From The AIS Report on Blue Cross and Blue Shield Plans. Not affiliated with the Blue Cross Blue Shield Association or its member companies.

Blues Plans Eye Investments in Marketing, Technology to Prepare For Public Exchanges

- January 2012 - Volume 11 Issue 1

As health insurers gear up to prepare for the launch of public exchanges in 2014, most Blues plans this year will devote more resources not only to technological and other infrastructure improvements related to exchanges, but also increased marketing and retail investments in order to facilitate what will be significant growth in the individual market.

A number of Blues plans and consultants interviewed by The AIS Report say that the exchanges mark a much different way of selling health insurance, and thus require significant changes in how insurers operate.

“Independence Blue Cross (IBC) is readying itself for a significant increase in retail sales over the next several years,” says John Janney, senior vice president of marketing services at the Philadelphia-based plan. “Our industry was built with a view toward businesses and employer groups being the customers…[but] we must also prepare for the large number of individuals who already are and will increasingly be purchasing health care directly from us.”

“This shift requires a deeper level of understanding on how individuals want to shop for, purchase and use health care,” he tells The AIS Report. “IBC is making a serious investment in understanding how best to reach these individual customers.”

As part of those efforts, IBC is partnering with the Blue Cross and Blue Shield Association (BCBSA), as well as a number of other Blues plans, “to effectively pool our best information when it comes to better understanding the individual consumer.” In addition, the insurer is looking at product development, communication channels, customer service and claims processing to evaluate what changes are needed in systems and processes to support the new retail marketplace, Janney notes.

BlueCross BlueShield of Tennessee also is thinking more about retail efforts, according to Danny Timblin, vice president of strategy and execution at the insurer. He tells The AIS Report the Blues plan is looking to “build out capabilities to allow better insights into consumer behavior and better participate in the exchanges.” He adds that BCBST also is focused on developing informatics and better utilizing claims data to improve health care delivery.

A former BCBSA official who spoke with The AIS Report says that Blues plans are looking at different retail offerings, but are searching for ways that give them a leg up. Last year, a number of Blues plans told The AIS Report that they were looking at expanding their retail store presence in anticipation of 2014 (The AIS Report 12/11, p. 3).

He adds that Blues plans could have inherent advantages over national insurers in the state exchanges “in that they are seen as part of the community, make local partnerships and know the market best….They need to leverage and emphasize that and be viewed as a trusted partner for employers and consumers in meeting health care needs.”

Adding plans with narrower networks and lower costs to consumers, developing more wellness programs for members, and forming more patient-centered medical homes and accountable care organizations are several areas where Blues plans will focus investments in this year, says Henry Loubet, vice president and chief strategy officer at Keenan, a California-based consulting and insurance brokerage firm. In the wellness area, IBC, Blue Shield of California (BSC) and Highmark Inc. are working with Boston-based Healthrageous, Inc., which has developed a Web-based platform, mobile apps and other wellness tools, to launch pilots this year that help members develop a personal health profile (The AIS Report 12/11, p. 7).

“Health plans are recognizing the amount of money they spend [on things] like administration, billing and eligibility, which are all big cost drivers,” he tells The AIS Report. “We think there’s a lot of room for cost reduction there. Especially with [medical loss ratio requirements], plans are interested in keeping costs down.”

Loubet notes that in California in particular, the two Blues plans, BSC and Anthem Blue Cross, are facing increased competition from Kaiser Permanente, which he says “has done an incredible job of changing the face of Kaiser from lower-cost, industrialized, assembly-line medicine into a whole different milieu.”

Anthem and BSC need “a lot of focus strategically on competing with Kaiser and trying to, in many cases, prevent Kaiser growth and [Kaiser] getting more enrollment and into markets that have traditionally been non-Kaiser.”

Compliance, Technology Influence Spending

With new regulations going into effect as part of the health reform law, Blue Cross and Blue Shield of Michigan will focus more resources on ensuring compliance with mandates, says Kevin Klobuchar, president and CEO for Blue Care Network, the Blues plan’s HMO. The company also plans to increase investment in its government programs space in order to boost growth in Medicare and Medicaid enrollment.

Blues plans also may try to become more tech savvy. Carl Doty, vice president and practice leader of consumer product strategy at Forrester Research, predicts there will be “moderate” investment in mobile services for smartphones and tablets in an effort to drive deeper engagement with consumers. Blues plans have been increasing their presence in the social media and mobile applications spaces in the face of consumers who are more and more tech-hungry (The AIS Report, 12/10, p. 1). Contact Janney via Karen Burnham at karen.burnham@ibx.com, Timblin via Kelly Allen at kelly_allen@bcbst.com, Loubet via Jennifer Davis at jdavis@keenan.com, Klobuchar via Helen Stojic viahstojic@bcbsm.com and Doty at cdoty@forrester.com.