Instamed_The Payment Experience Consumers Want_White Paper

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New Expectations: The Payment Experience Consumers Want From U.S. Health Plans

Prepared for:

New Expectations: The Payment Experience Consumers Want From U.S. Health Plans May 2015


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TABLE OF CONTENTS EXECUTIVE SUMMARY .................................................................................................................................... 3

INTRODUCTION .............................................................................................................................................. 4

METHODOLOGY ........................................................................................................................................ 4

U.S. HEALTHCARE PAYMENTS LANDSCAPE .................................................................................................... 6

HOW U.S. CONSUMERS PAY MEDICAL BILLS ............................................................................................ 6

HEALTH BENEFIT ACCOUNTS .................................................................................................................... 7

THE NEW STAKEHOLDER .............................................................................................................................. 10

NEW EXPECTATIONS ..................................................................................................................................... 12

CONSUMERS EXPRESS A NEED FOR PAYMENT CONVENIENCE ............................................................... 12

CONSUMERS WANT TO UNDERSTAND EOBS.......................................................................................... 13

DEEPENING MEMBER ENGAGEMENT ..................................................................................................... 14

NEW RULES OF ENGAGEMENT ..................................................................................................................... 17

CONSUMER CONVENIENCE ..................................................................................................................... 17

TRUST ...................................................................................................................................................... 18

HEALTH PLAN RISK CONSIDERATIONS .................................................................................................... 19

BENEFITS OF EARLY ENGAGEMENT .............................................................................................................. 20

CONCLUSION ................................................................................................................................................ 21

ABOUT AITE GROUP ................................................................................................................................ 22

ABOUT INSTAMED .................................................................................................................................. 22

AUTHOR INFORMATION ......................................................................................................................... 22

CONTACT ................................................................................................................................................. 22

LIST OF FIGURES FIGURE 1: TOTAL U.S. CONSUMER MEDICAL BILL PAYMENTS BY CHANNEL .................................................. 6

FIGURE 2: TOTAL U.S. CONSUMER MEDICAL BILL PAYMENTS BY PAYMENT TYPE ......................................... 7

FIGURE 3: EMPLOYER-SPONSORED PRIVATE INSURANCE HEALTH BENEFIT ACCOUNT ENROLLMENTS ........ 8

FIGURE 4: HOW CONSUMERS PAY FOR OUT-OF-POCKET MEDICAL EXPENSES.............................................. 9

FIGURE 5: HOW MUCH CONSUMERS PAY FOR OUT-OF-POCKET MEDICAL EXPENSES .................................. 9

FIGURE 6: DO CONSUMERS WANT A SINGLE PLACE TO PAY ALL THEIR MEDICAL BILLS? ............................ 12

FIGURE 7: SHOULD HEALTH PLANS ALLOW MEMBERS TO MAKE ALL THEIR MEDICAL PAYMENTS? ........... 13

FIGURE 8: LEVEL OF EOB CONFUSION .......................................................................................................... 14

FIGURE 9: CONSUMERS EXPECT MEDICAL BILL PAYMENT ON THEIR HEALTH PLAN’S WEBSITE ................. 15

FIGURE 10: CONSUMER INSIGHT ON MEMBER PAYMENTS ......................................................................... 16

FIGURE 11: HEALTH PLAN MEMBERS PAYING ON WEBSITES ....................................................................... 18

LIST OF TABLES TABLE A: AMERICAN CONSUMER SATISFACTION INDEX SCORES, 2014 ....................................................... 11



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EXECUTIVE SUMMARY

New Expectations: The Payment Experience Consumers Want From U.S. Health Plans,

commissioned by InstaMed and produced by Aite Group, examines the case for commercial

health plans to offer members an online service through which they can pay all their medical

bills and, when applicable, monthly insurance premiums.

Key takeaways from the study include the following:

Consumer experience matters. More consumers indicate lower overall satisfaction

with their healthcare experience (70%) than they do with their retail (e.g., Amazon,

82%) and shipping (e.g., FedEx, 81%) experiences.

Health benefit account payments solve 13% of the problem. Health savings

accounts (HSAs), health reimbursement accounts (HRAs), and flexible spending

accounts (FSAs) usage is growing, but 87% of consumer medical out-of-pocket

payments were made using payment types not associated with a health benefit

account.

Consumers want more convenience. Health plans are positioned to deliver greater

member convenience; 78% of primary bill payers who bought coverage through

their employer and 84% who bought from an exchange attest that paying all their

medical bills on the health plan’s website is a service they want.

