Blue Cross CEO: Amazon will speed move to consumer-based care

The involvement of Amazon and other tech giants in the health care industry will accelerate the move to consumer-based care, while the omnibus spending package passed by Congress in March will force insurers to pass on more costs to consumers, according to the president and CEO of Arkansas Blue Cross Blue Shield.

Curtis Barnett said in a speech at the Clinton School of Public Service Tuesday (April 24) that tech giants including Amazon see health care as the next frontier, and that Blue Cross sees them “as potential partners, and not as competitors going forward.”

Amazon recently made big news by announcing a partnership with Berkshire Hathaway and JPMorgan Chase to create a health care company. But Barnett said that Amazon and other tech companies are already in the health care market. In fact, Blue Cross has a partnership with a Google company on a diabetes management program that uses technology to improve patient compliance.

“I do believe that by applying their ability to innovate and their deep knowledge of consumer behaviors and technologies, these consumer tech giants will accelerate the consumer movement in health care,” he said.

Barnett said patients in the future will act more like consumers in other markets who have more information, take an active role in their care, and feel more empowered. The younger millennial generation is now the largest generation in the workforce today, and its members expect a more intuitive and personalized health care experience, he said. Other consumers are frustrated by growing financial exposure to health care costs and want ways to save money. Health insurers have contributed to the trend by moving to high-deductible plans and health savings accounts. Last year, more than $4.5 billion was invested in health care technology, and the largest area was personalized health care tools, he said.

Traditionally, the doctor’s office and the emergency room have been the front door to the health care system, but that’s changing. Now, that door is moving closer to the consumer through mobile and digital devices; through retail pharmacies, of which the planned merger between CVS Caremark and Aetna is an example; and through greater patient self-management.

On the last point, Barnett envisioned Amazon’s Alexa as a “full-time health coach.” Consumers could ask it to make an appointment with the “best” doctor in the county, and within minutes Alexa could do so based on patient reviews, board certifications and other criteria. Alexa could even remind consumers to weigh themselves when they wake up in the morning before the device sends a reading to a person’s medical team.

Data analytics and machine learning are already important tools for Blue Cross. The insurer can monitor a diabetic’s claims and data over the previous 12-24 months, spot patterns, and determine if the patient is likely to need dialysis in the next 12 months. Then it can reach out to patients and their medical providers. Blue Cross is moving to the point where it can monitor purchasing behavior to predict a person’s health status.

Barnett said changes to the individual health insurance exchange market, which serves 17 million Americans and 80,000 Arkansans, also are disrupting the health care industry. Since the Affordable Care Act required “guaranteed issue,” meaning consumers can’t be turned down for pre-existing conditions, the insurer has become better at outreach and care coordination. The insurer now identifies and adjusts to a patient’s risk after it insures them rather than identifying them before.

“And while we’ve not aways agreed, I believe our state government leadership has done a very good job of managing this market,” he said. “If you look at Arkansas compared to other states, the stability of this market is much, much better than it is other places, and I think we should commend our leaders for that.”

But the industry now faces headwinds. The tax plan passed by Congress last year repealed the individual mandate, which had helped stabilize the market. Congress didn’t include cost-sharing reduction funding in its latest spending package, which means the costs will be reflected in premiums.

“The impact of that will be those who do not receive the premium subsidies, the middle class, will feel the full brunt of those increases,” he said.

Barnett said the individual market could be affected by the Trump administration’s proposals to allow alternative, cheaper plans, expanded association health plans that are exempt from Affordable Care Act requirements, and short-term plans. A combination of higher premiums and potential lax government regulations could transform the individual marketplace into basically a high-risk pool, which will require states to create regulatory structures to sustain it.

Barnett said the old fee-for-service payment mechanism has been a major driver of cost increases because it contains incentives for volume and duplication. In response, in recent years the system has been moving toward value-based reimbursement with shared savings and risks.

The move has been driven in part by the federal government and, in Arkansas, partly by state initiatives involving Blue Cross. Those initiatives include patient-centered medical homes and paying for episodes of care rather than individual treatments and services.

“I think it’s important to note that regardless of what the government does, the private sector is committed to driving the payment structure to value,” he said.

Barnett said the growth of precision medicine, including genetic testing and gene-based therapies, will have a big impact on the health care industry moving forward. About 70,000 genetic testing products are commercially available. About one of every four Food and Drug Administration approvals from 2014-16 were related to precision medicine. Precision medicine has produced significant breakthroughs in treating cancer, cystic fibrosis and other diseases.

Currently, government and research institutions are active in the space, while payers and physicians are not. But that could change in the coming years. Barnett said as that happens, there must be evidence that the therapies work, and society will have to determine how the information will be stored and shared.

Barnett said social determinants of health are another important health care factor. He said genetics are only a small part of a person’s health risk; socioeconomics and behaviors are much more important. Five percent of his health plan’s members account for 50 percent of costs, and the individual market has been older, sicker and poorer than expected, with larger health issues than the commercial, employer-based population.

“In some ways, it’s looked more like a Medicaid population than a traditional employer population,” he said.

Because of those realities, Blue Cross has been increasing its social workers and integrating them into care management teams, packing more than 700,000 meals for food-insecure Arkansans to coincide with the company’s 70th birthday, and through its Blue and You Foundation provided 1,150 opioid overdose-reversing naloxone kits.