The evolving model of virtual first health plans

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Tune in to PwC’s Next in health to hear PwC specialists discuss virtual first health plans.Topics include:

  • Benefits, services and impacts
  • Adoption
  • Creation
  • Educating and providing new marketing programs and strategies for payers and providers

Topics: healthcare, health services, strategy, digital transformation, deals transformation, health plans, innovation, providers, insurers, payers

Episode transcript

Find episode transcript below.


00:00:04:02 Welcome to HRIs Next in Health Podcast. I'm Jenny Colapietro, PwC’s Vice Chair for Health Industries, working across pharmaceuticals, MedTech, payers and providers.


00:00:15:15 And I'm Igor Belokrinitsky, a principal at PwC Strategy& where I get to work was leading health organizations on their strategies and operating models.

00:00:25:05 Today, we have three guests from our health services team, Rohit Nayak, who is a director who is focused on driving growth for his health services clients via digital and deals transformation.

00:00:36:07 We also have Sri Murthy, a director who works with Health Plans across the country on their growth and innovation strategy. And finally, we have Andy Jones, a senior associate who works with providers and with health plans on their growth and go to market strategy. Gentlemen, thank you for being with us today.


00:00:52:08 Thank you for having us, Igor.


00:00:54:00 We're excited about this. And Rohit, I'm thinking back to maybe a year ago when we were talking about how there was a lot of innovation happening on the care delivery side, new types of networks, new settings, new treatments, new health and wellness and prevention services that went along with the care delivery.

00:01:13:07 And so there was innovation happening on the provider side. We're talking about how health insurers could keep up with some of this innovation and make sure that the health insurance products are evolving in line with some of these delivery innovations.

00:01:27:05 And so we started talking about this notion of a virtual first health plan. And since then you have published a great article about it. And so that's what we're going to talk a little bit about today.

00:01:39:18 And so perhaps a good place to start is to tell me a little bit about what these virtual first health plans are, what they do? Why are we starting to see them?


00:01:48:22 Sure, no thank you Igor, I can take that. So this is overall an exciting time within health care, right. Especially with the higher adoption of virtual first approach. Then the next question is, how do you kind of take this concept to health plans?

00:02:03:05 And I start by saying this is not a new concept in terms of how we think about health plan product, you had virtual benefit in some health products probably three or four years back and agreed that they had got accelerated during pandemic.

00:02:17:00 But this model is different and here is how. So when I think about a virtual first health plan product, it’s basically a model where the first touch find for a member across the continuum of care and that includes starting from enrollment.

00:02:31:02 All the way to if member wants to talk to a call center agent and have them inquiry to receiving care board specialties and subspecialties and primary care, maintaining health care all the way to payment. The first touch point of all virtual and this is that I would say differs from our traditional health plan product.

00:02:48:16 As I would say, there are two components that make it unique. Number one, it creates an ecosystem of virtual benefits and virtual services that are tightly integrated with each other.

00:03:00:01 And you're not looking at 15 different point solutions or virtual benefit. Number two is, it creates an incentive model. Again across the stakeholder chain, not just members, but provider, vendors, etc.

00:03:11:02 Where a virtual first approach is the right way to go. And the reason, it differs some, I would say, of traditional health plan product is number one, as I think about health plan products virtual benefit.

00:03:22:01 The health plan product might have 15-20 different virtual benefits, but there's limited integration across all of them. Number two, as you think about from an employer or a member’s standpoint, lots of this data, meaning if you think about our current health plan products.

00:03:35:01 We have physical care, we have call centers, and top of that, we have virtual benefits, and at the end of the day, it all becomes addictive to the employer and it leads to a lot of medical cost inflation.

00:03:45:13 And even from a member standpoint, there's no clear path about why they should go with the virtual approach versus any other traditional care setting.

00:03:53:04 And I would argue that there's never been a better time for something like this to emerge from a member benefits standpoint. But I feel like right now the time is right and for two reasons, both supported by demand and supply, right.

00:04:07:04 If I think about demand, the medical cost inflation have been showing no signs of slowing down and employer specifically including other stakeholders when employees specifically have been getting the short end of the stick on this one.

