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Michael Byers, HighRoads
Michael Byers, HighRoads
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5 Trends Shaping the Health Insurance Market

Technology is at the forefront of changes in the health insurance environment.

In 2014, payer leadership finds itself in a revolutionary role to drive business outcomes. Evolving regulatory mandates and market conditions create both challenges and opportunities that demand a confluence of critical thinking.

Perhaps the most positive development to emerge is the emphasis on the payer CIO/CTO skill set. This is the year CIOs and CTOs become heroes in their organization. For payers to succeed, IT is taking on the role of transformational leader, and must partner with the business with a laser-sharp focus on compliance, growth, customer satisfaction and evolution.

Here are the five payer trends to watch in 2014, with IT at the forefront:

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1. From Big Data to Centralized Data

Big data has rightly been the buzz throughout the past year, but the more effective data descriptor should be "centralized." Proponents of big data assert that through the use of predictive analytics, management can make better-informed business decisions through a combination of data analysis and scientific reasoning, rather than intuition or opinion. This is true, but for data to even reach this level of granular analysis, it needs to be come from a centralized source rather than multiple silos that aren't necessarily talking to one another.

Michael Byers, Highroads
Michael Byers, Highroads

For data to be actionable and for data to truly do "big" things, like, as an example, benchmarking plan information against aggregate plan data by industry or geography, it needs to originate from a source of truth.

2. From Legacy Systems to the Cloud

Predictability is not a word payers will be using in 2014. With evolving regulatory mandates and market opportunities, many payers have taken their existing legacy systems and tweaked them for this new world. But payers must recognize that existing approaches are not scalable and will need to be replaced with cloud-based technology that can address the rapid changes in the market.

In some cases, the age, risks, operating costs and inflexibilities of core legacy business applications are a business strategy impediment. This kind of IT debt can build up over decades and eventually must be addressed or it can threaten the future of the enterprise.

3. The Growth of Private Exchanges

Payers need to begin planning now for the emergence of defined contribution health plans, or risk missing a significant opportunity. Payers that enter the private exchange marketplace will quickly recognize that working from a centralized benefits plan management system is essential to avoid the stop-gap, one-off solution of manually managing document creation.

Payers will need to support this new distribution strategy by sending consistent plan benefit package data to the private exchanges through automated systems integration. They will also need to complement existing architecture and technology investments through open APIs and Web services integration, reducing investment in IT resources, hardware and infrastructure.

4. The Shift from a B2B to B2C Mindset

Individuals will be increasingly responsible for selecting their own health plans on both public and private exchanges, which has important implications for how payers market themselves. Exchange platforms and technology vendors that deliver the best consumer experience are most likely to win.

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A dramatic increase in information and transparency is already changing consumer expectations. Health care consumers are no longer simply comparing one health plan against another. They have come to expect the same type of customer experience they would receive from a major online retailer, such as Amazon, and they will no longer accept what they consider a subpar experience.

5. The Emphasis on Star Ratings

The Medicare Advantage Star Ratings system now has a greater risk/reward model for payers. Only payers that achieve a 4- or 5-star rating are awarded bonuses in 2014. If a payer earns 3 stars, there is no bonus (as had been the case in 2012 and 2013).

Payers that achieve a five-star rating have a big advantage because consumers now have an option to join or switch to a five-star MA plan at any time during the year, instead of only during the normal enrollment timeframe. This could have significant revenue upside for payers.

About the author: Michael Byers is president and CEO of HighRoads, which provides technology to help payers to centralize, manage and repurpose product plan data in the post-ACA market.

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