Legacy Product Configuration Architecture Survived ACA but Won’t Endure the New Consumerism in Health Insurance

This blog identifies an IDC prediction and alerts the industry to the need to upgrade the back office to meet consumerism in health insurance by upgrading the product configuration process.

Spurred by the Affordable Care Act (ACA) and web-based shopping, consumerism has arrived at health insurance companies. Only a few years ago, health plans considered billboards and television commercials during October “open enrollment” as their marketing strategy. Now, payers routinely use terms like individual loyalty, service-excellence, stickiness, retention, and “frequent switchers” in describing day-to-day interactions with members. Pointing to a goal of a “safe, secure, sustainable digital front-door experience”, payers are working feverishly on back-office technologies to enable the front-office seamlessness and friendliness desired.

In healthcare, the consumer of services is defined as the patient themselves, and/or the subscriber of an insurance policy, a parent, a caregiver, or a power of attorney delegate for a patient. Processes that are most closely aligned with a consumer are different than those of a patient. Some of the differences are around the fact that individuals lack the total freedom to consume healthcare goods and services based on their personal preferences. For example, they have limited choice in benefit plan based on employers and/or government offering. People now can only choose health insurance that is offered by their employer or their state.

Addressing this limitation is the consumer-sensitive concept of “mass customization” of health-plan products available to a consumer. That is, a personalization of the health plan that is offered to a consumer is driven by their individual needs. In 2020, IDC predicted that:

By 2023, 60% of health insurance products will be characterized by two communities, standard or individualized…”
-IDC FutureScape: Worldwide Health Industry 2021 Predictions, Oct 2020.

In this prediction set, IDC explained that one consumer community will enroll in standard products. These products, similar to the tiers (Platinum, Gold, etc.) inspired by the ACA and offered on insurance exchanges today, will evolve and be adopted by the commercial insurance market as companies cooperate instead of competing with proposed public option products.

According to IDC, the other consumer population will willingly surrender some privacy and obtain “individualized insurance based on health and lifestyle” in the next normal. These concierge product offerings, based on “benefit plan of one” concepts, will be, IDC says, individually crafted, priced, and available both to the individual and through employer-based insurance coverage. So, regardless of whether a person is getting insurance via their employer or individually, there will be a customization specific to them. Foreseen customizations would involve taking more data from members like BMI, smoking propensity, real-time care data, bone density, colorectal screening, retinal eye exams, mammography, flu shots, and fall risk prevention strategies. From this data, AI-infused derivations of risk will be ascertained, and insurance companies will craft a dynamic “health score” like the FICO credit score. From this health score, actuaries will have confidence to underwrite policies at the person level when legally possible.

In the back office, configuration of this individualization of insurance products is only possible with a modern infrastructure that can flex based on countless member-data variables. Most payers today configure new product offerings from spreadsheets of product features. These archaic methods were tested severely with the requirement to produce a “Summary of Benefits and Coverage” for the 2013 ACA and payers similarly experienced “spin-up” pain while bringing “standard” products to market on the ACA-mandated federal and state insurance exchanges.

Concurrently, the average time-to-market for product/plan ideation, design, sales, finance, overall approval, rating, finalization, filing, and marketing takes multiple months. This is a prohibitive architecture in today’s consumer-oriented health insurance market. Products need to be developed in days or weeks, driven by elements unforeseen. Like car insurance, which now is sensitive to “usage patterns” like speed and braking, along with price policies or lower deductibles based on “individual performance,” health plan offerings need to bend nimbly.

To achieve this “benefit plan of one” product generation and maintenance flexibility, spreadsheets must be eliminated and replaced with a plasticity of architecture that welcomes new data variables, weightings, exclusions, and inclusions. Concurrently, a workflow of product development and maintenance that is streamlined, effective, efficient, and documented must exist, both within the walls of a payer and externally for the product filing process.

It can be foreseen with the CMS interoperability mandates now in place facilitating data exchange that “insurance products” will no longer be PPO or HMO-labeled. Instead, they’ll be a derivative of personal, adjustable, and adaptable factors found in care management, wellness, home-health-monitoring, genomic, and environment/social determinant data.

A payer requires deft, agile product configuration software set to meet this challenge, and that software does indeed exist from some forward-thinking vendors. That software includes a standalone product catalog which provides a single source of truth as well as flexible, automated workflow to create and approve the product design inside and externally to the organization. The data and flow must also facilitate the creation of documentation and collateral for marketing, governmental, filing, and customer service purposes. The goal of this software is to integrate across the organization and result in efficiencies and administrative cost savings. Everyone wins if there is an extreme level of flexibility combined with automated workflow; the payers get faster time-to-market, the members get personalized benefits, and the organization gets more efficient. Legacy product configuration technologies and processes may have barely survived ACA but they will not survive the new consumerism demanded by health insurance members.