Payments are a health plan brand differentiator. Consumer appeal for a service that

consolidates all their medical bill payments is strong, as 86% of exchange-originated

members much prefer plans offering this service over plans that do not, and 74% of

consumers covered via their employers prefer the same.

Payment capabilities require security and compliance expertise. Payment Card

Industry Data Security Standard, Health Insurance Portability and Accountability Act,

and federal money movement regulations are just some of the considerations for

payment functionality implementation. Health plans need to understand the

impacts of security and compliance regulations on their build-versus-buy decision-

making processes.



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INTRODUCTION

Over the past two decades, U.S. consumers have been offered better ways to make payments in

a range of areas. On many occasions, they embraced these new payment methods in huge

numbers, rewarding the businesses offering them. In the ‘90s, U.S. consumers were provided

with debit cards, which quickly became mainstream. Skeptics who thought that U.S. consumers

would snub them in favor of their trusted credit cards were disappointed. Debit cards now

account for the majority of U.S. card transactions. As e-commerce took off in the late ‘90s,

skeptics thought little of PayPal, an obscure online payment method for eBay enthusiasts. A

decade later, it came to be viewed by major card networks and banks as a threat against their

business model. Meanwhile, consumers were provided with the ability to consolidate most of

their recurring bill payments in one place—bank websites. Today, online bill payment is one of

the most popular activities on banks’ websites and mobile applications, and it contributes to

customer retention.

In healthcare payments, consumers are supplied with limited solutions. When purchasing

individual insurance on an exchange, consumers might be offered a way to pay their premiums

online only to find out that they can’t pay their medical bills in the same place. Consumers

enrolled in healthcare spending accounts (HSAs, HRAs, and FSAs) may be able to make online

payments using only that account type. The vast majority of U.S. consumers lack a convenient

way to manage their healthcare bills, an inconvenience brought to even greater light due to

shifting U.S. demographics and a reliance on mobile devices, particularly among the growing

millennial segment. This limited payment functionality misses the mark for consumers who want

to conveniently pay through the channels most accessible to them (e.g., online and mobile).

In the following white paper, Aite Group examines the case for commercial health plans to offer

their members a single place to pay medical bills and, when applicable, insurance premiums. We

show the following:

Commercial health plans face an increasingly influential consumer.

Consumers exhibit strong interest in the concept of paying all their out-of-pocket

medical bills (and premiums, when applicable) in a single place via their health plan’s

website.

Early commercial health insurance companies adopting this payment approach

confirm consumers’ interest.

METHODOLOGY

Aite Group bases this white paper on its existing research, an independent analysis of an

InstaMed-commissioned online survey, conducted by Melior Group, of 1,000 U.S. consumers in

March 2015 (Consumer Healthcare Payment Survey), and third-party executive interviews.

Consumers qualified to participate in the study are 27 to 59 years old and enrolled in healthcare

insurance through an employer or a healthcare exchange. Consumers with an employer plan

through the municipal, state, or federal movement were excluded.



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In addition, qualified respondents either are the subscriber, who primarily decides which plan to

buy or shares this responsibility, or pay healthcare-related bills all or some of the time.

The data for the total sample has a margin of error of 3 points at the 95% level of confidence.

Where noted, Aite Group conducted statistical tests of significance among groups at the 95%

level of confidence.

This analysis focuses on three distinct groups of consumers:

Consumers who obtained healthcare insurance via an employer and review and pay

the bills all the time.

Consumers who bought healthcare insurance via an exchange, have either a sole or

partial role in selecting the plan, and review and pay the bills all the time.

Consumers who review and pay bills some of the time or are not involved in that

process.



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U.S. HEALTHCARE PAYMENTS LANDSCAPE

This section examines the payment types U.S. consumers use to pay medical bills and dives

deeper into a subset of U.S. consumers—health benefit account holders. The section concludes

with consumers’ perspectives on their ability to pay through their health plans.

HOW U.S. CONSUMERS PAY MEDICAL B ILLS

Consumers’ desire for convenient payment methods is reflected in their shift to digital channels.

U.S. healthcare consumers found alternatives to the U.S. Postal Service as their primary medical

bill payment channel. In 2013, U.S. consumers mailed 37% of U.S. medical bill payments, in

contrast to 50% in 2010. Billers and bill payment vendors contributed heavily to this steep

decline, expanding the presence of digital (consumer self-service) payment channels. Two

examples point to this digital explosion from 2010 to 2013.

More consumers stopped mailing checks as a precursor to Automated Clearing

House (ACH) enrollment, instead opting to enroll online.

