CAHPS surveys – standardized, yet customized

Challenge:

After the unification of several large health plans to become one of the largest national health benefits companies in terms of commercial membership in the United States, this organization was confronted with assessing performance and maintaining high quality plans. Performance ratings were necessary at the individual health plan, the regional levels, and the national levels with the ability to determine how that performance falls compared to the industry. Customization was also a necessity due to the different issues faced in various markets.

Solution:

We implemented the CAHPS 3.0H survey for all plans keeping in mind the individual needs of each health plan. We used the standard HEDIS CAHPS adult commercial instrument with a core set of added questions and regional customized added questions based on the various market objectives.

Outcome:

After conducting the surveys following all standardized specifications, DSS compiled the results from each plan to create individual plan level reports. These reports included current year results, results from previous years, and comparisons to their system averages and Quality Compass. In addition to the individual plan reports, DSS developed regional reports and an overall system wide report. These reports included similar information for all plans and all plans in a particular region with comparisons to the DSS Book of Business, Quality Compass, and regional/system averages. This enabled the corporate organization to conduct their overall system level reviews using the CAHPS measures as well as the added core set of questions. The corporate and regional levels found it very informative to be able to see the plan to plan comparison at a glance. It helped identify which plans set the bar and which plans needed improvement. The individual plans found the detailed write-ups in their particular reports helpful for making informed decisions on improving performance trends.

top of page

The Proof Is In The Performance

Capabilities are all well and good. Client lists and approach are important. But what about results? What have you done for me lately? Here, we’ll let you peek over our shoulder at some relevant work we’ve done for clients with needs a lot like yours. Like to see other examples? Have follow-up questions about specifics? Just ask us.

Individual Product Design and Packaging

Problem.

A senior executive was directed by senior management to improve the margins for all products his organization sells directly to consumers - individual product, Medicare, LTC, etc. The question he pondered was whether to increase premium, increase deductibles and copayments, or reduce benefits for his individual products? Of course there was a short fuse and a limited budget.

DSS Solution.

Due to time and budget constraints, DSS designed a combination of focus groups with simple conjoint exercises. In all six focus groups conducted, three were with customers and three were with non-customers. Early in each group we administered a simple choice-based conjoint exercise. After the exercise, respondents discussed their choices and preferences between premium, copays, deductibles, benefits, etc. After this discussion, the conjoint exercise was repeated. Three weeks from the start of the project DSS provided a clear directional report to the executive. The total cost was kept under $45k.

Executive summary excerpts:

• The general level of sophistication of the people in our groups, in regard to health benefits, is higher than it is for the average group-covered individual. This conclusion is based on this research and other individual product studies we have done.
• At the highest level, several issues stand out in the minds of your customers and prospective customers in regard to what they want in an individual health insurance product – predictability, ease of use and value.
• In regard to product design, consumers overestimate the value of copays in general and not having limits on the number of doctor visits with copays as opposed to coinsurance and deductible. They are willing to pay more for an unrestricted number of copays, either in the amount of the copay or the premium or both, than the benefit is worth. They appear to want the predictability so badly they will overpay for it. We think this also reflects their lack of knowledge regarding what a doctor visit really costs. They consistently overestimate the cost of a typical doctor visit.

top of page

Commercial Group Product Design, Pricing and Market Segmentation

Problem.

A national managed care organization determined that they needed a more rational approach to product design, pricing and market segmentation. More specifically, they wanted a system based on solid research results and predictive modeling that product managers could use long after the research was complete to address product design and pricing issues as they arose.

DSS Solution. Three-pronged:

DSS designed research involving detailed conjoint studies with business decision-makers, consumers covered by group plans, consumers with individual plans, and seniors with Medicare supplements. The methodology involved a telephone, mail, telephone reminder sequence. Utilities were estimated for each market segment.

In a second phase of the project DSS conducted market segmentation based on the conjoint utilities (preferences), selected attitudinal data and behavioral measures.

Phase three of the project involved the development of a powerful, but easy-to-use simulation tool that all appropriate managers could access over their Intranet. This was the genesis of our Dominator 2020^® tool.

Segmentation analysis.

For the commercial small group segmentation of employers DSS identified four segments and profiled those segments in terms of detailed employer and employee characteristics, and most attractive products for each segment. Our client’s market share for the first three segments met expectations, but their share in segment four was only one-third as much. Additional analysis of financial data showed that the fourth segment was also the most attractive in terms of loss ratio by a significant margin. Groups in this segment were younger, had a higher percentage of males, had a higher percentage of professional workers, etc. than the average small group in the market. The explanation for this disparity was found in our client’s product offering; competitors were offering products more in tune with what these employers and their employees wanted. DSS used the conjoint results to identify a product that would be more appealing to segment four.