00:04:19:08 And they would really appreciate something which does not impact experience and outcomes, but also is able to deliver something similar and even better at a lower cost.

00:04:29:13 Second piece as we think about adoption, adoption of virtual care has definitely picked up a lot over the last two years, and now you have members and stakeholders who really want something so that they can get services. I would say that the luxury of being at home and it’s no impact on their health as such.

00:04:47:04 And if you think about supply, I would say there's been a big change over the last few years that all these new health care condition health companies, you can actually deliver a virtual first health plan right now with the kind of technology innovation that has kind of gone on that additional health space.

00:05:03:12 So I would like to end with an analogy that I think a good analogy for this, as I would think about banking probably a decade back you had to go and deposit your checks or you need to kind of go to a bank branch to do any of those transactions.

00:05:16:05 Now you don't need to do any of that. And I would say to your earlier point, health plans have some catch up to do on that front.


00:05:22:22 Thank you Rohit. This is a very exciting development indeed. Sri when you think about it, who do you think are most likely to be the early adopters of a virtual first plan?


00:05:33:13 Thanks Jenny that's a great question. As you think about it, one of the positive unintended consequences of the pandemic was that it took away any doubt whatsoever that people had on virtual health being a cornerstone of health care delivery.

00:05:46:00 So irrespective of however you cut the data by age, geography, gender or income, you'll see that people love the virtual model and they have embraced it.

00:05:57:13 So from a health plan standpoint, as you think about it, it means it is applicable across lines of business. But there are some financial, operational and strategic nuances that will drive varying phases of adoption by lines of business.

00:06:12:01 We believe that we'll see commercials followed by Medicare Advantage and then individual and Medicaid lines of business adopting this model. Let me explain that a bit more, actually.

00:06:22:09 So as you think about commercial, particularly self-funded commercial groups are going to be most attracted to the value proposition of the virtual health model. This is because like Rohit said, these plans for higher convenience to the employees.

00:06:37:05 Because they drive better engagement between the caregiver and the patient. They offer significant potential to reduce the total cost of care and they close gaps in health equity.

00:06:47:13 In fact today, many self-funded commercial groups already offer a ton of benefits to their employee, all centered around the use of virtual delivery of care.

00:06:58:01 But the utilization of these services have been spotty because the virtual first plan integrates all of these benefits to create a seamless experience for the member. It is actually a win-win for the employers and employees.

00:07:10:17 As you think beyond commercial Medicare Advantage, what follows eventually, we have enough data to prove that seniors are increasingly tech savvy.

00:07:20:01 We know that regular touch points with the PCP are critical for this population. And we have also seen an increasing adoption of remote monitoring for chronic conditions in Medicare Advantage.

00:07:31:05 These trends lend itself naturally go virtual first model. However, there are some considerations to solve around complexity of patient conditions, regulatory hurdles, risk adjustment factor, economics and so on.

00:07:44:18 But overall, we see this segment as right for adopting this trend as well. Finally, as you think about individual and Medicaid lines of business, we see these as the last adopters.

00:07:55:02 And finally, this is because the members in these segments are less cost conscious as they're highly subsidized. And in general, there are bigger regulatory hurdles, operational complexities to solve, to make this model work for these lines of business.


00:08:08:24 So thank you for tackling that and appreciate you raising the point around the progress that virtual care made during the pandemic.

00:08:17:05 The other thing, of course, we learned is the need for flexibility and the need to switch from physical to virtual settings and back as the pandemic proceeded and as the regulations permitted it.

00:08:29:08 And so another nice thing about these virtual first products is they allow for that flexibility to make adjustments. And presumably we will then see much greater adoption down the road as well.

00:08:41:08 And so for health plans that are just now considering launching an offering like this or expanding an offering like this, what does it take to actually build a virtually first health plan?


00:08:54:12 So as we think about what to build and how to build, I think probably the first start your question you ran before that is who are you building this for and if they would be willing to buy.