More consumers stopped submitting written credit or debit card information with

their bill payment coupon, instead opting to pay directly online.

This shift to online and mobile is reflected in an increased bill volume for the two combined,

from 14% of total medical bill volume in 2010 to 22% in 2013. Online volume is driving the

channel, as volume rose from 13% in 2010 to 20% in 2013; mobile, despite its universal

consumer access, is early in its role as a medical bill payment channel and increased from 1% to

2% over that same time span (Figure 1).

Figure 1: Total U.S. Consumer Medical Bill Payments by Channel

Source: Aite Group

3%

4%

13%

29%

50%

2%

3%

2%

20%

36%

37%

Mobile

In-person

Phone

Online

Direct debit

Mail

Total U.S. Consumer Medical Bill Payments by Channel(N=1,242 consumers)

2013 (620 million bills)




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Digital channels lead the shift in payment types, and an increased volume of electronic

payments used to pay medical bills further reflects consumer convenience. More consumers are

using electronic payment types more relevant to them, at the expense of paper check payments.

The percentage of check payments used to pay medical bills decreased from 53% in 2010 to 50%

in 2013, a trend expected to continue as consumers seek more convenient electronic ACH and

payment card alternatives to paper checks (Figure 2).1

Figure 2: Total U.S. Consumer Medical Bill Payments by Payment Type

Source: Aite Group

HEALTH BENEFIT ACCOU NTS

Many commercial health plans strongly consider catering to members through health benefit

accounts as they devise payment strategies. While health benefit account membership and

account spending are on the rise, their overall impact on payments is small. As a result,

commercial health plans should consider these members’ payment needs as a component of

their overall payment strategy but should not consider catering to this lone segment as they

devise their approaches.

Most health benefit account enrollments occur through an employer or group insurance

product, yet HSAs can be sold as a retail consumer product. Examples of HSA retail channels

include public exchanges, bank branches, and health plans themselves. While the retail market

holds promise, employer-sponsored health benefit accounts represent a stronger segment to

assess market impacts.

1. See Aite Group’s report How Americans Pay Their Bills: Sizing and Forecasting Bill Pay Channels and

Methods, 2013-2016, September 2013.

7%

11%

15%

13%

53%

3%

7%

12%

14%

14%

50%

Money order

Cash

Debit card

Credit card

ACH

Check

Total U.S. Consumer Medical Bill Payments by Payment Type (N=1,242 consumers)



http://aitegroup.com/report/how-americans-pay-their-bills-sizing-and-forecasting-bill-pay-channels-and-methods-2013-2016

http://aitegroup.com/report/how-americans-pay-their-bills-sizing-and-forecasting-bill-pay-channels-and-methods-2013-2016



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Consumer enrollment in health benefit accounts (HSAs, HRAs, and FSAs) is gaining traction at a

compounded annual growth rate of 9% from 2013 through 2017. As a point of comparison, there

were 66 million consumers with health benefit accounts compared to 143 million with PayPal

accounts at year-end 2013.

In 2013, 40% of the U.S. population enrolled in an HSA, HRA, and/or FSA benefit account, a

figure expected to increase to 45% in 2015 and march toward 55% in 2017 (Figure 3).

Figure 3: Employer-Sponsored Private Insurance Health Benefit Account Enrollments

Source: Aite Group

Consumers’ spending from these accounts is on the rise, yet consumers spend significantly more

using other payment forms (credit card, debit card, checking account, etc.). This point further

illustrates that health plans need to accept multiple payment types, particularly in the growing

online and mobile bill payment channels.

Out-of-pocket payments made outside a health benefit account constituted 87% of

all U.S. consumer out-of-pocket payments in 2013, compared to 13% of payments

made through a health benefit account (Figure 4).

Out-of-pocket payments made outside a health benefit account totaled US$294

billion in 2013 and are expected to increase to US$301 billion in 2017 (Figure 5).2

2. See Aite Group’s report U.S. Consumer-Driven Healthcare: Health Benefit Account Market Sizing,

November 2013.