The Dominator 2020^® tool allowed product managers to simulate the effects that changes to products and introductions of new products will have on the competitive marketplace. After two years DSS repeated the research with consumers and business decision-makers, adjusting utilities and reparametizing the models. The clinet continues to use the system in their product development process. Key features of the Dominator 2020^® tool include the ability to assess or simulate:

• Attribute utilities for any a priori or value-based market segment.
• The interactions of two or three attributes at a time.
• The effects of expected competitive responses.
• The relative price differentials needed to make a group of products equally attractive.
• Price sensitivity for any product or set of products.
• Preferences for up to 10 sub-segments at a time.
• Cannibalization.

Within a year the client launched the product and targeted it directly at segment four. As a result, the client’s share in this highly desirable segment rose by almost 35 percent in just two years.

top of page

Medicare PPO Market Segmentation, Product Design and Pricing

Problem.

CMS (formerly HCFS) solicited proposals from health insurance organizations to conduct demonstration projects for Medicare PPOs. Our client needed research to help them design product to include in their proposal that would both make sense to Medicare beneficiaries and permit them to produce a positive financial result. They needed a pricing strategy, sales estimates and wanted to profile the Medicare beneficiaries most likely to choose the PPO alternative they chose to offer. Finally, they wanted a modeling tool that they could use post launch to assess the impact of competitive moves in regard to benefits design and pricing as they developed.

DSS Solution.

DSS designed research involving a detailed conjoint/discrete choice study with Medicare beneficiaries in the following product groups: Medicare only, Medicare plus a supplemental policy, Medicare HMO. DSS developed a computer-driven exercise and administered it at a number of different central locations. Participants were recruited by phone and were paid an incentive for participation. Using proprietary tools, DSS estimated utility and importance for each product feature.

DSS identified benefit segments (using the term “benefit” to refer to the general things people want in a product) using cluster analysis and latent class analysis (latent class produced the best solution) of the individual level utilities. Segments were profiled based on demographic, attitudinal characteristics, and current product choices of Medicare beneficiaries in each segment.

Analysis of the four segments in conjunction with the conjoint simulation showed that one segment was primarily made up of those with Medicare HMO coverage, one was dominated by those with Medicare coverage only, and the other two were heavily populated by those with Medicare plus a supplemental policy. Further, these two segments were divided between the standard A-I Supplements such that one had a much higher prevalence of those with the less expensive supplements and the other had a much higher prevalence of those with the more expensive supplements.

Further analysis, using our tools, showed that the new Medicare PPO concept had, as we had theorized from qualitative research, the greatest appeal to those in the two segments made up heavily of those with supplemental policies. Appeal was greatest in the segment made up of those with less expensive segments. The utilities estimated were used with our Dominator 2020^® market simulation tool to search for an optimal product design for these two segments based on the financial constraints imposed by our client.

This analysis provided the basis for the product and marketing strategy rolled out in three markets in early 2003. The Dominator 2020^® tool allowed product managers to assess/simulate:

• Attribute utilities for any market segment.
• The effects of expected competitive responses.
• The relative price differentials needed to make the different Medicare product alternatives equally attractive.
• Price sensitivity for any version of the PPO product.
• Cannibalization.

The results were used to shape our client’s proposal to CMS, including benefit design, and to develop the marketing strategy for their Medicare PPO product. While it is too early to assess success, results have been promising up to this point.

top of page

Marketing, Service and Value-Added Benefits Research

Problem.

A nationally recognized health insurance wanted a deeper understanding of employers in terms of their product needs, price thresholds, and purchasing behavior. Further, our client needed to understand employers’ responses to recent premium increases and exactly how these costs were being shifted within organizations. Lastly, they wanted market information on current deductible/copay levels, premium-sharing, and opinions on alternative plan options.

DSS Solution.

We designed detailed two phase study consisting of six groups across three employer segments followed by a quantitative Internet approach. Our analysis identified key market trends in MCO product prices, benefit level structures, and receptivity to lower-cost health plan options. Client used results to shape product offerings and design new price structures.

top of page

Regional Competitive Market Analysis

Problem.

