AIA has outlined how it believes insurers and healthcare providers can better align to make healthcare more efficient with the current model being “outdated and unsustainable”.
The insurer noted the use of new business models which are seeing insurers play a bigger role in care delivery and explained how it is developing a panel of preferred providers.
It also noted that with surging healthcare demands fundamental reform was necessary as “piecemeal changes will only lead to more dramatic and painful changes in the future”.
Ultimately, it added that reform would not be easy but by working together “on the basis that access to affordable healthcare is a public good” there could be significant benefits.
‘Outdated and unsustainable’ model
In its report, Payor-Provider Alignment: Making healthcare sustainable in Asia, AIA further highlighted that aging populations, greater demand for care and rising chronic disease rates were squeezing resources, exacerbating medical inflation and throttling access to care.
The insurer noted the region was “grappling with a reality that other parts of the world have been working to address for years”.
It added that the “traditional fee-for-service healthcare model is outdated and unsustainable”.
The insurer continued: “Greater use of data and new business and payment models can lessen these strains by creating a tighter link between the interests of people who provide healthcare – doctors, hospitals, and clinics – and those who pay for it – payors, both public and private insurers.
“So-called payor-provider alignment would provide incentives for all parties to make healthcare more efficient.
“It can bring society meaningfully closer to tackling affordability today, shoring up accessibility and quality for future generations, and reducing the costs to society, like wastage and other externalities of the fee-for-service model,” it added.
Preferred provider panels
With its publication, AIA highlighted some of the elements which it believes are most in need of addressing within the region, such as ensuring patients avoid hospital stays when ambulatory care is more suitable.
It argued that if trends in other fee-for-service markets were similar in Asia then an estimated 25% of all healthcare costs in the region stemmed from waste.
This includes unnecessary surgeries and hospital stays, inappropriate use of antibiotics, and a lack of preventative care, among other factors.
“Payor-provider alignment would reduce such waste in healthcare and ensure more clinically appropriate and cost-effective care,” it said.
With new business models evolving including insurers, mostly in the US and Europe, taking ownership of many healthcare providers or linking-up with providers through joint ventures and commercial partnerships, it has taken action.
As a result, AIA said it was developing new ways of managing its relationships with providers based on its analysis of quality indicators and outcomes.
“Using this data – adjusted for differences in patient risk profiles – AIA can create panels of preferred providers that it can offer to its customers,” the insurer said.
“This enables customers to get access to more affordable and effective coverage. And providers in AIA panels benefit from increased volume and consistency on fees.”
Data and transparency
AIA argued data and transparency were critical elements of the operation to equalise the situation and that this would help weed out large variations in fees and charges for the same care or treatment.
It believes standardising how health data are recorded at a line level and shared among providers and insurers would be essential.
“That would allow all parties to analyse how care is delivered and find ways of improving efficiency, quality, and outcomes,” it said.
And transparency of the fees and charges assessed for treatments and procedures would be equally critical.
“AIA has found large variations in fees for drugs and procedures between similar facilities as well as insurers being charged more for the same items than a customer may pay out of pocket,” it said.
“Transparency would allow prices to have the signalling effect necessary for market efficiency. Patients could make more informed choices.
“Insurers could identify the most cost-effective routes to recovery, and also create incentives for preventative care.
“Transparency is especially important for smaller insurers that do not handle the volume of claims to perform meaningful data analysis on their own,” it added.
Multi-stakeholder approach
The insurer concluded by arguing that greater payor-provider alignment could bring benefits to healthcare systems, patients and providers.
However it acknowledged that the multi-stakeholder approach would be necessary and the task would still be a difficult path.
“Overhauling healthcare delivery and payment systems is no small feat,” it said.
“Reform must come about through a multi-stakeholder process that includes governments, payors, providers, and patients.
“If these groups work together on the basis that access to affordable healthcare is a public good, then patients will benefit through more affordable, more efficient, more patient-centric care, and society at large benefits through reduced aggregate spending and greater health equity.”
