October 15, 2021

The 12 Levers Powering the Next Generation of Health Plans

Today, the biggest influence on your healthcare isn’t your doctor—it’s your health plan. 

Many doctors have little faith in the health insurance industry. 83% of physicians say that insurers’ delays or denials of prescribed testing and treatment can cause patients with chronic illnesses to get sicker. 

In the last few years there has been an explosion of point solutions, each geared to tackle a specific cost containment tactic in a health plan, and create better outcomes for the patient.  The average health benefits program today has contracted 14 vendors. 

The problem? The tech infrastructure needed to manage these unbundled plans doesn’t exist. This has created a fragmented consumer experience and delivers a fraction of potential value. 

At Flume, we’re working to change that. We’ve identified 12 key factors in designing a highly-effective and lower-cost healthcare plan that works for everyone. 

We call these the 12 Levers Powering the Next Generation of Health Plans. 

In this piece, we break down the 12 levers to support new and well-established healthcare providers as they work to build the healthcare of the future. 

Plan Design Lever 1: Network swap


For anyone designing a health plan, choosing a network is a balancing act between broad access and flexibility. Network contracts have the biggest impact on what you can and can’t put into a plan design. Typically only 20% of plan members incur the majority of claims costs, while the remaining 80% of members hardly incur any claims costs. Because of this, the network should be flexible. Low-use members should be able to easily access the care they need, and the high-use members should be targeted with messaging and resources to help lower costs and improve health outcomes. This would include implementing the tactics contained in this article to improve their care quality and reduce their costs. 


How to make Network Swap work

In unbundled plan design, networks are modular, and employers should be considered a piece of the whole to empower a larger strategy. Flume needs to integrate with each network for payment and eligibility checks, while following its contractual guidelines so the group or plan is following their rules. We need to match provider tiers to member enrollment and status, and data needs to flow so the other vendors of the healthcare stack. Value-based care contracts or direct contracts are not necessarily more difficult to administer, but they must be structured so provider payments and terms are followed correctly. 

Plan Design Lever 2: Intra-Network Navigation


Most members are not equipped to shop for healthcare or compare providers by quality and price. As modern plans start to share risk based on the outcomes they can drive, they will need to help members make informed decisions by engaging with them early in the care journey. Key here is making price and quality data accessible to members. Many health systems and clinical programs do offer “care teams” to help members navigate, but without the underlying data provided by the health plan, their effectiveness is limited. 

How it works

At Flume there are two modalities for Intra-Network Navigation:

  1. Member-initiated: A "search for a doctor” tool that provides members with cost and quality data. Most portals today only serve members the provider’s name, address, and specialty. 
  1. Flume-initiated: Based on AI analysis of claims, eligibility requests, inbound inquiries and the like, the Flume Workflow Engine identifies members in real time who could be diverted to other solutions on the health plan and automatically serves alerts to the patient, plan, or care team. For example, a Flume-backed healthcare plan could identify a patient with diabetes and direct them to a chronic care platform such as Livongo.  

The key to success is rewarding members for following the right pathways with lower deductibles and OOP expenses or other rewards.  

Success should be measured by the percentage of patients who were successfully redirected to better care; member and plan savings; and reduced return visits.

Plan Design Lever 3: Direct Primary Care

A fast-growing model that challenges fee-for-service, Direct Primary Care (DPC) provides members a small, dedicated team to cover 80%+ of most of their healthcare needs, plus downstream referral pathways. 


In this model, most conditions are managed at the primary care level, and the patient’s care team refers them to specialists as needed. A patient’s team may include a medical doctor, nurse practitioner, health guide and behavioral health specialist. 

Benefits to a plan built around Direct Primary Care:

  • More control and insight over the care pathways for members, even to qualifying downstream specialists and partners
  • Fewer tests, surgeries, ER visits and unnecessary referrals 
  • Lower member cost, both in the monthly fees and by designing the plan to waive or lower out-of-pocket costs when members follow their DPC referrals
  • Stronger understanding of patient population, because DPC groups take limited number of new clients
  • Better  “interoperability” — alignment among health information systems — because patients have a single point of contact who can coordinate care.