60%

57%

55%

51%

44%

40%

43%

45%

49%

55%

2013

e2014

e2015

e2016

e2017

Percentage of U.S. Population With Employer-Sponsored Private Insurance Enrolled in a Health Benefit Account, 2013 to e2017

Not enrolled in HSAs, HRAs, or FSAs Enrolled in HSAs, HRAs, or FSAs

http://aitegroup.com/report/us-consumer-driven-healthcare-health-benefit-account-market-sizing



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Figure 4: How Consumers Pay for Out-of-Pocket Medical Expenses

Source: Center for Medicare and Medicaid Services, Aite Group

Figure 5: How Much Consumers Pay for Out-of-Pocket Medical Expenses

Source: Aite Group

87%

86%

84%

83%

81%

13%

14%

16%

17%

19%

2013

e2014

e2015

e2016

e2017

How Consumers Pay for Out-of-Pocket Medical Expenses, 2013 to e2017

Out-of-pocket paymentamount made outsidea health benefit account

Out-of-pocket paymentamount made usinga health benefit account

$294

$289

$291

$295

$301

$44

$49

$54

$61

$71

2013

e2014

e2015

e2016

e2017

Total Health Benefit Account Spend, 2013 to e2017 (In $US billions)

Out-of-pocket paymentamount made outsidea health benefit account

Out-of-pocket paymentamount made usinga health benefit account



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THE NEW STAKEHOLDER

Commercial health plans must adapt to a market in which consumers exhibit stronger buying

power. Consumers increasingly influence employers’ healthcare benefit purchase decisions and,

in a growing faction of cases, buy direct from health plans.

Until recently, U.S. private health insurance was essentially a business-to-business (B2B) sale,

with commercial health plans selling group plans to employers directly or via brokers. While

employer-sponsored coverage is likely to remain the dominant way for U.S. consumers to obtain

private health insurance, commercial health plans must brace for an expanding business-to-

consumer (B2C) sales approach in both the individual and group markets.

In 2013, commercial health plans gained new individual market distribution channels as the

Affordable Care Act introduced public exchanges (i.e., e-commerce websites where consumers

shop for individual private health insurance). Health plans saw expanded market opportunities

and, with that, intense competition in the pursuit of new members. The Kaiser Family

Foundation estimates that 15.5 million people had individual insurance in 2014, obtained on and

off public exchanges, up from fewer than 10.6 million in 2013.3

In the group market, commercial health plans’ new distribution channels emerge as more

employers embrace or plan to embrace private exchanges over the next few years. Similar to

public exchanges, commercial health plans participate in private exchanges through which

employers allow employees to pick and choose among several insurance companies and plans

(e.g., a multicarrier private exchange). Various employer surveys suggest that between one-fifth

and one-third of U.S. employers could embrace private exchanges over the next few years,

allowing millions of employees to shop among several insurance companies.4

Meanwhile, U.S. employers compete for talent as unemployment drops and employee

demographics shift. While employers seek to control their healthcare costs, such as by offering

high-deductible plans, they continue to view benefits as a way to attract and retain talent.

Employers—stuck between a rock and a hard place when it comes to reining in costs and

supporting employees—are set to pay greater attention to employee feedback regarding the

overall health plan experience. In years to come, even if the selection of a plan remains with the

employer, commercial health plans will have to tune in to the consumer voice.5

3. Larry Levitt, Cynthia Cox, and Gary Claxton, “Data Note: How Has the Individual Insurance Market

Grown Under the Affordable Care Act?” Kaiser Family Foundation, updated May 12, 2015, accessed on April 28, 2015, http://kff.org/health-reform/issue-brief/data-note-how-has-the-individual-insurance-market-grown-under-the-affordable-care-act.

4. Alex Alvarado, Matthew Rae, Gary Claxton, and Larry Levitt, “Examining Private Exchanges in the Employer-Sponsored Insurance Market,” Kaiser Family Foundation, September 23, 2014, accessed on April 28, 2015, http://kff.org/private-insurance/report/examining-private-exchanges-in-the-employer-sponsored-insurance-market/.

5. “Tackling the Tough Questions: A Review of Employers’ Health Benefit ’Pain Points’ and Private Exchanges,” The Alliance, November 2014, accessed on April 28, 2015, http://www.nebgh.org/resources/Tackling%20the%20Tough%20Questions.pdf.

http://kff.org/health-reform/issue-brief/data-note-how-has-the-individual-insurance-market-grown-under-the-affordable-care-act

http://kff.org/health-reform/issue-brief/data-note-how-has-the-individual-insurance-market-grown-under-the-affordable-care-act



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Health plans face the challenge of shifting a B2B-dominant culture toward a more B2C one. This

shift presents massive implications to the type of user experience health plans must deliver. In

software speak, there is an abysmal gap between B2B software companies’ investments in the

user experience versus B2C software companies’ investments. A study on this topic points out

that consumer applications average two times more user friendly than solutions designed for the

enterprise.6 While commercial health plans are not software firms by nature, they do provide

websites and other user interfaces.

