1 INDUSTRY BRIEF Data Management: Foundational Technologies for Health Insurance Exchange Success Sponsored by: Informatica Janice W. Young November 2013 IN THIS INDUSTRY BRIEF U.S. health plans have been actively selling their products and services on federally (PPACA) mandated public health insurance exchanges since October 1, In addition, many will participate in either existing or emerging private health insurance exchanges. Initial exchange models will provide relatively rudimentary online sales marketplaces. Compared with the retail and financial services models, initial healthcare insurance efforts are immature and unsophisticated. Assessment of early health insurance exchange models suggests a multiyear evolution toward a semblance of maturity within the healthcare payer market and compared with other consumer markets. At the endpoint of the maturity curve is the execution of the "retail strength" healthcare consumer environment. In response to this emerging market need and opportunity, healthcare payers require new innovative solutions to facilitate healthcare payer public and private exchange participation. One of the core components of the "retail strength" health insurance exchange marketplaces is the 360-degree consumer view, an integrated view of consumer products, services, clinical and health/wellness information and status, and buying and communication preferences. The 360-degree model is critical to healthcare payer efforts to fully engage consumers in making informed, best practice, and timely decisions regarding insurance coverage, as well as clinical and health and wellness actions. However, the 360-degree model requires the integration of all information, data, and processes that touch the consumer. Fundamentally, then, the "retail strength" consumer engagement model requires a renewed industry commitment to data quality, transparency, integrity, and availability. This industry brief discusses the evolving maturity model for the U.S. healthcare payer marketplace and key foundational technology strategies that will position healthcare payers for success. November 2013, IDC Health Insights #HI244495
2 Health Insurance Exchange Maturity Model: Setting the Stage for the 360-Degree "Retail Strength" Consumer Model Maturity of the U.S. health insurance exchange market will evolve through the end of the decade. The IDC maturity model establishes five discrete stages of maturity: ad hoc, opportunistic, repeatable, managed, and optimized (see Figure 1). As health plans move along the healthcare exchange maturity curve, their business and focus shift from the historical and legacy business-to-business (B2B) environment to the retail business-to-consumer (B2C) environment. Consumer data, information, and engagement become increasingly important and strategic areas of focus. At its maturity, the exchange market will establish and revitalize the healthcare payer's individual consumer relationship and consumercentric investments. Exchanges will ultimately leverage many of the best practices of more advanced consumer industries into high-performing, profitable, personalized relationships with highly satisfied and committed customers. FIGURE 1 IDC's Private Health Insurance Exchange Maturity Model: Five Stages of Progress Ad Hoc Opportunistic Repeatable Managed Optimized Testing theory/ concept New market presence Limited back-office integration Focus on testing sales and billing processes Establish core business requirements and market strategy Corporate commitment and financing Partnership models identified Consumer-centric models are invoked Sales and billing processes mature Business and IT platform executed against "retail" healthcare consumer expectations External integration is mature Sustainable funding and governance models are applied Strong market competitor Cross-selling and partnership opportunities are leveraged Best practices from retail consumer experience in sales, products, interactions, and analytics are applied 360-degree consumer view Market leader Demonstrably strong outcomes in sales and consumer health management Competing on health outcomes objectives Competing on strong consumer platform and analytics Source: IDC Health Insights, IDC Health Insights #HI
3 The Health Exchange Maturity Model Ad Hoc Description. Organizations at the ad hoc stage engage in private exchanges to "test the waters" of the market experience. These are usually proof-of-concept (POC) or pilot projects based on individual or small workgroup efforts. The majority, if not all, of the effort focuses on a rudimentary external sales model. No changes to back-end, consumer, product, and clinical processes or technologies are made. Goal. The primary objective at the ad hoc stage is to gain initial experience and to provide decision makers with information that demonstrates the value, opportunities, competitive advantage, or market protection of the individual market. The initiative generally provides insights into long-term investment and innovation required to compete effectively in the individual market. Opportunistic Description. Opportunistic deployments extend lessons learned from initial ad hoc efforts. An understanding of the core elements of the individual business model is developed. Corporate commitment is evidenced. Key stakeholders align to develop strategy, common goals, and new business and process requirements. Initial strategies and concepts are embraced to transform the organization to a consumer-centric model. The organization studies the "retail strength" individual consumer strategy. An early business plan emerges. Goal. The primary goal of the opportunistic stage is to reap the benefits of lessons learned in the early stages and to extend corporate understanding and commitment beyond the sales and marketing arena for the individual consumer model. Repeatable Description. At the repeatable stage, projects, events, processes, and