How to integrate DPC into a health plan

Back-end integrations are critical to setting up a plan built around Direct Primary Care. Flume typically works closely with the plan to set up and define referral pathways that are core to the plan’s value offering. APIs need to be in place so that when a DPC provider makes a referral, that acts as the preauthorization and also the billing code, so that members are billed according to the plan design. Usually, when members follow the referred pathway, their OOP is $0 or a nominal fee. Some plan sponsors may choose to offer their employees a traditional PPO alongside a DPC plan.

Success should be measured by the number of successful referrals; the number of patients redirected to lower-cost options; and patients who have met their health goals. 

Plan Design Lever 4: Bundled Surgery

More and more commonly, self-funded plans offer non-emergency procedures and associated care through an independent network of providers who agree to all-inclusive pricing. Often these providers are independent and tend to specialize in certain procedures, which keeps their overhead low, costs predictable, and quality high. 

Benefits to integrating Bundled Surgical solutions from the start

  • Cost and quality are prioritized as part of that network, as opposed to broad access
  • All-inclusive pricing incentivizes providers to offer better quality and manage expenses
  • The plan has the option to include travel expenses 

How this plays into unbundled plans today:

  1. Member-initiated: Members who know they need surgery contact their plan’s customer care line and ask for provider options within the bundled network. Depending on the plan’s other care pathways, the bundled surgery network is prioritized and can be searched by the concierge or support team.  
  2. Flume-initiated: The Flume Workflow Engine® identifies that a patient is a candidate for redirection based on AI analysis of claims, percerts, eligibility requests, inbound inquiries, etc.. Then, the concierge or customer support team reaches out to explain the patient’s options. This action can be white-labeled for clients, or the action can trigger alerts delivered directly to a client’s care team who will own the outreach. 

In both instances, backend integration with the bundled surgery vendor allows members to search for the best provider option. Communications should include information about cost and quality differences compared to the referred location.

Key performance indicators for this lever include the percentage of successful redirection  attempts, redirections by category and/or class, and cost savings.

Vendor evaluation requirements

  1. Geographic Coverage — What depth/breadth and in which markets?
  2. Data Exchange— Will the vendor supply data to allow our concierge to engage members directly?
  3. Network Overlay — Can queries be bound by other networks in place?
  4. Incentive Flexibility — Can we structure custom incentives, such as pricing for the member?
  5. Transparent Pricing — How does this vendor make money, and are their terms transparent?

Plan Design Lever 5: Disease Management

Hyper-focused care delivery companies deliver smart devices, expert advice, and health management strategies tailored to a specific chronic disease.

Specialized programs are available for: 

  • Diabetes
  • Health & nutrition coaching
  • Musculoskeletal
  • Hypertension
  • Weight management
  • Cognitive behavioral health
  • Maternity and fertility
  • Digestive (IBS)
  • And more

Setting up the backend

Flume works with the plan to integrate disease management vendors so that data flows into the and out of the plan. Data from disease management vendors is used to report on utilization and savings data across multiple vendors and to increase member utilization. 

New partner integrations happen in weeks, not months. 

How member engagement works

Vendors run their own programs and provide their own proprietary technology, coaching, etc. To get the most out of the programs, eligible members should be proactively encouraged to sign up for these programs. Using Flume Workflow Engine®, claims and precertification data can surface members who may be candidates for chronic disease programs, and rules can be written to do things like automatically alert the plan sponsor or engage the member directly. 

Key performance indicators include how many eligible members are using the service, vendor NPS, and savings reduced claims. Results should be reviewed each year to make sure the vendor is providing value or if they should be swapped for an alternative.

Vendor Evaluation Requirements

  1. Geographic Coverage — What is the breadth of availability, and in which markets?
  2. Flume Integration — Will they supply data to allow our system to create rules for alerts and reporting?
  3. Incentive Flexibility — Can we structure custom incentives for members who enroll?
  4. Member Interface — What is their app, care team, and member experience like? 
  5. Transparent Pricing — How does this vendor make money, and are their terms transparent?

