By TRACEY DRURY
tdrury@bizjournals.com | 716-541-1609

With health-care costs continuing to increase along with the incidence of chronic disease, finding ways to encourage people to take a more active role in maintaining their health is a major focus for insurers as the calendar flips to 2012.

Executives at the three major health plans in Western New York say they expect to see more of the same in the new year as they work to boost "consumer engagement" and the difficult process of connecting the dots for individuals about how their actions can make a real difference in controlling the cost of health care.

All three insurers - BlueCross BlueShield of WNY, Independent Health and Univera Healthcare - say it's getting tougher to maintain programs while keeping premium increases to a minimum.

"There's all this myth and fantasy that people have about the industry, that we are somehow hoarding roomfuls of money and trying to squeeze more out of the providers. It's not true," says Alphonso O'Neil-White, president and CEO of HealthNow Inc., parent company of BlueCross BlueShield of WNY.

"The biggest challenge for us overall is to maintain our core business while at the same time changing and innovating to adjust to the coming changes in the marketplace," he says. "It's a huge, huge challenge for any organization. You've got to try to stay the same and change at the same time."

The next two years will be busy ones for insurers preparing for major changes that come onboard in 2014. They include the implementation of state insurance exchanges that will see insurers selling their plans to individual consumers versus employers, and the continued shift from group HMO plans to self-insurance plans - a throwback to traditional insurance plans from decades ago. And both of those shifts also result in less revenue for insurers.

"The individual consumer is going to be one of our primary purchasers again, like in the old days," O'Neil-White says. "We're going to be experiencing significant challenges because of these shifts in the marketplace. We've also got to do work in other segments of the business."

BlueCross BlueShield is expanding access for members to analytical tools and changing how it offers customer service offerings to prepare for some of those changes. It also is talking with providers to develop new partnerships and enable changes to the delivery system.

It's also expanding its national presence and offering a more diverse group of products to employers around the nation, says Cheryl Howe, chief operational officer. Getting a bigger foothold in the individual market through the exchanges is a huge piece of that.

"We have not been able to play in the individual market so that is a real potential for us," Howe says. "Being able to go out and sell to the individual is something to look forward to."

Dr. Michael Cropp, CEO of Independent Health, says the biggest challenge is to achieve the "triple aim" of improving quality, better access to care and lower cost trends.

"That's what we're after as a country, but it's been elusive," he says. "The cost of health care is beginning to squeeze our ability to make investments."

And that's not a Western New York problem alone, but one that is plaguing the entire industry across the country. The problem goes beyond escalating costs, with uncertainty about federal health reform and how some pieces will actually be implemented, leaving providers and insurers unsure how to proceed.

A good example is the state health exchanges, which remain a question mark as state health officials and legislators continue to hash out the details about how exactly they will work.

"We have federal legislation that could be changed, and state legislation that comes behind - some of which hasn't even been passed yet," Cropp says. "Think about it: 2014 is only two years away. We're preparing for an exchange environment when the state hasn't even passed the enabling legislation."

Without that legislation or even a framework for how it might work, insurers are left to do scenario planning, with the hope that one of the scenarios will come close enough to match up with whatever the state eventually outlines. In preparation, Independent Health is looking at its distribution channels, with an eye toward expanding what's delivered electronically versus face-to-face.

The company is exploring different payment models with providers, and is in the midst of a computer system conversion that will enable it to reward results versus volume. That includes expansion of an e-visit pilot program with Buffalo Medical Group to other practices in 2012.

"We're paying physicians for results and activities that produce the desired results that haven't been reimbursed before, such as time on the telephone counseling the patients or using nurses to educate patients - things we know make a difference, but there's no billing code," Cropp says.

Art Wingerter, president of Univera Healthcare, points to its ActiveUnivera product as a key ingredient for pushing the consumer engagement piece that's vital to bringing down health-care costs. The company also recently brought its disease and case management division back in-house to help create a closer relationship with members who are at risk or already diagnosed with chronic illness.

"If we see through claims data there was an episode of care, then we can immediately react and contact them and have outreach to that member," Wingerter says.

Though insurers and providers may have been more willing in the past to wait for patients to come in with problems, today's health-care system has to be more proactive and work to prevent those outcomes.

"Members need to engage in conversation and get a greater understanding of their condition and the management of the condition.
Wingerter says. "When they choose not to, that translates generally into a more costly and difficult result."