Consumers’ experiences in unrelated sectors influence their view of health insurance’s

convenience. It does not matter to consumers that a health insurance company is not a

technology firm at its core. Consumers model their user experiences off Apple, Amazon, Netflix,

FedEx, and now Uber. As a result, consumers are likely to compare their health plan website

experiences with those they have when transacting on Amazon or shipping and tracking the

status of a package via FedEx. To say the least, the comparison is humbling (Table A).

Table A: American Consumer Satisfaction Index Scores, 2014

Health insurance Internet retail (e.g., Amazon) Shipping (e.g., FedEx)

Ease of submitting a claim

75 Ease of checkout and payment process

87 Ease of tracking shipment 90

Timeliness of claim processing

74 Ease of navigation 84 Timeliness of delivery 87

Ease of understanding insurance statements

73 Clarity and usefulness of product description

81 Speed with which purchase or other transaction was completed

86

Website satisfaction 71 Site performance 83 Website satisfaction 83

Call center satisfaction

68 Helpfulness of customer support (live chat, help pages, or call center)

79 Courtesy and friendliness of in-store staff

88

Overall score 70 Overall score 82 Overall score 81

Source: 2014 American Consumer Satisfaction Index

6. Jeff Sauro, “6 Differences Between B2B And B2C Usability,” MeasuringU, May 5, 2014, accessed on

April 28, 2015, http://www.measuringu.com/blog/b2b-usability.php.



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NEW EXPECTATIONS

This section examines whether consumers want payment convenience and, if so, what role the

health plan would play. Next, it delves into the level of confusion consumers have around the

explanation of benefits (EOB) and what they owe to the provider. Finally, the section closes with

actions health plans can take to deepen member engagement through payments.

CONSUMERS EXPRESS A NEED FOR PAYMENT CONVENIENCE

The notion of paying all medical bills in one place resonates with consumers, especially those

who are the primary medical bill payer. Of the primary bill payers, 76% of those who bought

coverage through their employer wish they could pay all their doctor, hospital, and other

healthcare provider bills in one place, compared to 82% of primary bill payers who bought

coverage via a public exchange (Figure 6).

Figure 6: Do Consumers Want a Single Place to Pay All Their Medical Bills?

Source: Consumer Healthcare Payment Survey, March 2015

Consumers connect with the idea of paying all their medical bills in a single experience, and

commercial health plans act as destination websites for members and stand to play a large role

in this service, given their ties to the root of an eventual consumer payment: the actual medical

claim. Plans extending their member claims services through to member payment resonates

with both primary bill payers and those who are not responsible for bill payments (e.g., may look

to health plan websites for benefit coverage). Seventy-eight percent of primary bill payers with

employer-based coverage agree that health plans should allow members to make all their

healthcare payments in once place, as do 84% of primary bill payers who bought coverage from

an exchange and 77% of non-primary bill payers (Figure 7).

76%82%

69%

24%18%

31%

Plan through employer/primarybill payers (n=647)

Plan via an exchange/primarymedical bill payers (n=151)

Not primarybill payers (n=202)

Q. I wish I could pay all of my healthcare bills, such as for doctors, hospitals, and other medical providers, all in one place.

Agree (includes strongly agree) Disagree (includes strongly disagree)



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Figure 7: Should Health Plans Allow Members to Make All Their Medical Payments?


CONSUMERS WANT TO UNDERSTAND EOBS

Consumers want to understand their medical bills, yet they express frustration when it comes to

understanding how much they owe. The healthcare industry is not early in addressing this

confusion. Whereas consumers reap the benefits of non-healthcare retail brands’ investment in

an easy bill presentment and payment experience, consumers pine for a less confusing and more

actionable healthcare experience.

Consumer confusion with health plan EOBs is quickly turning into frustration in the marketplace.

As consumers’ out-of-pocket costs grow, they need more insight into their costs and their

available benefits, but consumer frustration with the EOB builds because a healthcare provider

bill is actionable. The consumer’s expectations are clear: read the bill and immediately decide to

pay it or not. Consumer expectations around the EOB are murkier, and since the consumer

receives the EOB before he or she receives the bill, it is easy to see why confusion and frustration

exist.

An EOB asks a consumer to sort of take action yet not really take action. The consumer is told he

or she owes someone, but because this document is processed before the bill, he or she must

wait for the provider’s bill. It taxes the individual’s memory to expect a bill from the provider and

mentally note that he or she will have to pay it. Despite the common perception that EOBs can

be quickly tossed aside, they weigh on many consumers’ minds. Commercial health plans are

uniquely positioned to lessen EOB confusion and present this information in a simplified, digital

manner via the plan’s website, which is easily consumable by members.

