NY Times article – Insurers and image


June 21, 2012

Insurers Seek to Soften Their Image, No Matter How Court Rules on Health Act


As the country waits to see how the Supreme Court will rule on the Affordable Care Act, health insurance companies are taking matters into their own hands.

Over the past year, many of the largest insurance companies in the country, including Aetna, Cigna and Humana, have introduced elaborate marketing campaigns to reposition themselves as consumer-friendly health care companies, not just insurance providers. The insurers have been preparing for the possibility that the court may uphold the most controversial provision in the legislation — the individual mandate that would require people to buy health insurance or face a fine.

While a majority of Americans would still be left to choose among the options their employers offer, a favorable ruling would expand the market for the insurance companies, allowing them to sell directly to millions of uninsured Americans.

Insurers say that even if the mandate is struck down, they will press forward with their strategy because future success will depend on engaging directly with the consumer. “I expect to see a fair amount of competition for the public’s attention,” said Michael B. McCallister, chairman and chief executive of Humana. “The individual relationship is going to be ever more important.”

The new efforts include themed messages like a “Go You” campaign by Cigna, as well as loyalty and rewards programs that take a page directly from the marketing playbook of traditional retailers.

The campaigns represent a departure for insurers, who had previously directed their marketing to wholesale business accounts, not individual consumers. The shift in strategy may become necessary no matter what happens with the health care act, but it is fraught with challenges for an industry that is better known for causing consumer headaches than for curing them.

“They are among the most disliked industries in the United States,” said Regina E. Herzlinger, a professor of business administration at the Harvard Business School and the author of the book “Who Killed Health Care? America’s $2 Trillion Medical Problem and the Consumer-Driven Cure.” “The nature of the business is that they really are not that eager to O.K. every expense,” Ms. Herzlinger said.

Indeed, insurance companies expressed concern about certain provisions in the Affordable Care Act when it was being debated in 2009, and lobbied to shape some of the rules. If the law is upheld by the Supreme Court, it could force insurance companies to extend coverage to tens of millions of uninsured Americans, regardless of pre-existing medical conditions.

In the meantime, insurance companies have been spending more on their marketing and advertising efforts. According to Kantar Media, a research unit of WPP, spending on medical and dental insurance advertising increased to $789.3 million in 2011 from $667.7 million dollars in 2010.

Mr. McAllister described Humana’s new approach as “bright, honest, aware and bold.” One television ad the company released in 2011 showed a family reunion at a summer home, complete with giggling children, cooing grandparents, bonfires and swimming at the lake.

In January, Aetna announced it, too, was refreshing its brand to continue “its evolution from an insurance carrier to a health solutions company,” the company said in a statement. “More and more, the end consumer is who we need to focus on,” said Belinda Lang, the head of brand and consumer marketing at Aetna.

Along with new advertising campaigns, several insurers are introducing new digital products, including some that seem to borrow equally from shopping comparison sites, airline loyalty programs and Groupon.

For example, Humana has created a program that rewards members for healthy behavior like losing weight or quitting smoking, awarding points that can be redeemed for things like hotel reservations, electronics and clothing.

One of the biggest insurers in the country, the Blue Cross and Blue Shield Association, recently updated its daily deals Web site, which offers members discounts on things like eye surgery and gym memberships. Aetna introduced a digital tool that allows consumers to compare out-of-pocket expenses. “Ah, the potential of putting people first,” says the narrator of its ad.

Putting people first is not a phrase many consumers associate with insurers, which instead tend to conjure up memories of endless bureaucracy, skyrocketing premiums and declined coverage. The advertising campaigns are an attempt by health insurance companies to humanize themselves and “to make the patient believe that the health insurance company really cares about them and to reassure the customer that they get what they pay for,” said Nora J. Rifon, a professor in the department of advertising, public relations and retailing at Michigan State University.

Fred Karutz, the general manager of health plan solutions at Silverlink Communications, a health care technology company, said that if the health care overhaul was left intact by the court, as many as 120 million Americans could be in the market for health insurance by the end of the decade.

“Insurance is a large-numbers business,” Mr. Karutz said. “The marketing push is for nonbuyers, the people who are ambivalent.” By nabbing new customers, sick, old, young and healthy, the companies can create “a balanced risk pool” he added.

EmblemHealth’s advertising campaign focuses on telling stories of its employees and sending its members a message that insurance can be personal. Some of the ads are large billboards placed at major intersections and landmarks in New York City, like Madison Square Garden. One ad, which quotes from Sonia, an Emblem employee, reads, “ You really develop a connection with someone when you can look in their eyes and help.”