investments are identified. Clear corporate sponsorship and leadership strategies, objectives, processes, and technology investments are established and defined. The initiative is a defined corporate strategic priority; sustainable funding and governance models are established. New positions are created and staff hired to execute the new business model. Goal. The primary mobility goal of healthcare organizations at the repeatable stage is to achieve a recognized competitive position within the exchange market. Solutions, marketing, and delivery focus on needs and expectations of the consumer market. Managed Description. At the managed stage, health plans are actively and effectively competing within the health insurance exchange market. Organizations have enough experience to begin establishing targeted sales, acquisition, and retention strategies. Partnership strategies emerge for cross-selling and upselling opportunities. Innovative health, wellness, and new products are offered for greater presence, services, and consumer engagement and retention. Health plans heavily leverage and invest in best practice models from retail and financial services for a high-performing individual market presence. The 360-degree consumer engagement strategy is defined and implemented IDC Health Insights #HI
4 Goal. The primary goal at the managed stage is to establish a leadership position within the health insurance exchange market and to begin investments in differentiation strategies. The health plan shifts the competitive model from competing on solely price to competing on a more "retail-like" competitive strategy focusing on pricing and delivery based on efficiency, service, and results. Optimized Description. Healthcare organizations at the optimized stage have established a mature 360-degree "retail strength" consumer engagement model that pervades all aspects of the organization, beginning with the health insurance exchange marketing and sales process. Goal. Goals are market and innovation leadership, as well as using the individual consumer market model to successfully achieve the healthcare "triple aim": cost improvement, quality improvement, and excellent outcomes. Competition in this market is focused on demonstrated achievement of these triple aim goals. Maturing exchange strategies are similar to maturing "retail strength" consumer engagement strategies. The shift to a "retail strength" B2C focus is driven by both consumer expectations and new health plan market, product, market, and delivery strategies. As consumers become increasingly engaged in cost, quality, and health and wellness responsibilities and decisions, they will expect the same level of transparency, efficiency, reliability, and access that they experience in retail and financial services interactions. Health plans will also seek to initiate business models akin to those of retail markets, leveraging more and better consumer and consumer behavior information from which they will target sales, product, care, and health management strategies, as well as new business and crossselling opportunities. Key business objectives of the healthcare retail model include the following: Know more about healthcare consumer needs and desires Be better able to market appropriate and personalized products and services Identify and foster relationships with preferred customers Provide consumer tools for more efficient and customized healthcare interactions Have a better picture of overall health, wellness, and care management interactions Be better able to market appropriate and personalized products and services Send appropriate and personalized messaging through desired channels Identify early health and wellness intervention points to mitigate more serious future health challenges and costs Improve customer retention Improve healthcare cost, quality, and outcomes 2013 IDC Health Insights #HI
5 FUTURE OUTLOOK The Health Insurance Exchange Evolution Foundation: 360-Degree Consumer Engagement The health insurance exchange's evolution toward maturity starts at the ad hoc stage with marketing and sales test cases and early market entrance and concludes at the optimized stage with end-to-end integration and alignment of the 360-degree consumer engagement strategy linking marketing, sales, health and wellness, clinical services, and quality and cost initiatives. The 360-degree model is an integrated consumer engagement strategy that enables automated interactions, shared communications, and appropriate transaction and information transparency to the health plan, the provider, and the consumer. Typical data includes sales/acquisition, finance, payment and administrative management, health and wellness, and clinical care (see Figure 2). FIGURE 2 Primary Analytics Components of the Maturing Healthcare Payer 360-Degree Consumer Engagement Platform Enroll Utilization Segmentation Marketing Comparative shopping Payments Acquisition/ product selection/ enrollment Analytics CRM Financing/ payment Admin/ finance transactions/ resource decisions Cost/utilization history Finance Interaction tracking Cost/quality data Care Outcomes Communications Care management Health and wellness Triggers/alerts Segmentation Manage Triggers/alerts Segmentation Outcomes Communication participation Health Source: IDC Health Insights, IDC Health Insights #HI