00:09:05:02 And what I'm talking about, and Sri mentioned this before, like if you would think about self-funded employer, as I would say, the first clients to take this on, how do you actually create a differentiating value proposition for them so that they can adopt a virtual first health plan product without really compromising anything on employee abrasion or employing experience or even worse like health outcome.

00:09:27:06 And I think as they think about their value proposition, it centers around three things. Say number one, as I mentioned before is the cost piece of it. You have to prove that the virtual first model is a much more cost efficient solution.

00:09:39:01 I think there have been multiple studies around how the solution can potentially get to at least 15% lower medical cost if it runs efficiently1, like it should. Second piece, which they would really appreciate as not adding another layer of complexity which they already have.

00:09:55:19 So how can you prove that a virtual first health plan product would greatly reduce your complexity and really bring together all of these different virtual benefits together under one roof?

00:10:07:08 And instead of them having to integrate 15 different point solutions and last thing, which I think is the most important piece, which I mentioned before, that the employee experience and the outcomes that they would get out of it would be comparable and better than what they used to get before.

00:10:22:07 Now having said that, if I were a health plan product, you have, I would say the building blocks. But you need to have a different mindset as you're thinking about those building blocks. As I think about it, there are four I would say a big blocks that would kind of consider you the virtual first product. number one is a virtual first care model.

00:10:37:03 And the care model is how you would deliver care by stitching together different point solutions, different primary health care vendors, health and wellness vendors, etc. under one roof.

00:10:48:02 And from a member standpoint, they're just interacting with one point of contact. So how do you kind of create that virtual first care model across primary care and specialties and subspecialties.

00:10:58:15 Second piece of it is the network itself and I think about the network that two components. Number one is the virtual health network, which is the virtual network, which will be the first point of contact for members seeking care across primary care specialties and subspecialties.

00:11:14:01 And the second piece of it is, let's say a member needs to access a physical setting because you have to have that option, probably a wraparound network and wraparound, high performing networks.

00:11:23:02 I would say the best value is the highest quality and since it's a virtual first model, you don't have the luxury to kind of take an entire network and building to it because that would be cost prohibitive.

00:11:35:08 How do you kind of curate a network that fit for this product is an important thing. Third thing, which I think would make and break the fee for the advocacy piece, since it's a virtual first model, you really need members to have it advocate who is guiding the members, either via digital or other channels as they kind of leverage care.

00:11:57:04 And when they say guide us, answering their questions because there might be questions like how do I avail this benefit? And thinking about transparency, of course, how much would it cost if I would go to this outpatient setting for my MRI.

00:12:08:09 So all that stuff and building a deeper relationship with the member would be key for a strong advocacy model. I would say that it is a cornerstone to this product.

00:12:18:07 Lastly, which kind of support all the three I just spoke about it, the infrastructure and the infrastructure should be kind of capable of doing three things. Number one, since you have a lot of virtual benefits, it should orchestrate and integrate all these virtual benefits in a way that they're able to integrate together into the care model.

00:12:36:08 Second, from a member standpoint, there seamless and self care as to kind of navigate this different care setting. Number two is, as you can tell, that the key to the smart work is data to flow in a very seamless space.

00:12:50:01 So having that interoperable infrastructure where the client or the member data has been seamlessly transferred and even better is now that you have access to one of the benefits of having a virtual first model is you do have a lot of member impressions and you have a lot of data.

00:13:05:04 So how do you use this data to further drive member value rather than example identifying the high risk patients proactively or, you have a deeper understanding to member how do you navigate them to the best care setting that is probably closest to them.

00:13:18:01 And also offers them the most value would be a few things to think about. So overall, I think it will be quite a meaningful change in mindset and also definitely some investment. But our thesis is, it’s an upfront investment which will pay for value the year as going forward.


00:13:34:01 That's excellent. And you mentioned there's multiple ways of monetizing it from growth to getting to a better cost position as well. So that's great. Now we've talked a number of times about how care and coverage are moving to a new world where they're going to be provided not just by individual players but by entire ecosystems.

00:13:54:04 And within those connected health ecosystems, it seems like these virtual first health plans could serve an important role for aligning incentives and connecting the different participants.