With its “Go You” campaign, Cigna addresses consumers directly for the first time. “It is a shift, it’s an important shift,” said Maggie FitzPatrick, the chief communications officer at Cigna. The campaign includes bold colored ads with more personal messages like: “Why would you want to be like someone else? Its exhausting just trying to be yourself.”

Dr. Elliott S. Fisher, the director of the Center for Population Health at the Dartmouth Institute for Health Policy and Clinical Practice, said the campaigns were necessary regardless of the outcome of the Supreme Court case.

“Their future is going to depend on their ability to demonstrate value to patients and to employers,” Dr. Fisher said of insurance companies. “No one any longer questions the fact that health care is unaffordable and that the current way we are doing business isn’t working.”

Despite all of their efforts, Mr. Karutz of Silverlink said, the companies still have a long way to go since many of them are new to the retail environment. “As people become consumers, they seek out value,” he said. “In the group space, health plans could never hear the consumer scream, but in the retail space everybody can hear the consumer scream.”

“They need it,” said John Kamp, the executive director of the Coalition for Healthcare Communication, a policy and marketing group. “They know they are on the wrong side of the public attitude.”

G.A.O. Calls Test Project by Medicare Costly Waste

April 22, 2012


From the New York Times


WASHINGTON — Medicare is wasting more than $8 billion on an experimental program that rewards providers of mediocre health care and is unlikely to produce useful results, federal investigators say in a new report.

The report, to be issued Monday by the Government Accountability Office, a nonpartisan investigative arm of Congress, urges the Obama administration to cancel the program, which pays bonuses to health insurance companies caring for millions of Medicare beneficiaries.

Administration officials, however, defended the project and said they would not cancel it because it could improve the quality of care for older Americans.

In the 2010 health care law, Congress cut Medicare payments to managed care plans, known as Medicare Advantage, and authorized bonus payments to those that provide high-quality care. Investigators found that most of the money paid under the demonstration program went to “average-performing plans” rated lower than the benchmarks set by Congress.

The report said the project would cost $8.3 billion over 10 years, with 80 percent of the cost occurring in the first three years.

Federal investigators are trying to determine whether Medicare officials had the legal authority to make the changes.

Senator Orrin G. Hatch of Utah, the senior Republican on the Finance Committee, and Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee, said the report suggested that Medicare officials had abused their authority.

In a statement, Mr. Hatch and Mr. Camp said they were concerned that the government might be “using taxpayer dollars for political purposes, to mask the impact on beneficiaries of cuts in the Medicare Advantage program.” Administration officials denied that.

A separate federal panel, the independent Medicare Payment Advisory Commission, also criticized the project, saying it increases “spending at a time when Medicare already faces serious problems with cost control and long-term financing.”

The panel denounced Medicare’s “overly broad use of demonstration authority” and said “limited Medicare dollars should go to truly high-performing plans.” It said “the extension of quality bonuses to the vast majority of plans is likely to result in far greater program costs than the reward system enacted” by Congress, and that by spreading the rewards so broadly, “the demonstration lessens the incentive to achieve the highest level of performance.”

The G.A.O. said the project “dwarfs all other Medicare demonstrations” in its impact on the budget, but is so poorly designed that researchers could not tell whether the bonus payments led to improved care. As a result, it said, it is unlikely to “produce meaningful results.” Insurers can use the bonuses to offer extra benefits, like vision and dental care, or to lower premiums.

More than 12 million people are in Medicare Advantage plans. About one-third of them are in plans that would receive bonuses under the 2010 law. By contrast, under the demonstration program, 90 percent are in plans eligible for bonuses, the report said.

The administration said that by offering bigger bonuses to more health plans, it hoped to encourage larger, more rapid improvements in care. “All Medicare Advantage plans will be part of the demonstration,” a federal health official told James C. Cosgrove, the accountability office’s director of health care studies.

The Medicare commission said “demonstration authority is intended for smaller-scale projects” that test innovations in the way health care is financed and delivered.

The health care law cut payments to private Medicare Advantage plans after many studies found that they were being overpaid. President Obama said the private plans were getting “unwarranted subsidies” that “pad their profits but don’t improve the care of seniors.”

The commission said payments to private plans, including the bonuses, were still about 7 percent higher than what the government would pay for similar beneficiaries in the traditional Medicare program.


Private Insurers look at 1%

February 27, 2012

At-Risk Patients Gain Attention of Health Insurers


Who doesn’t want to be in the top 1 percent of wage earners, political discomfort aside?