Consumers express frustration with the information presented on the EOB, as 50% of consumers

who signed up via a health exchange and 45% of those enrolled via their employer agree or

strongly agree that they are confused by their health plans’ EOBs (Figure 8).

78%84%

77%

22%16%

23%




Q. Health insurance plans should allow members to make all of their healthcare payments in one place.




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Figure 8: Level of EOB Confusion


DEEPENING MEMBER ENGAGEMENT

Health plans own a unique opportunity to align their member payment offerings to members’

other retail experiences because of their relationships with the member and their roles in claims

processing. Most must invest in robust digital capabilities, however, which leads to presenting

EOB information in a less confusing manner, as 47% of all primary bill payers indicate (Figure 8).

Consumers express strong interest in engaging health plans in a retail-like website experience,

and health plans that do so can build deeper engagement across the following important

member services:

Increasing the usefulness and clarity of the insurance product description is critical,

as 97% of primary bill payers expect to check benefits to which they are entitled

under their insurance plan.

Increasing the ease of tracking a claim is necessary, as 96% of primary bill payers in

group coverage attest.

Increasing the simplicity of EOB information and making that simpler EOB available

for viewing are noted as desirable by 95% of employer-covered primary bill payers.

Offering a single place to pay all their medical bills connects with 87% of primary

group-covered consumers, a staggering number given that this capability is not

readily available today, as are the aforementioned services, which most consumers

typically associate with a health plan (Figure 9).

45%50% 51%

55%50% 49%




Q. I am very confused by the “explanation of benefits” statements that I receive from my health insurance plan, that is, the statements that show how much of the care received is covered by my health insurance plan

and how much is owed by the patient.




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Figure 9: Consumers Expect Medical Bill Payment on Their Health Plan’s Website


Primary bill payers and those who are not paying the bills state that the ability to make

payments via a health plan’s website is highly important. These same consumers relate to the

concept of and value for health plans enabling member payments, a service allowing members

to pay all their medical providers for their portion of the claim responsibility.

Individuals in charge of paying medical bills (84% of those in employer coverage and

89% enrolled through an exchange) assert that the ability to make payments

through a health plan’s website would simplify their healthcare bill paying.

Primary bill payers who got coverage via their employers and those who bought a

policy via an exchange both think that health plans should offer payment capability

to all of their members (83% and 89%, respectively).

73%

81%

91%

92%

92%

94%

93%

96%

95%

89%

92%

97%

97%

97%

97%

99%

78%

87%

95%

95%

95%

96%

97%

97%

Make payments to your health insurance plan(e.g., monthly premiums)

Make payments to providers, including doctorsand hospitals, for out-of-pocket costs

Review the formulary (that is, the prescriptiondrug coverages)

Seek health/medical information and advice

View EOBs, that is, the statements that showhow much of the care received is covered byyour health insurance plan and how much is

owed by the patient/member

View status of medical claims

Find doctors, hospitals, urgent care centers,medical testing sites, etc., that participate in

your health insurance plan network

Check benefits to which you are entitled underyour health insurance plan

Q. Let’s say a health insurance plan was creating a website for its members. How important would it be for you to be able to do each of the

following through the website? (Percentage who say it's important to very important)

Planthroughemployer/primary billpayers(n=647)

Plan viaanexchange/primarymedicalbill payers(n=151)

Notprimarybill payers(n=202)



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Consumers find payment capability appealing, as 86% of exchange-originated

members are highly supportive and much prefer to select a plan that offers the

service over those that do not, and 74% of consumers covered via their employers

view the ability to make payments as a key brand differentiator (Figure 10).

Figure 10: Consumer Insight on Member Payments


71%

81%

79%

86%

89%

89%

74%

83%

84%

If I had to pick a new health insurance plan, Iwould much prefer to select a plan that offers

member payments

Health insurance plans should offer memberpayments as a payment service to all of their

members

Member payments would simplify healthcare billpaying

Q. Please rate your agreement with these statements. (Percentage who agree or strongly agree)

Planthroughemployer/primarybill payers(n=647)

Plan viaanexchange/primarymedicalbill payers(n=151)

Notprimarybill payers(n=202)



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NEW RULES OF ENGAGEMENT

Arguably, bill payment is the most lasting interaction consumers have with retail brands. Health

plans need to engage consumers differently and in the process deliver increased convenience

and trust. This section examines ways to do that and then discusses top-of-mind risks for health

plans bringing a bill payment service to market.