00:14:05:12 So if you are indeed a participant of a health ecosystem, what does the emergence of these virtual first health plans mean for you? How should you interact with them Andy, any thoughts from you?


00:14:18:03 Yes, thanks, Igor. So the implications of the virtual first model really are far reaching. And while the products themselves are being built primarily to meet the needs of employers and members, multiple layers of the health care ecosystem are impacted, with the two biggest being providers and the payers themselves.

00:14:37:08 So providers should expect a higher share of virtual patients, which will affect both how the care is delivered and the actual business operations of the care delivery.

00:14:47:11 And from that care delivery perspective, physicians will need to get comfortable delivering high quality care virtually across specialties that might have historically skewed towards in-person models.

00:14:59:02 And further, physicians will need to refresh billing and coding practices for that increase in virtual visits. Providers should also think about reevaluating their value based care strategy and given the potential reduction in total cost of care from virtual first products, practices may look to take greater risk to share in those savings.

00:15:17:23 For payers, effective change management across a variety of different stakeholder groups will be really important to get the virtual first product off the ground. So first and foremost, they're going to need to communicate with network providers, help them understand what is changing.

00:15:33:04 What their options are to participate and help them educate on things like billing and coding practices that will need to be updated. Second, the payers will need to get sales channel partners on board.

00:15:44:03 So they'll need to make sure brokers and benefit consultants are educated not only about what the virtual first products are, but understand how they'll benefit and how they can help educate employer groups make the most effective decision for them.

00:15:58:04 And then finally, payers will need to create new marketing programs and materials so that the employers and members can really see the true value of such an exciting new product that really might be a new space for them to wrap their heads around.

00:16:10:06 And then beyond payers and providers, there's a host of other ecosystem players that will be impacted, such as digital health partners, other third party vendors and regulators like. And so really everyone in the health care ecosystem should consider how they're affected by virtual first products as they continue to grow and take hold.


00:16:29:04 And this seems like an exciting opportunity for a lot of different players in the health care ecosystem, as you outlined. Sri what kind of activity are we seeing today and where is the market headed?


00:16:40:05 Big question, Jenny. They've actually been seeing a lot of activity in the space of the last two years. If I had to use my crystal ball here, we believe that in the next few years, most plans, employers and members are going to seriously consider virtual first models as a viable option.

00:16:58:00 Today, most national plans have already implemented or are planning to implement a virtual first product in one line of business and in some select geographies.

00:17:08:07 As these plans gain more experience and adoption in that space and as we see more advancements in technology, they are likely going to expand this to more lines of business and regions.

00:17:20:05 They have also seen that some of the newer tech focused health plans have already launched their versions of virtual first products in the market. So in order to stay competitive, we expect that many more regional payers will enter the space over the next couple of years.

00:17:37:13 A number of factors will fuel this trend in this world, including one the unprecedented innovation on the virtual care delivery side, two favorable regulations and policies around these restrictions, and the reimbursement, reimbursement for consuming virtual services.

00:17:53:05 Three continued consumer demand for such products and four the need of lower cost of healthcare and close gaps in health equity. So overall, there is really no doubt in our mind that the virtual first health plan model is here to stay and to transform healthcare and make health care work for the consumer.


00:18:11:24 Thank you Rohit, Sri and Andy for joining us today. This has been really interesting to just learn about these virtual first health plans. And we appreciate you sharing with us today.


00:18:21:04 Thank you, Igor and Jenny, for having us. It was really exciting to talk about this topic and I look forward to many more such conversations.


00:18:28:04 Totally agree. Thank you Igor and Jenny, loved participating here today.


00:18:32:01 Thank you Igor and Jenny, this has been really great and I’m looking forward to talking to you next time.


00:18:36:13 And of course, we will link to the article that you've written on this topic in notes for this particular episode, for those of you who want more information and for more on these topics and other health industry insights driven by policy, innovation and care delivery changes, please visit our website at Until next time, this has been Next in Health.


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Jennifer Colapietro

Jennifer Colapietro

Cloud & Digital Leader, PwC US

Igor Belokrinitsky

Igor Belokrinitsky

Principal, PwC US

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