How to improve coverage literacy: Five member-focused strategies

She stared at the bill in her hand, dumbfounded.

A few months ago, her husband had gotten sick, so sick in fact that the community hospital that had been treating him recommended a transfer to a nearby teaching hospital or his life could be in danger, so they put him into an ambulance and transported him 10 miles away, where, after six weeks of inpatient treatment and many long nights of worry, he finally got well enough to return home. And then the bills started coming: $1,500 for each of the two hospitals where he had been treated. $3,000 for medications for which the insurance company denied coverage because they were administered without pre-authorization. And nearly $2,000 for transport from one hospital to the other that the insurer also denied because the “patient was ambulatory and able to sit upright.”

“But we have insurance,” she later explained. “I thought all of this was covered.”

Unfortunately, stories like this one of unexpected out-of-pocket costs and complex pre-authorization processes are ubiquitous among health plan members. ZS recently conducted a study aimed at understanding the key drivers of customer experience, uncovering that this disconnect between the plan and its members over coverage is one of the key reasons for member dissatisfaction. At the root of this disconnect is consumer lack of awareness of coverage and benefits—what we’re referring to as a lack of “coverage literacy.”

Simply stated, healthcare is complex, so plans are complex. Therefore, while the insurer may be following by the rules outlined in the plan information, the member may not always have a complete understanding of those rules. Without this understanding, members just don’t know what the insurance they purchased does (and does not) cover, leading to sticker shock and plan dissatisfaction.

Our research uncovered three critical gaps in member knowledge that contribute to a rampant lack of coverage literacy.

Going into our interviews with customers about the member experience, we anticipated that they would prefer plans that allowed them to tailor coverage to their unique needs, but their responses surprised us a bit. When asked if they would prefer the flexibility to pick from an a la carte menu of coverage components rather than a pre-configured coverage plan, the majority of respondents said no.

Why? Contrary to our assumption that a custom plan will be appreciated, consumers told us they preferred the pre-configured plan because they don’t feel confident in picking the right coverage for themselves. This response indicates that consumers do not have sufficient knowledge of the various coverage options to be able to determine the best options to address their own needs.  

Both the healthcare and insurance industries are rife with acronyms, abbreviations and technical jargon that make their way into member communications. The problem? Most members are not part of either industry and therefore do not “speak” this language. As a result, members do not really understand all of the terminology used by the insurer during plan selection, in the explanations of benefits (EOB), or on calls with customer support representatives.

Our research uncovered a high level of consumer frustration in this area, with members saying things like, “The EOB mentions what is covered but it is difficult to follow and not customer friendly.” And, “I can't understand medical terms.” Customers also mentioned that “It is confusing to understand the coding for specific procedures.”

In several of the interviews, members said that “Plans should tell upfront which medications are covered and which need special authorization.” But this information can be extremely challenging to find. While probably available somewhere, this information often is not up to date or readily accessible to customers. In fact, it may even be difficult for customer support representatives to find accurate information to share with members. This lack of information leads to many unpleasant surprises when the insurer denies coverage.

If other technical industries can build high levels of consumer literacy, so can health plans. The key is to have the right focus on member experience, which will drive innovation and execution of new ideas. Here are a few of the ideas that emerged from our research:

1. Expert assistance during plan selection: Customers expressed their appreciation for the plans that assisted them in making the right plan choices. Some customers shared that the “Plan rep broke down all the information, so it was easy to understand the coverage.” In addition to in-person consultations, plans can also develop AI-based solutions (like those offered by Picwell) that help members pick the right coverage based on their current situation and forecasted needs.
2. Real-time benefit information to members: Plans need to think about using advanced technologies for providing a solution (or set of solutions) that guides members to the right care options by providing real-time benefit information, such as in-network doctors, the right facility for the situation/condition, the estimated out-of-pocket cost, etc. In a recently published white paper, for example, ZS introduced the idea of a “virtual buddy” to improve the member experience by addressing this need.
3. Real-time formulary and benefit data to physicians and members: Most plans make the formulary information available to providers, but the problem is that it is not up to date or easy to access. Real-time benefits tools, integrated with the provider’s e-prescribing and electronic medical records, can solve that problem. Some plans have started using real-time benefits tools like United Healthcare’s Precheck MyScript, which provides formulary and cost-related alerts at the point of care. Similar solutions can be implemented for referrals, durable medical equipment and diagnostics tests.
4. Simplifying EOBs and other coverage documents: Our study indicates that one of the key reasons that health plan members call customer service is to resolve queries about EOBs. For customers, the key information on the EOB is their share of cost and how they are doing against the deductible. Plans should take help from user experience consultants to design EOBs, highlighting out-of-pocket cost and deductible information in a more visible way. According to a recent report from content analysis company Visible Thread, health plans also have significant opportunity in improving sentence length, eliminating passive voice, and choosing less complex vocabulary in their beneficiary documents, both print and online.
5. Alerts for unused benefits throughout the year: Many members remain unaware of the preventive health services available to them at no charge. A regular cadence of reminders about the available and unused coverage can bridge that gap and create a positive experience for the members.