CONSUMER CONVENIENCE

Most consumers want their personal preferences accommodated on two levels: They want to

pay where they want to pay (and, if applicable, pay as many bills as they can there) and use the

payment type of their choice.

W H E R E T H E Y W A N T T O P A Y

As previously discussed, consumers want and expect health plans to offer a service through

which they can pay all their medical bills. Some commercial health plans do provide a way for

members enrolled in health benefit accounts to pay medical bills. Not only does this limit

payment functionality to a small percentage of consumers, but the payment capability is

typically not integrated into the health plan’s website, so the experience is very disjointed.

Unfortunately, this limited payment capability is not good enough. Most commercial health

plans do not offer member bill payment, and for many that do, usability features tend to be

poor, especially when consumers compare them to non-healthcare Web experiences.

The limited number of health plans offering centralized bill payment capabilities and the

likelihood that consumers will experience usability issues result in very few consumers coming to

the commercial health plans’ sites to pay medical bills. Only 3% of primary bill payers enrolled

through their employer state making payments to providers for their out-of-pocket costs is their

primary activity on their health plan’s website (Figure 11).



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Figure 11: Health Plan Members Paying on Websites


H O W T H E Y W A N T T O P A Y

Consumers want to pay their medical bills through their health plan website (87% of primary bill

payers), but most cannot. This is a sign they are inconvenienced in the current market. Health

plans developing this service relieve this pain point and allow members to access it via their

preferred Web-enabled device (personal computer, mobile phone, or tablet) are now engaging

that member very differently. Health plans accomplish deeper engagement by supporting the

acceptance of multiple electronic payment options (87% of total out-of-pocket spend) above and

beyond health benefit accounts (13% of total out-of-pocket spend; Figure 4).

TRUST

Most of the time, commercial health plans overlook the need to roll out a well-integrated and

thoughtfully designed user experience. Most consumers don’t see EOBs spelled out in plain

English, which should clearly outline what the plan covered and what the member owes in a

consumer-friendly display.

Consumers want to understand the EOB statements they receive, but almost five out of every 10

consumers are confused by them. In addition, members do not receive FedEx-like updates on

claims’ processing status. Consumers want to view a bill they trust enough to pay and want a

convenient way to execute that payment. Health plans that simplify EOB information and

present it in a more consumer-friendly manner again remove a trust barrier and engage with

their members differently.

3%

3%

7%

3%

23%

15%

10%

35%

1%

5%

35%

5%

6%

12%

4%

30%

2%

2%

2%

3%

14%

15%

29%

32%

Review the formulary (that is, theprescription drug coverages)

Seek health/medical information and advice

Make payments to your health insuranceplan

Make payments to providers for out-of-pocket costs

View status of claims

Check benefits to which you are entitledunder your health insurance plan

View EOBs

Find medical providers

Q. You indicated that you have done the following on your health insurance plan website. Which of these activities do you do most often?

Plan throughemployer/primary billpayers (n=647)

Plan via anexchange/primarymedical bill payers(n=151)




19

HEALTH PLAN RISK CONSIDERATIONS

Commercial health plans considering payment solutions must be prepared to understand the

evolving security, compliance, and regulatory environment related to consumer payments.

In light of the increasing risk of security breaches and the brand damage associated with their

impacts, heath plans must weigh the risks of building a payments solution in-house or

outsourcing to vendors with payments expertise. In either case, no organization is guaranteed

immunity from breaches, but health plans must consider strategies to reduce or eliminate the

processing and storage of consumer bank account and payment card information. The downside

risk to brand reputation and post-breach expense to fix systems and ensure members have the

necessary monitoring and protection tools in place is significant, as Target Corporation, Home

Depot, and other retail brands may attest.

Most health plans have increasing risk in terms of their members’ personal health information

and financial data within their current premium collection programs. Health plans must ensure

that internal processes and external vendors involved in payments are well-vetted from financial

industry and healthcare industry controls. Health plans will incur a significant cost to become

compliant and maintain compliance across Payment Card Industry Data Security Standards (PCI-

DSS), and most payment processors and banks are not equipped to handle personal health

information. In addition, health plans must navigate unfamiliar and complex financial industry

regulations including anti-money laundering (AML) regulation, Office of Foreign Asset Controls

(OFAC) sanctions, and federal and state Money Transmitter Licensing (MTL) and regulations.

