoints. These investments could be a blend of navigation tools, disease-
specific care management plays and digital engagement platforms.
Historically, primary care has been a fork in the road for payers: Some have
invested heavily, while others have insisted they are staying away. But Covid-
19 has changed the primary care market dynamics, forcing some payers to
reconsider. First, continued cost pressure is convincing some payers that they
need to control the front door of care. At the same time, increased financial
pressure on primary care providers has made acquisitions attractive in some
markets. Our research shows that 69% of physicians in independent primary
care groups would consider acquisition, up from 29% in 2019
Finally, new business models allow payers to participate in primary care

businesses without adding new business units. For example, fast-growing
primary care providers Oak Street Health, ChenMed and Iora Health have
grown substantially in the last 24 months and announced several partnerships
with payers. Some of these primary care innovators have sought payers as
investment partners up front to help manage care pathways efficiently and,
when possible, eliminate the need for more expensive care in the future.
Payers, in turn, help educate their members on the value of new care models.
The goal for both payers and providers is providing high quality care at lower
cost.
TAGS
Coronavirus Health Insurance & Delivery Systems Healthcare
US Healthcare Trends 2020

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15/10/2020 Healthcare Payers Pivot as Pandemic Changes Member Behavior | Bain & Company

Healthcare Payers Pivot as

By Joshua Weisbrod, Michael Brookshire and Erin Ney, MD

September 14, 2020 • 6 min read

 As telehealth booms, payers need to integrate digital health into bene it

 Payers are adjusting reimbursement policies to accelerate the shift to

 Forward-looking payers are making new investments in care management

As Covid-19 reshapes the healthcare landscape, successful payers are

Telehealth strategy. Before Covid-19, most payers oﬀered telehealth services,

To determine the right strategy going forward, leading payers start by

access specialties for rural members can be delivered through telehealth. In

Convenience-related cases are those in which payers use telehealth services to

Reimbursement innovation. Covid-19 has had a profound eﬀect on patient

to consider value-based arrangements with payers. These models oﬀer more

Digital pioneers in care management such as Omada Health and Quantum

Finally, new business models allow payers to participate in primary care

Coronavirus Health Insurance & Delivery Systems Healthcare

US Healthcare Trends 2020

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