Plan Design Lever 6: Fraud Waste & Abuse

80% of hospital bills contain errors or fraudulent practices, costing companies billions a year. This is really table stakes for health plans today. Fraud, Waste & Abuse (FWA) vendors provide tight, automated monitoring of incoming claims to prevent/recover overpayment. FWA is an always-on back-end service through a third party using medical coding audits and other techniques. 

How it works

All claims are run against a known data set of “right practices” and pull out discrepancies for human intervention. Flume uses two factors for FWA auditing: one through the network and one through an independent party for verification. The majority of claims should be analyzed for FWA before being paid so the plan isn’t chasing money. Fraud, Waste, and Abuse auditing requires a tight data flow to the integrated third party vendor on all claims plus mechanisms for audits and payment processing. 

Vendor Evaluation Requirements

  1. Turn around time - How fast can the vendor turn around claims? (industry standard is 14 days, we look for 7-10)
  2. Integrations—Can and will they integrate for live data feeds
  3. Tech competency — Do they have a tech-forward vision, such as using APIs and portals vs. pen and paper?  

Plan Design Lever 7: Rx Sourcing

Two tactics are major trends right now in unbundled plan design: Manufacturer’s Assistance Programs and international sourcing for specialty medication. Members taking expensive specialty and maintenance medications may voluntarily enroll in Manufacturers Assistance Programs or International Sourcing programs which can take their out of pocket costs to $0, and reduce costs to the plan by 50-80%.

How it works

Flume integrates with the vendor to share claims and pharmacy prior-authorization data throughout the plan year. As claims begin to flow in, Flume’s Workflow Engine will watch for Jcodes or other redirection opportunities, then engage with members to help them apply for the appropriate savings program (Manufacturer’s Assistance Programs are usually based on financial need). Once a member is identified, the vendor engages them to help introduce the program and walk them through enrollment. After enrollment, the drug is delivered by the manufacturer directly to the member, using the vendor as an intermediary. There is no longer a plan cost associated with the drug, only the vendor’s services, which can be a percentage  of savings or a flat monthly fee.

Programs like this may not necessarily impact stop-loss terms. They do, however, directly reduce plan expenditures in the current and subsequent Plan Years. 

What Can Go Wrong? 

Manufacturer’s Assistance Programs are not intended for patients who have full coverage, so there is inherent risk in relying on this tactic. The drug must come off the plan for the member to be eligible, which could create a hard conversation for some plan sponsors. 

Plan Design Lever 8: PBM Swap

Most major carriers allow for Pharmacy Benefit Manager (PBM) carve-outs, though often with some group size minimums. In general, plans need a PBM with  incentives that align with the plan sponsor’s.

Vendor Evaluation Requirements

  • Formulary is customized and can be managed; the PBM does not benefit from spread pricing
  • 100% of all coupons and rebates are guaranteed to go back to the group
  • Pricing model is clearly articulated: either fee-per-script or PEPM
  • Fully transparent data sharing 
  • Consideration for health systems, such as 340B pricing and administration
  • Option to “buy local” and purchase from community pharmacies 
  • Patient incentives option 

How to make this a success

In many cases, the value of shared pharmacy savings credits may be much higher than the admin credits given. This is where many employers wind up overpaying for status-quo plans.

Plan Design Lever 9: White Bagging

When a patient requires a hospital or physician-administered drug, it can be bought from a specialty pharmacy and shipped to the provider in a process known as “white bagging.” This avoids huge buy-and-bill markups of up to 1000% or more. Patients can also be steered to the most appropriate site for treatment, whether that’s a hospital, infusion center, or even at home. 

How it works

This lever is run in conjunction with a medical manager and a transparent Pharmacy Benefits Manager. These vendors should be selected for relationships they have with specialty pharmacies whose financial incentives are aligned with the plan sponsor. Flume must monitor drug prior-authorizations and claims for infusion therapies (J Codes). When opportunities for white bagging are identified, our partners order distribution through the specialty pharmacy network. Each stakeholder is engaged: the Plan, PBM, hospital pharmacy, and the member’s doctor(s). The drug is delivered just as it would be if the provider bought and billed for them through the hospital pharmacy. 