The risks of doing nothing are significant, however, as premium payment must be collected,

particularly on the public exchanges, and health plans risk being disintermediated by other third-

party payment tools.



20

BENEFITS OF EARLY ENGAGEMENT

Many consumers are not in the business of developing products to make their own lives easier,

and there is also a difference between what consumers say they do and what they actually do. A

leading commercial health plan implemented a consumer payment solution in July 2013,

however, and the following corroborates key findings from the consumer healthcare research.

Consumers want payment capabilities, and demand continues to increase: 21

months after rollout (April 2015), there were over 65,000 first-time users.

Consumers want their health plans to be where they are, namely, on mobile devices,

and this health plan sees consistent mobile payment growth; the percentage of

mobile payments as a total of all payments increased 54% between November 2014

and March 2015.

Consumers want a retail-like experience, and this health plan rolled out a major

upgrade to its website, including improved ways for members to identify providers,

get information on their performance, obtain customized cost estimates, and view

how the financial responsibility is split with the insurer.

Consumers want to be less confused, and this health plan changed its approach to

presenting claims (EOBs) and explains them in plain English.

Consumers will use the service if available, and this health plan’s year-over-year

(2014 and 2015) growth in Q1 payment volume was 84.4%.

Members consistently rate payment functionality high in satisfaction in member

surveys.

Health plans struggle with competing priorities, like any business. As health plans look to

prioritize the demands of consumerism, they should not overlook online payment technology as

one path into deepening member engagement.



21

CONCLUSION

Commercial health plans should make no mistake: Great rewards go to those with a

relentless focus on better user experience. The reverse is true, too. As consumers

become key stakeholders driving health plan selection, their needs for greater

convenience are inevitably going to impact how insurers compete.

Regardless of how consumers are obtaining insurance today, through their employer

or through an exchange, the demand for payment capabilities through a health plan

is high. The convenience of one place to make payments, stored payment methods

in a digital wallet, and a single view of payment history doesn’t just resonate with

today’s consumers, it’s an expectation based on the Melior Group Consumer

Healthcare Payment Survey.

Healthcare benefit account usage will grow over the next several years, but it will

continue to only represent a small percentage of overall healthcare out-of-pocket

spending (projected to be less than 20% of overall spend in 2017). Health plans have

to look at the needs of their entire membership base when planning for payment

capabilities.

Health plans must pursue payments with security and compliance at top of mind.

Weighing the time needed to develop in-house payment security and compliance

expertise, certify in-house systems and applications, and ensure partners’

compliance against the cost to outsource to vendors delivering the integrated

payment capabilities in a vetted secure and compliant manner is critical. The

urgency of this exercise is driven by the overall objective: engaging with members in

more relevant and deeper ways to ensure retention and growth of new business.

Health plans are uniquely positioned to educate and solve member confusion

around the EOB; consumers want to view a bill they understand and trust enough to

pay. Health plans can deliver on that.



22

ABOUT AITE GROUP

Aite Group is an independent research and advisory firm focused on business, technology, and

regulatory issues and their impact on the financial services industry. With expertise in banking,

payments, securities & investments, and insurance, Aite Group’s analysts deliver comprehensive,

actionable advice to key market participants in financial services. Headquartered in Boston with

a presence in Chicago, New York, San Francisco, London, and Milan, Aite Group works with its

clients as a partner, advisor, and catalyst, challenging their basic assumptions and ensuring they

remain at the forefront of industry trends.

ABOUT INSTAMED

The InstaMed Network simplifies every healthcare clearinghouse and payment transaction for

providers and payers, all in one place. InstaMed enables providers to collect more money, get

paid faster, and reduce the time and costs to collect. InstaMed allows payers to cut settlement

and disbursement costs with electronic payments and facilitate consumerism for their members.

InstaMed’s single, integrated network simplifies the healthcare payments process and reaches

over two-thirds of the market in the United States, including hospitals, practices/clinics, billing

services, practice management systems, and healthcare payers. Visit InstaMed on the Web at

www.instamed.com.

AUTHOR INFORMATION

Mike Trilli +1.617.398.5058

[email protected]

Gwenn Bézard +1.617.398.5041

[email protected]

Judy Fishman +1.617.338.6067

[email protected]

CONTACT

For more information on research and consulting services, please contact:

Aite Group Sales +1.617.338.6050

[email protected]

For all press and conference inquiries, please contact:

Aite Group PR +1.617.338.6050

[email protected]

For all other inquiries, please contact: [email protected]

mailto:[email protected]






Documents

Instamed_The Payment Experience Consumers Want_White Paper