No one, though, is especially envious of another group of 1 percenters: the heaviest users of health care.

One percent of patients account for more than 25 percent of health care spending among the privately insured, according to a new study. Their medical bills average nearly $100,000 a year for multiple hospital stays, doctors’ visits, trips to emergency rooms and prescription drugs.

And they are not always the end-of-lifers. They are people who suffer from chronic and increasingly common diseases like diabetes and high blood pressure.

As the new federal health care law aims to expand care and control costs, the people in the medical 1 percent are getting more attention from the nation’s health insurers.

“The huge opportunity is the at-risk people who are chronically ill,” said Dr. Alan Muney, the chief medical officer for Cigna, a large health insurer. “The problem in the health care system today is there is often too little too late or too much too often.”

Studies have already shown that Medicare spending is concentrated on a small group of individuals who are seriously ill. But an analysis by the IMS Institute for Healthcare Informatics, the research arm of IMS Health, a health information company in Danbury, Conn., provides a rare glimpse into the medical problems of people with private health insurance who are under 65. About three-quarters of them suffer from at least one chronic condition that could spiral out of control without proper care.

Health insurers are likely to have little choice other than to monitor these cases more closely, said Daniel Malloy, an executive at IMS Health. Under the federal health care law, which is expected to go into effect in 2014 if it is not struck down by the Supreme Court, insurers will no longer be able to deny coverage to anyone with a potentially expensive medical condition or put limits on how much they will pay in medical bills.

And avoiding these patients altogether will no longer be an option. Insurance companies will be required to enroll millions of new customers without the ability to turn them away or charge them higher premiums if they are sick. They will prosper only if they are able to coordinate care and prevent patients from reaching that top 1 percent, Mr. Malloy said. “The insurance model is fundamentally changing,” he said.

Many insurance executives say they are already developing programs to better address the needs of these patients. The insurers often work with employers that are self-insured to manage their workers’ medical conditions, and companies are already demanding they do what they can to control costs.

“Once we’ve got patients, we’re responsible,” said Dr. Lonny Reisman, the chief medical officer for Aetna, another large insurer. “We’ve always managed them as aggressively and effectively as we can.”

Insurers are becoming increasingly sophisticated in being able to identify those who are high spenders and those who are at risk of developing serious complications. “It’s important to know who they are and manage their conditions,” said Dr. Pat Courneya, the medical director for the health plan offered by HealthPartners, a large health system based in Bloomington, Minn., which is a client of IMS. People with high medical bills often continue to be costly throughout the years, he said.

While diabetes, for example, typically costs about $12,000 a year to cover, a diabetic whose condition rages out of control can become one of the top spenders with expenses that average $102,000 a year, according to the IMS report. Uncontrolled, their diabetes may lead to a heart attack or stroke or they may lose their eyesight or have a limb amputated.

When Wendy Meath, a 59-year-old with diabetes, was hospitalized a year ago, she was identified by HealthPartners as someone who needed help to control her disease. She had been admitted for kidney stones, one of many possible complications of diabetes. Although she had insurance through her husband, she was unemployed.

Since leaving the hospital, where she was admitted for 12 days for a series of complications from the surgery to remove the stones, Ms. Meath has been in regular contact with one of HealthPartners’ nurses, who serves as a case manager. The nurse calls at least once a month and checks in after she goes to the doctor for any developments. The health plan also assigned a social worker to help her with the cost of medications and other obstacles that were preventing her from taking better care of herself. “It makes me feel like I’m not alone,” Ms. Meath said.

“They’re trying to prevent the big things from happening, which is great,” she said.

The next challenge, say insurers, is to figure out how best to work with a person’s doctor. Because many of these patients seem to be seeing many doctors and taking many medications, there may be no one who is accountable for the patients’ overall health. “You’re going to see some gaps in care that led to this kind of progression,” Mr. Malloy said.

Insurers say they are experimenting with different ways to pay doctors so they are more responsible for overseeing these patients. Cigna, for example, says it plans to pay doctors more to coordinate care or develop ways for the doctors to share in the savings generated when someone does not go to the hospital if the visit could have been avoided through better treatment.

But insurers are also still grappling with their understanding of human nature — why some people simply don’t take care of themselves or take their medicine or go to the doctor, even when it is clear that they should.

Aetna, for example, recently eliminated the co-payments in some of its health plans for certain medicines for people who have recently suffered a heart attack. In a recent study, however, many patients who got these medicines free were still not taking them.

“The reality is if we don’t figure out how to get to the patients, we’re not going to get where they need to be,” Dr. Reisman said.