Even though white bagging may not necessarily require any change in member behavior, this is part of a larger process to consider whether the drug needs to be administered at a hospital (most expensive) versus an infusion center or at home.

Considerations (what could go wrong)

When White Bagging is employed, the drugs may fall outside the Drug Supply Chain Security Act’s track-and-trace requirements. Patients and  plans who want to utilize such a tactic may find themselves facing opposition from their provider. However,  oftentimes the doctor administering the care, the pharmacy sourcing the drug, and the billing department are disconnected from talking to one another. 

Plan Design Lever 10: Black Swan Protection

We define Black Swan Protection as a defense against high-cost events that aren’t regular occurrences for a health plan. The cost of these events can be significantly reduced if the plan understands where these events are likely to occur, and has a solution in place and ready to be activated as soon as the event occurs.

Examples of Black Swan Events

  • Air Ambulance — Billed charges for hospital rides can run between $45K and $90K for a 1-hour ride. Fixed wing flights can be hundreds of thousands of dollars. Rates can be controlled—and proper utilization for air transport services ensured—with prior authorization for non-emergency transfers, medical review of transport claims, and negotiation and repricing. All of this is run by a third party vendor integrated into the plan. 
  • Renal failure and dialysis — Specialized programs reduce and even prevent kidney disease and associated claims. Services include health coaching, repricing and arbitration, and even predictive modeling using medical claims to catch cases early .  The cases that progress into dialysis can range in cost from $200K to more than $1 million, and this service ensures that proper risk management steps are taken.   
  • Claims $150,000 or higher —  In this case, legal arbitrage reduces medical claims so there is fair compensation. Risk can be taken by the arbitrator partner.

How it works

Flume integrates data with the specific vendors and shares claims information so they can do their jobs of identifying intervention opportunities. The Flume Workflow Engine® can be employed to help speed up this process and alert stakeholders when a case is under review. 

For specific cases, plan sponsors will need to work directly with the vendors.

Plan Design Lever 11: Mental Health

Mental health  is a growing area of interest for health plans. In this context, we mean chat or text-based behavioral health coaching with a licensed therapist, provided by a third party. The benefit of this offering is that phone and app-based platforms make support available regardless of member’s location. A broad range of topics and specialities are available for whatever the member feels they may need help with, from stress and depression to problems with work and relationships. If needed, medication can be prescribed, managed, and delivered.

What to look out for

This is a burgeoning field for employee benefits, so stats for ROI are still not widely available.

How it works

Mental health platforms can integrate into the plan design in various forms. Teladoc offers one alongside more traditional telemedicine offerings. Ginger (now Headspace Health) and Spring Health offer services focused specifically on mental health and coaching, usually at a PEPM fee which can be paid by the Plan or passed to the member. Members sign into the app and select from a coach or care professional. Their journeys are closely curated by the mental health vendor with regular check-ins. 

The TPA should integrate these vendors into the tech stack and make sure data is traded for reporting and ROI purposes. Key performance indicators include utilization and NPS, because most platforms are paid PEPM regardless of how many use it.

Plan Design Lever 12: Patient Financing

Plans must  lower the barrier to accessing care by creating options for patients to pay for their out-of-pocket expenses over time. Patients do not need to delay care due to high cost, which may lower costs over time by mitigating emergency care or more acute issues. On the provider side, it reduces unpaid bills and AR. 

How it works

Employees are given a special credit card to pay for any out-of-pocket medical, dental, vision, mental health, or veterinary expense. When they swipe the card, they are offered an opportunity to split the transaction into a payroll-deducted payment plan over time, up to 12 months. There is no interest or fees. Collection continues by the vendor even after an employee terminates from the plan. On the back end, Flume ties the billing, contributions, and the lending bank together for proper attribution and reporting. 

The plan’s cost is a PEPM fee, so utilization is a key performance indicator. 

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