6 Interest and planned investment in consumer engagement solutions continues in IDC Health Insights' Healthcare Payer Technology and Business Investment Survey reveals the continuing consumer priorities for application and solution investments in In particular, the survey found that 50% of health plans designated consumer engagements as a top driver and priority for new and replacement technology investments. Furthermore, health plans list consumer engagement strategies among leading programmatic drivers of health plan IT budgets and among the top 2 specific investments in cloud, application, and analytics technologies. The Exchange 360-Degree Retail Technology Platform The Missing Link: Trustworthy Data Reflecting its emerging strategic importance, analytics has led health plan technology investment priorities since Health plans have invested and are actively investing in a wide variety of consumer analytics, including: Marketing and sales. With the rise of health insurance exchange marketplaces, health plans now extend investment strategies to include consumer analytics traditionally used in retail and financial services markets. These analytics strategies provide new insights into consumer health and purchasing behaviors and responsiveness to interaction channels and information and help the health plan identify and retain highly valued customers. Consumer engagement. Health plans are investing in big data and reporting solutions and in new rules-based workflow engines to support consumer decision support tools, provide cost/quality data, trigger multichannel alerts, and identify best outcome strategies. Regulatory reporting. Consumer-level data feeds require regulatory quality, risk, and reimbursement reporting. Report data drives quality ranking and reimbursement and health plan premium reimbursement. Key business processes in the reform era require highly accurate, available, integrated, and reliable consumer information. However, the data that proliferates across multiple health plan and external systems, environments, and databases is not only very rich but also exceptionally heterogeneous. Across technologies, consumer identification information is frequently inconsistent and incomplete and is stored using highly variable data models. Furthermore, in the reforming market, health plans will access more and more information from external sources, including providers, social media, exchange marketplaces, government programs, mobile technologies, and partners. Data and information heterogeneity will worsen. Despite this, many health plan strategic discussions and tactical investment strategies lack the requisite renewed commitment to and investment in the consumer-centric data infrastructure. Data governance emerges as a critical enterprise activity. Key data governance requirements to manage and surmount the existing and growing heterogeneity and to ensure accurate and reliable consumer data to support consumer engagement in the healthcare retail market model include: Information exchange and transformation solutions to establish consistent and reliable exchange of data between healthcare payer internal systems and applications as well as among and between data partners. Solutions should provide high-volume exchange in standard and configurable health insurance exchange formats between the exchange marketplace and the health plan. Automated audit and error reporting services should be available to efficiently address exceptions and errors IDC Health Insights #HI
7 Master data management tools to establish an authoritative consumer record, resolve duplicates, and establish data relationships. Solutions should support both exchange/marketplace and health plan data as well as integrate social media and mobile data sets. A configurable solution will enable the health plan to establish the auditable framework to identify and link consumer, family, and related data. Data quality tools to automatically and proactively identify and resolve data quality issues using a rules-based configurable solution. Workflow integration enables automated engagement of data quality business owners within the enterprise. Delivery options that include discrete and enterprise models, on-premise and cloud solutions, and configurable business rules, workflow, and auditing. The consumer-focused data management strategy is new to healthcare but is mature in other industries. As health plans execute their data governance models, they should seek consulting and solutions from vendors with strong experience in more mature consumer markets, including retail and financial services. Within the constraints of healthcare security and privacy requirements, health plans and exchanges will ultimately leverage many of the best practices of more advanced consumer industries into high-performing, profitable, personalized consumer relationships. Essential Guidance At its maturity, the exchange market will establish and revitalize the healthcare payer's individual consumer relationship and consumer-centric investments. Incomplete, inaccurate, and unreliable information will be the unfortunate and insufficient base of any consumer-centric exchange and 360-degree consumer-centric information and engagement initiatives. Poor consumer data will both drive poor decisions and outcomes and discourage consumer participation and confidence. Furthermore, poor consumer data will likely negatively affect revenue if it is used as the basis for risk analysis and reporting. Establishing a strong data governance foundation that ensures trustworthy data will translate directly into trusted decisions and trusted consumer relationships as well as optimal revenue outcomes IDC Health Insights #HI
8 About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make factbased decisions on technology purchases and business strategy. More than 1000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 48 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Global Headquarters 5 Speen Street Framingham, MA USA idc-insights-community.com Copyright Notice Copyright 2013 IDC Health Insights. Reproduction without written permission is completely forbidden. External Publication of IDC Health Insights Information and Data: Any IDC Health Insights information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Health Insights Vice President. A draft of the proposed document should accompany any such request. IDC Health Insights reserves the right to deny approval of external usage for any reason.