The [payer] industry is truly on the cusp of a new era where payers are transforming from being seen primarily as claims payment entities to being seen as true partners for patients and providers.

Source: Nancy Fabozzi, Frost & Sullivan

At our current line of work, we’ve come across and became intimately familiar with how the changes in the healthcare policies (ACA, etc.) have impacted the way stakeholders look at data, analytics, and novel methodologies in the healthcare space. Yet, given our line of work (which heavily focuses on the provider and consumer space), the nuance of how these policies affect the payer space has always escaped me. Nevertheless, I was fortunate to have come across Nancy’s articles (published in HIMSS’ Health IT Pulse) to get myself acquainted with a quick overview of this transforming industry. My hope is to summarize the findings which Nancy has finely articulated, as well as to drill a bit deeper into many of the concepts that should be elaborated further.

After reviewing the materials, I found the story for the changes in the payers market to be awfully similar to what we’ve come to understand in the provider and consumer space. In fact, the beauty is that we’re now finally seeing the overlap/crossover of interests and incentives tied to all of the stakeholders involved. It’s a true partnership with one end goal – to deliver the best and most affordable care possible to the end customer.

Primary Drivers for the Need of Payer Analytics

  • DRIVER 1: Need for managing new levels of risk resulting from the ACA
    • Why? 
      • There are 18 million Americans previously uninsured who will hit the market. These individuals are largely uninformed and has little to no experience in using the health care system. [Source, see page 17]
      • The ACA has implemented key provisions to intrinsically address “Adverse Selection”. The provisions mandate a single risk pool, which dictates the need for payers to have a better understanding in managing and modeling their pool of risks. [Source, see page 9]
  • DRIVER 2: Need for reporting and compliance for two key National Committee for Quality Assurance (NCQA) quality initiatives: HEDIS and Star Ratings
    • Healthcare Effectiveness Data and Information Set (HEDIS) is a tool used by more than 90 percent of America’s health plans to measure performance on important dimensions of care and service. Altogether, HEDIS consists of 81 measures across 5 domains of care.
      •  Measures “Health Plan” performance
      • Why Care? The Centers for Medicare & Medicaid Services (CMS) have directly linked reimbursement for healthcare services to patient outcomes.
    • Five-Star Quality Rating System
      • Compares Medicare Advantage Plans and Prescription Drug Plans
      • Why Care? The Affordable Care Act of 2010 mandates that CMS make quality bonus payments (QBPs) to Medicare Advantage (MA) organizations that achieve at least four stars in a five-star quality rating

Analytics solutions needed to drive excellence in quality metrics must be capable of integrating claims, operational, and clinical data…the need to access and incorporate various unstructured data elements is becoming more critical, further driving the need for next-generation analytics solutions.

  • DRIVER 3: Need for refined analysis of the depth and breadth of data to drill down on cost drivers – condition, member, physician, and hospital levels.
    • Payers are moving beyond their historic focus on retrospective utilization review to taking a more proactive role in engaging and supporting providers with data for population health.

Payers will need a holistic solution that not only encompasses a breadth and depth of data, technical capabilities, as well as a series of supporting infrastructure to achieve these goals. There are very few solution providers that can offer all of these capabilities, hence the call for broad strategic alliances in this space.

Top Three Challenges for Payer Analytics

  • Data Integration
    • Data integration is at the heart of any payer organization. With the amount of M&A activities taking place and the focus on population health management, payers will need to truly integrate the data coming from disparate sources (e.g. hospital, provider, and allied health professional EMRs, claims files, patient monitoring devices and wearables, etc.)
  • Data Governance and Data Quality Control
    • In most payer organizations, business functions are still very siloed. In order to generate the meaningful analytics insights dictated by business needs, there needs to be a new imperative from a strategic, top down perspective. Breaking down these silos will be a challenge in itself, but it must be done.
  • Combination of Clinical and Claims Data
    • Today, payers and providers still largely don’t know how to effectively work with each other to share data. This presents an opportunity for third-party entities that can extract data from both payers and providers, shifting through the data and run predictive modeling and other analytics functions to support population health and other initiatives.

Without doubt, this will be a whole set of daunting tasks. But payers must step up to the challenge, and solution providers must work together to address this critical need for the payers and its respective stakeholders.

Select Vendors Serving the Payer Analytics Market

  • Platform Analytics Solutions
    • IBM
    • TriZetto
    • Verisk Health
    • ZeOmega
    • QlikView
    • Optum
    • SAS
    • Teradata
    • Inovalon (formerly MedAssurant)
    • Ab Initio
  • Point Solutions
    • SAS
    • Optum
    • MEDai (acquired by LexisNexis)
    • 3M
    • “homegrown solutions”
  • Analytics Services Vendors
    • MEDai (acquired by LexisNexis)
    • Optum
    • Teradata
    • Truven’s CareAnalyzer
    • Verisk Health

Optum is uniquely situated across each of the above solution category, which is perhaps indicative of this vendor’s breadth and reach across the payer space. It’d be extremely interesting to see how the other players can potentially work with one another to fulfill an end-to-end need in the payer analytics market. It will be valuable for the players to conduct a “horizon scan” of the current competitive market to understand where the potential gaps and opportunities are.

Interesting Partnerships

  • Optum Labs
    • Optum Labs is a new kind of open collaborative center for research and innovation involving all stakeholders (on improving patient outcomes and containing healthcare costs.
    • Originally set up between Optum and Mayo Clinic, the organization has grown to a very significant collection of partners and collaborators.
    • 4 Tenets: Collaboration, Data & Analytics, Prototyping & Testing, and Adoption.
  • HealthCore + Wellpoint + AstraZeneca

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