• The planning director of a large regional insurer was tasked with developing a marketing plan with a comprehensive competitive analysis.
• The organization did not have a competitive intelligence process.
• Initial communications with several large benefits consulting organizations identified that they were unable to fully meet the information requirements without expensive and undefined primary research.
• As often occurs, the need for well-developed information was short-fused.

DSS Solution.

• Recommended approaching brokers due to their exposure to various competitors and market conditions.
• Thirty minute executive telephone survey of 200 brokers with $35 incentive.
• To gain a depth of understanding, survey questions were heavily open end, or qualitative.
• Collected perceptions of top and bottom performing competitors: dental, health, group life.
• Turned around survey with report by region in four weeks from outset.
• Assessed key competitors (based upon broker business volume with competitor) for SWOT analysis, identification of emerging trends and challenges for next five years.
• Reported results arrayed by competitor with analytic summary.

Results.

• The planning director was able to provide the company with its first comprehensive competitive assessment, by competitor and with an interpretation of current and expected trends in the marketplace.
• A trend toward a PPO preference in the health insurance marketplace was first identified in this study. Within two years the organization shifted its marketing focus to respond to this trend.
• All subsequent marketing plans now include a comprehensive competitive assessment. A competitive intelligence unit has now been established.
• In 2003 the client asked DSS to develop a research plan to conduct this research on an annual basis to provide continual competitive updates on the marketplace.

top of page

National Competitive Market Analysis

Problem.

• The research director of a major national insurance and financial services organization needed to track his company’s position in the competitive marketplace, by each of two major markets.
• Advanced interpretive and trending analysis was expected on the results.

DSS Solution.

• DSS recommended interviewing brokers due to their knowledgeable interaction with competitors.
• Focus groups were conducted to identify carrier competencies which brokers are in a position to assess.
• A telephone pre-study was conducted to narrow the list of competencies and identify key driver competencies. An annual telephone tracking questionnaire was developed and implemented (n = 400), including $35 incentive.
• A total of 46 drivers were identified, categorized by:
  • Carrier image
  • Networks and enrollment programs
  • Pricing and ability to control costs
  • People, systems and service
  • Marketing support to brokers

Results.

• The client learned that its market position in one of the two key markets was weak, eclipsed by several competitors known to have online access for brokers to sales support information and underwriting status. In addition, several service issues were identified.
• Service issues were addressed and the client initiated an experimental broker relations program in one of the markets. This includes providing more sales support and information online (forms, pricing information, and later sales and underwriting status reports.
• Year two comparison will be used to assess the impact of the broker relations program. If effective it will be re-evaluated for a national rollout, including enhancement of online access to information.
• The client anticipates expanding this study to include its top 10 markets in 2004.

top of page

Regional Broker Affinity Study

Problem.

• A regional client in the northeast experienced significant falloff in small group sales in a two-year period while competitors were experiencing steady sales or very slight downturns in sales.
• Analysis demonstrated that pricing alone was not the issue, although insured group pricing was 10 percent above average for small group business. The sales force reported that brokers were reluctant to quote the clients' business due to slow quote turnaround from Underwriting.
• The marketing vice president was determined to find resolution in order to increase sales.

DSS Solution.

• DSS conducted 15 qualitative executive interviews, five with client sales representatives, five with benefits managers who recently cancelled the client’s coverage, and five with high volume brokers whose quote volume had dropped in the past year.
• A number of issues arose, including price, service, claims, etc. However, a consistent theme arose around brokers. Employers were persuaded by their brokers to seek different carriers; sales representatives cited problems with broker quote turnaround in Underwriting, and brokers indicated that they were increasingly relying upon competitors’ online access to information.
• The marketing vice president called for a quantitative assessment of brokers to identify their current and expected use of online services and how much it really affected their willingness to quote business.

Results.

• The client conducted a cross-functional forum to present the results of the initial executive interviews and develop action plans to address various service and information access issues that were identified.
• Approximately one-third of the brokers were significantly reliant upon online access to information and service from carriers. But for key brokers that percentage was roughly half. The study identified the services and information currently accessible online by competitors. It also collected a battery of information about broker compensation, service from the carriers, and marketing support to brokers.
• The case was made for a significant online capability implementation to provide brokers with sales support tools and forms, email hotline information with a 2-hour guaranteed response, online proposal support, online census submission, real-time monitoring of underwriting status, access to commission status, etc.
• This program was aggressively implemented in 7 months, including a broker kickoff meeting and a mailing. Key brokers were contacted directly by client sales representatives.
• Within one year of implementation, sales had quadrupled in the sagging small group market.

top of page