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Regional insurers bet big on virtual-first plans

When Priority Health launched its premier virtual-first plan at the end of 2020, Carrie Kincaid, vice president of individual markets, said she expected maybe 3,000 individuals to enroll in the plan. Instead, the number of people signing up reached 5,000.

“I definitely think that this feels like an entirely new product and a new way of doing insurance,” Kincaid said. “It feels like it’s meeting a need that is evolving and hasn’t been met before, and it feels like something that will meet a need that will likely continue to grow as future times continue.”

Over the past few years, an increasing number of regional insurers have launched virtual-first plans for the first time, mimicking the moves of insure tech startups like Oscar Health and requiring individuals to consult with a primary care doctor virtually before they come in for an in-person visit. These plans often do not require consumers to pay a co-pay to visit their virtual doctors, saving enrollees on healthcare costs. And health plans think they can save costs too by shifting care to lower-cost settings and increasing consumer access to care, thereby catching members’ health issues before they require greater treatment costs. Dr. Jean Abraham, Wegmiller Professor of Healthcare Administration at the University of Minnesota, said that these plans represent the first-generation of virtual-first coverage since the economics of the model have not been proved yet. Enrollees might be able to catch health problems in a low-cost setting first—but if they require in-person follow-ups, insurers will be on the hook for multiple visits.

“It is too early to know how cost-effective these benefit designs will be and, honestly, I don’t think we can know until we get out of the COVID environment,” Abraham said.

In addition to saving users time and up to 5{f771d91d784324d4be731abc64bffe0d1fd8f26504ceb311bcfd8e5b001778f4} compared to other Priority Health plans, Kincaid said the Grand Rapids, Mich.-based insurer’s product helps individuals with chronic conditions manage their care, and provides healthcare access to those living in remote regions of Michigan. The COVID-19 pandemic has also driven consumer interest in telemedicine, Kincaid said, although the MyPriority Telehealth PCP plan was in the making about a year and a half before the first coronavirus case was reported in the U.S. In April 2019, one in 1,000 of Priority Health’s 1.2 million members’ visits were conducted virtually; in April 2020, it was one in five.

“Sometimes you just find that perfect time,” Kincaid said. “We had the right option at the right time, and it came all together at once.”

From February to April 2020, Paul Bartosic, vice president of Harvard Pilgrim Health Care’s Connecticut Market, said the Wellesley, Mass.-based health plan saw a 6,000{f771d91d784324d4be731abc64bffe0d1fd8f26504ceb311bcfd8e5b001778f4} increase in the use of urgent care telemedicine among its 2.4 million members. He expects 500 large companies to have signed up for the payer’s SimplyVirtual plan by the end of the year, which it launched in partnership with health tech provider Doctor on Demand. Among enrollees, he said the plan lends itself to younger, tech-savvy users and those who travel frequently. With its cost coming in at up to 10{f771d91d784324d4be731abc64bffe0d1fd8f26504ceb311bcfd8e5b001778f4} cheaper than some of Harvard Pilgrim’s plans, he said it attracts companies that are looking to save on insurance costs too.

“I’m pretty bullish on it personally, especially given all of the interest,” Bartosic said. “I do think there’s an opportunity for SimplyVirtual to really take off in Connecticut and elsewhere.”

Abraham said she sees parallels between the movement to virtual-first plans and the health maintenance plans of yesteryear, with virtual-first plans acting as a gatekeeper for consumers and aiming to help consumers navigate the healthcare system in a cost-effective way. Because regional insurers like Kaiser Permanente, Priority Health and Harvard Pilgrim have a dedicated provider network they can tap to participate in virtual-first plans they are relatively easy for these payers to deploy. Even Oscar Health has an exclusive provider organization for its approximately 420,000 enrollees.

“I think a lot of insurers have put a toe in the water, and are testing the new model designs, and then they can evaluate to see what the effects are,” Abraham said. “I think based on that they will determine whether or not it makes sense to scale, and to try to push these plans more aggressively.”

Brad Ellis, senior director of insurance at Fitch Ratings, said that, right now, the majority of virtual-first plans are like Priority Health’s, and offered by regional insurers to cover individuals, in a move to differentiate themselves from larger payers in their market. But he can see the benefit for larger insurers like Cigna and UnitedHealthcare that sell to larger employer-groups to eventually offer virtual-first plans since the coverage would allow employees to visit their doctor without taking a half-day off.

Going forward, it will be interesting to see how these models shift consumer consumption of in-person primary care to specialized, virtual providers, and how the data flows between tech companies and more traditional healthcare providers. He said all of this will have an impact on how providers structure their operations.

During the pandemic, most health plans have pledged to reimburse provider’s virtual care at the same rate as in-person care. But after the federal emergency, Ellis said insurers are likely to halt these policies and pay providers less than they would receive for in-person visits. If that happens, providers might want to spend less time consulting with virtual patients, Ellis said. At the same time, he noted that virtual visits do not necessarily require an examination room, which could save providers cost on space and give them the capacity to see more patients, which he said were two critical points as the population ages.

“Rather than lowering costs, it kind of eliminates the need for expanding costs, if you will,” Ellis said. So it’s a complicated number to come to but, over time, as virtual care permeates, we’ll come to the right decision that it works for everybody.”


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