Unlike the limited virtual benefit plans long have offered members, this new model is designed in a way that the first point of contact is digital across the entire member journey — from enrollment through care delivery to payment.
A combination of trends make now the time to embark on this innovative model.
- Increased focus on cost control: A recent PwC study estimates that medical costs in the U.S. will rise by 6.5% in 2022, and virtual first plans offer a compelling solution.
- Rising adoption of virtual healthcare: The Covid-19 pandemic greatly accelerated virtual healthcare use. By April of 2021, 64% of U.S. households reported using a telehealth service within the last 12 months, a Becker’s Hospital Review survey found.
- Favorable regulatory trends: A new CMS rule has expanded the scope of allowed services and increased incentives for providers to offer telehealth.
Payers that capitalize on these trends by offering innovative virtual first plans can drive significant benefits financially, strategically and operationally.
Consumers are beginning to demand the same level of convenience that banks and retailers offer from the healthcare system. The virtual-first model helps plans meet that demand not only by making access to care easier and more convenient through telehealth, but by taking the hassle out of everything from enrollment to claims payment to customer service by making these interactions digital. This enhanced experience can translate to higher member retention.
The enhanced access and convenience also enables payers to close healthcare gaps. For example, they could provide immediate access to care for members in a care desert or offer after-hours virtual care so hourly workers wouldn’t have to miss work to see the doctor.
The model makes financial sense for payers. They can drive down medical costs by steering members to more cost-effective care settings and urging them to see a physician earlier in their care journey, potentially preventing expensive inpatient treatments down the road. Additionally, payers can exert better control over costs by redirecting members back to their virtual medical home.
These benefits can help payers differentiate with employers as they translate toward lowering the total cost of care, helping retain a diverse workforce, improving employee productivity, and enhancing employee health and satisfaction.
Given the benefits and economics of virtual health plans, early adopters are likely to share common traits, such as price sensitivity, adaptability to new types of products, and need for increased flexibility. Early adopters may include small-group and blue collar employer plans, individual and exchange plans, student health plans, and Medicare plans hoping to meet the demands of the Medicare population, which can significantly increased telehealth usage in the pandemic.
Most plans already have added virtual benefits, but a virtual first health plan serves as an integrator across a range of virtual benefits. At its core, the model is designed so that the first point of member contact is digital across the entire member journey.
A single platform oriented around digital experiences can create unique opportunities for innovation that only a virtual first plan could make possible. For example, virtual first plans can foster communities for members with similar needs, such as condition-specific virtual support groups, and facilitate participation in virtual clinical trials. Virtual first plans also can help members set and manage goals, reward good health by tracking behaviors, and integrate benefits with other employee resources (e.g., mental health) and local resources. As consumer needs evolve, virtual first plans can pioneer new ways to meet them.
To help build a successful virtual first product, organizations will likely need to integrate a set of capabilities that use digital channels as the primary medium of serving members.
The efficacy of a virtual first model rests on thoughtful integration of all the above capabilities to help drive members to utilize telehealth physicians and digital tools as the first course of action. Specifically the following needs to hold true:
- An integrated virtual care delivery platform should be used as a chassis for virtual services across primary care, behavioral health, home health and urgent care
- Incentives should be aligned across stakeholder groups (physicians, members, health systems) to adopt virtual model
- Improved outcomes (clinical, behavioral and cost) and experience should result under the virtual first model
- Holistic member view and actionable insights should be available to critical stakeholders across the value chain
Virtual first health plans can be implemented across a variety of markets and will likely cause disruption at each stage of the healthcare value chain. Accordingly, the rise of virtual first plans presents opportunities and challenges alike for stakeholders.
Payer Implications: Plans should consider several factors to help build a successful virtual first product. First, plans should aim to expedite the integration of virtual first capabilities and address gaps. Second, they should identify and curate a provider network to help drive a virtual first product. The network structure can enable specific provider groups to adopt end-to-end virtual capabilities. Finally, payers should demonstrate the value proposition and evidence-based outcomes to employers, with the potential to pilot with two or three test populations.
Provider Implications: Providers should consider the care-delivery and financial implications of providing care virtually to a rising share of patients. Physicians should also have access to telehealth technology and be comfortable providing high-quality care virtually. Further, revenue cycle and other financial metrics, such as cost per visit, will likely need to be re-evaluated for virtual visits.
The virtual first model has potential to disrupt markets across the entire healthcare ecosystem. With the right approach, plans and providers alike have an opportunity to capitalize on market trends and drastically reduce barriers to care for members through virtual first plans.
To learn more about how PwC can help your organization please visit https://www.pwc.com/us/en/industries/health-services.html or contact us_healthindustries@pwc.com.
This article was submitted by Igor Belokrinitsky, an adviser to executives in the healthcare industry for Strategy&, a global consulting firm that is part of the PwC network.
