5 Big Ideas from AHIP Conference

In a lively series of presentations at the America's Health Insurance Plans annual conference, attendees were urged to brace for disruptive technologies, do more with data, and embrace radical change.

We have probably all been to professional conferences where glassy-eyed attendees shuffle from session to session. This year's America's Health Insurance Plans was not like that. Not at all.

There is nothing quite like an existential threat to clear the mind.

For decades, employer-sponsored insurance policies have dominated the market, prompting a wholesale approach to the business. Now, health insurance exchanges and widespread cost-sharing with health plan members is spurring a shift to retail business models.

At the America's Health Insurance Plans Institute 2014— the group's annual conference—in Seattle, there was an unquenchable thirst for big ideas to help insurers tackle the titanic challenge ahead. Here is a sample:

1. Expect disruptive technologies to spark exponential growth.
Keynote speaker Peter Diamandis MD, co-founder, CEO, and chairman of the XPRIZE Foundation, had the audience's full attention from his very first words: "We're living in the most extraordinary time ever. You're in for a wild ride ahead."

Diamandis said exponential growth of disruptive technology and new business models will be in the driver's seat during the healthcare industry's "wild ride" over the next decade.

"The rate at which disruption is occurring is accelerating," the pancreatic surgeon said, adding that faster and cheaper computing power is providing the foundation for emerging technology. "A couple of guys and gals working in a garage can impact a billion people in less than 10 years."

Diamandis discussed an array of technological developments that are poised to upend healthcare providers and payers. The self-described "space geek" held one of the disruptive technologies in his hand on the stage: a prototype "medical tricorder" that is one of the XPRIZE Foundation's projects. It was inspired by the Star Trek franchise.

The first XPRIZE project offered $10 million to anyone who could design and test a vehicle that could propel tourists into space. Two dozen teams from more than seven countries competed. "They spent $100 million to win a $10 million prize," Diamandis said.

The $10 million Qualcomm Tricorder Prize has drawn 330 teams from around the world, and the winner is expected to be named within 16 months. The device is expected to be suitable for home use and include blood chemistry analysis capabilities.

To cope with exponential change, Diamandis' advice to health plans is to launch bold initiatives to adapt to the changing business environment. "Either you disrupt yourself, or someone else will," he said, adding that insurers should consider co-opting innovative new entrants in the market. "It's going to be very hard for you to disrupt your core products… As you implode, you're going to ride [the new entrants] as they explode."

2. Private exchanges are skyrocketing.
The pace of growth in the private health insurance exchange market is eye-popping.

"This market is happening faster than we anticipated," Rich Birhanzel, managing director of Accenture's health administration business service, told me at the conference. "Health plans are talking with their employer customers about it. The private exchange is a top-of-the-mind issue."

Accenture had originally forecast that 1 million lives would be insured through private exchanges this year, but has now revised that figure to 3 million. It expects 40 million Americans to get their health insurance through a private HIX by 2018. "We're at the front end for what we think will be fast adoption," Birhanzel told me.

With about 170 million Americans currently getting policies through their employers, there is a ceiling to private exchange growth, he said. "It's not going to be for everybody," Birhanzel told me. "Employers have a high degree of variability in their benefit offerings."

But health plans and their employer partners that ignore private exchange opportunities do so at high risk, he said. "This is a question employers are going to have to answer, even if the answer is 'no,'" he said.

3. Payers and providers are slowly but surely adopting a wide range of value-based reimbursement models.

David Nace MD, VP and medical director of McKesson Health Solutions, presented research on the shift to value-based healthcare delivery. "We can now say with certainty that healthcare delivery is moving in one direction: towards value-based care," he said.

"The affordability crisis is causing unprecedented changes in the healthcare landscape, the most significant of which is the transition from the current volume-based model to myriad models based on measures of value."

Nace characterized the shift as groundbreaking. "The speed was faster than I anticipated," he said, adding that McKesson's data found a broad expectation that multiple value-based reimbursement models will be present in the market over the next three to five years, with pay-for-performance currently leading the pack.

Nace offered a conservative prescription for healthcare industry stakeholders mulling the switch to value-based reimbursement. "If you're a payer or provider," he said, "don't try to do all these models. You'll crash and burn… Pick the area you think is doable. Once you're successful with that, move on to another model."

4. Harness the rising tide of data.
The unprecedented abundance of data available to health plans poses both challenges and opportunities. "Data is driving how we should manage our plan members and how members want to be managed," Inovalon CEO Keith Dunleavy MD told a packed general session.

He said one of the biggest pain points for payers as they struggle to utilize the flood of available member information is "data latency." A credit card purchase at Starbucks involves connecting several sets of data from multiple sources, but "the transaction takes seconds," Dunleavy said. Insurers face hurdles attaining the same level of data connectivity because "you have all sorts of information that comes out at different rates," he said.

After a health plan member has a "clinical event," the time it can take for an insurer to have all the data needed to process a claim "can sadly be measured in months," the Inovalon CEO noted.

5. Avoid incremental approaches; embrace radical change.
The architect of an innovative primary care model urged AHIP conference attendees to embrace radical change. "It's as if it's 1902 and we want to cross the ocean quickly," said Rushika Fernandopulle MD, co-founder and CEO of Iora Health. "What we need is an airplane; and the way you build an airplane is not by putting wings on boats."

Iora Health's dozen primary care practices serve patients from a wide range of income strata, from low-wage workers in Las Vegas to high-salaried professionals at Dartmouth College in New Hampshire. The practices focus on patient engagement, with four "health coaches" working with each primary care physician, and a value-based payment model that includes bundled payments.

"We've been accused of moving too quickly and upsetting the status quo," Fernandopulle said. "The bottom line is our practices perform better than most."

"Our outcomes are phenomenal," Fernandopulle said, citing a reduction in emergency department visits by 50 percent and cut in overall healthcare spending by about 13.5 percent.