Consumer expectations for healthcare are being established by industry leaders in innovation, and the emphasis is turning toward personalisation, digital enablement, omnichannel access, and continuous and seamless service. More and more, the member experience is used to evaluate (and reward) payers and providers. For Medicare Advantage plans, for instance, developing a differentiated patient and member experience continues to gain relevance. According to the most recent US Centers for Medicare & Medicaid Services (CMS) updates, customer experience-related metrics will make up around 57 percent of the overall Star Rating in 2023 (for Part C and D combined), up from about 32 percent in 2020.

Payers seeking cutting-edge managed-care models can more directly affect members’ experiences in obtaining and receiving treatment by involving and integrating with providers more deeply (as compared with traditional approaches). According to our research, payers who are pursuing cutting-edge managed-care models outperform their competitors on all Consumer Assessment of Healthcare Providers and Systems (CAHPS) indicators (image below), which is a sign of member experience.

A growing body of research shows that cutting-edge managed-care models encourage increased levels of screenings, tests, and vaccinations—all of which are linked indicators of health and wellness. There is evidence that these models can assist users in managing chronic diseases.

According to our research, payers who use cutting-edge managed-care models score better than their competitors on the majority of Stars outcome and experience measurements, such as the CAHPS, HEDIS, and HOS (Health Outcome Survey) measures. Medication reconciliation post-discharge, diabetes care—eye exam, and colon cancer screening are a few examples of the indicators with the most notable outperformance. Additionally, payers who pursue cutting-edge managed-care models do better on a variety of drug adherence tests as well as on more general metrics like “improving and maintaining physical health,” “receiving needed care,” and “care coordination”.

Payers can achieve long-term total cost of care savings through innovation in care delivery that are frequently not possible through more conventional levers (for example, utilisation and care management). Payers can accomplish this while preserving (or frequently even enhancing) the quality and accessibility for members.

Initial signs indicate that these models may, in the near future, raise prices for specific forms of care as members obtain more comprehensive care, despite the fact that empirical evidence is still in its early stages (for example, more options for behavioral-healthcare services for members). Integrated and comprehensive care models are anticipated to result in lower overall medical expenses over the long run, nonetheless. Investing in whole-person care has the potential to save $185 billion, according to our research. Payers that adopt these models might be able to guarantee that members get the right degree of treatment in the best possible environment, fostering members’ health and well-being to prevent future diseases and complication rates.

Payers are looking toward diversification to ensure long-term performance and sustainability as the traditional health-insurance industry grows more consolidated while also being disrupted by new entrants. The market for care delivery is a desirable neighbour for diversification for many payers. Either through the commercialization of provider enablement services that offer a per member per month (PMPM) fee and/or shared savings, or through ownership of care-delivery assets that enable access to revenue and margin from high-growth nonacute assets, the potential for value creation is significant.

An increasing focus on cost, quality, and experience, coupled with a continued shift toward value-based care, has increased the need for providers to develop capabilities in areas such as financial risk management, care management, clinical integration, and patient engagement. In this model, payers offer MSOs and other enablement services to support provider partners in delivering higher-value care and a better experience to members. Payers can build upon existing data and tools (for example, member stratification, care-management programs, EHR connections, claims data across providers, and types of care) and existing provider relationships to quickly integrate with provider workflows and unlock value. This model concurrently can unlock a new revenue stream.

The rapid acceleration of digital and technology-enabled tools and offerings, which the COVID-19 pandemic has further heightened, is creating the opportunity for companies across industries to develop customer-centric “ecosystems” in new and exciting ways. Payer can play the role of an ecosystem convener that brings together multiple services, tools, and healthcare players. In this model, payers have a broader role in care management by convening (but not necessarily owning) point solutions across the healthcare ecosystem and personalizing member care journeys to enable access to integrated, convenient, and higher-value care and services. Value can be unlocked through lower medical costs (given greater ability to direct members, providers, and caregivers to deliver the right care in the right setting at the right time), differentiated member experience (for example, through digital-first offerings), improved competitive positioning, and member acquisition.

Direct participation in care delivery offers the opportunity to diversify revenue streams and access high-growth and high-margin segments, more directly influence the scaling of new care models, and improve coordination across the care continuum to lower medical costs. Payers that participate in direct care delivery are well positioned to better align and coordinate member benefits with innovative care models to deliver care when, where, and how it is needed. In addition, an in-depth understanding of the local provider landscape and an ability to guide how members access care allow payers to deliver care in a targeted way, focusing on specific areas, populations, or care models with high potential value. Still, a range of variants can be considered even within this strategy, including investment in physician organizations and ownership of acute and nonacute assets, including home health, ambulatory surgery centers, urgent-care centers, or stand-alone infusion centers.

To pursue and succeed in an innovative managed-care model, payers may consider a range of interdependent factors. Market share and scale across lines of business, strategic priorities, risk appetite, financial position, and local provider landscape are all important considerations. The ability to pursue these strategies at scale also depends on a payer’s starting position. Until recently, only a few types of payers had a direct role in care delivery—specifically, integrated delivery networks and large nationals. While these players can more effectively combine many of the approaches mentioned above (given their scale), smaller regional health plans are more likely to capture value and develop competitive advantages if they have a more focused strategy, with a clearly defined posture in care delivery. Partnerships with like-minded plans or adjacent healthcare players may also unlock greater value.