Understand how we got here — and how to move forward.


Blog Post

2020 health plan strategic market outlook

Following our February 26 webinar where we shared Advisory Board’s 2020 health plan strategic market outlook, Natalie Trebes—one of our leading health plan researchers—hosted a Q&A session with members about major trends affecting health plan strategy. Nearly all of the questions pertained to one of the three major challenges fueling health plans’ rising medical spend:

  1. Reimbursement rate cross-subsidization driven by highly variable physician costs
  2. Rising drug costs driven by innovative new therapies
  3. Population health challenges driven by unaddressed social needs

If you weren’t able to attend our Q&A session—or you want to share this with your team—below are the three most interesting questions that were asked (and our experts’ answers):

How is the rise of Medicare Advantage impacting payer-provider relationships?

Good news: CMS continues to generously finance Medicare Advantage (MA), and there’s an opportunity for both payers and providers to maintain a margin here. The quality- and risk-adjusted payment rates have recently driven increased experimentation with high-touch primary care models and innovative ways to integrate supplemental benefits that focus on social determinants of health. However, with MA’s emphasis on process-of-care driven star ratings, some providers feel burdened by additional documentation and reporting requirements, which can exacerbate underlying problems with burnout.

In many markets, payers are guiding patients to a narrow group of high-quality, low-cost providers; those providers benefit not only from higher volumes but also from increased data sharing and collaboration with the payer. In the coming years, we’re likely to see even more aggressive payer steerage to innovative physician groups able to manage MA populations more effectively—and procure appropriate rates.

With the coronavirus crisis shining a spotlight on the need for virtual care options, how are payers supporting telemedicine options?

Employers, even more than consumers, are demanding more virtual care options from payers. And they’re demanding that these virtual options be easy to understand, easy to use, and affordable. Especially now amid the emerging COVID-19 pandemic—with many plans waiving telehealth copays for virtual visits to encourage their use as a first line of defense and prevent spread across the health care system.

Looking to the future, plans are trying to coordinate their vendor-offered telehealth services with virtual visit opportunities across the traditional provider network. Many provider organizations struggle to decide whether to build or partner here, as the growth of telemedicine has created new challenges in coordinating care, sharing data, and reimbursing physicians for time spent with these services. Even in organizations integrating virtual care options well, many operational challenges remain. Payers must do their part to help providers integrate virtual care models into physician workflows, protect patient privacy, and analyze the data generated from these new sources to improve evidence-based care.

How are payers responding to the recent article suggesting that the Camden Coalition of Healthcare Providers care transition program didn’t really lower costs as expected?

The article was a wake-up call to payers and providers assuming that intense care management support of high-risk patients definitively lowered readmissions and downstream costs. It has generated a lot of conversation about the ROI of such population health investments, and illustrated how important rigorous, well-designed evaluations are.

Before we lose hope, there are certainly limitations to consider—this a post-discharge intervention, meaning that the program didn’t mitigate social risk factors before patients became high-cost. And much of the benefit of the intervention leaned on community-based support from mental health and substance abuse programs, for example. Researchers noted that these often lacked sufficient capacity.

Moving forward, the article reminds us that payers and providers wanting to inflect population health must go deeper—targeting the structural problems like food, housing, and transportation—if they want to make a difference. And above all, focusing on complementing and collaborating within the community. Plans, for example, can invest in helping community organizations demonstrate their value and secure ongoing funding sources—to sustain their impact.

If you’re interested in learning more about the trends shaping health plan strategy and the challenges that informed the Q&A dialogue above, listen to our archived webinar.

Have a Question?


Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.