5 Ways AI is Transforming the Health Plan Industry

The health insurance industry has been facing several challenges in recent years. Rising costs, the uncertainty of 2024 being an election year in the United States, increasing pressures for price transparency, and fluctuating levels of member trust have all had an impact on the industry.

In response to these challenges, industry leaders are increasingly turning to artificial intelligence to streamline operations, reduce costs, and enhance member experiences. By leveraging AI, health plans can adapt to the rapidly changing landscape, ensuring they remain competitive and capable of meeting the needs of their members. Below, we explore four transformative ways AI is set to revolutionize the health plan industry.

Generative AI has been making a lot of news not just for the flash of new tech, but because of the very real results it’s driving. According to McKinsey, companies are seeing a 40% increase in productivity through AI-driven automation, leading to greater revenue.

Let’s explore ways health plans are using AI to make business and customer improvements.

1. Revenue Growth

A McKinsey report estimates that “by using currently available technology, payers could see net savings of 13 percent to 25 percent in administrative costs and 5 percent to 11 percent in medical costs as well as 3 percent to 12 percent higher revenue.”

For those seeking to grow revenue through an existing source like existing members, AI can enable and support member retention through several key strategies:

• High-Value Group/Account Identification: AI models can generate insights on members who might be at risk of not renewing during open enrollment, helping sellers prioritize outreach efforts.
• Broker Performance Insights: AI can identify high-performing brokers, allowing health plans to invest more time and support with those brokers, leading to increased sales and revenue growth.

For those seeking to grow revenue through new sources such as Pharmacy Benefits Management (PBM), AI can support data analysis and summarization for identifying new revenue opportunities, like adding custom benefits (e.g., Pet Insurance) to standard offerings, thus increasing premiums if members opt into such coverage.

2. Improved Member and Employee Experience

Many consumers have been drawn to digital health companies and services over the years for their intuitive experiences. Examples include self-assessments and AI-enabled recommendations, self-service appointment scheduling with shorter wait times, and more. A recent Forrester report found that in 2024, health insurers will drive engagement and trust from their members through expanded marketing and advocacy initiatives. This is critical to an insurers success as plan offerings become more and more generic across brands. AI enables these enhancements by:

• Personalizing Marketing Initiatives: Health plans that personalize marketing initiatives are more likely to succeed in increasing member trust and satisfaction.
• AI Transcription and Summarization: This allows for better empathy from Customer Service Representatives, leading to improved member experiences.
• Employee Self-Service and Virtual Agents: AI can support internal knowledge and provide virtual agents for employee support and improved member service.

In terms of care management, AI supports wellness programs and preventative care by analyzing claims data to notify care managers when a member might qualify for a certain program or should be included in an outreach campaign.

3. Brand Reputation and Differentiation

According to Forrester analysis, the industry is in the third year of decline in the US Consumer Experience Index. Several drivers significantly impact the overall consumer perception of a brand by US health insurance consumers, such as first contact resolution, knowledge of member history, helping members manage their care, and procession transactions quickly.

AI can play a crucial role in enabling and supporting every one of these aspects, ultimately enhancing brand reputation and differentiation. AI can also help in managing relationships with brokers and improving Medicare Advantage plans by addressing factors like health outcomes, member experience, clinical quality, customer service, performance, and drug safety.

• Personalized Interactions: AI can analyze member data to tailor communication and support, ensuring members feel valued and understood.
• Proactive Engagement: AI can automate reminders and follow-ups, ensuring members receive timely information and support throughout their journey.
• Broker Performance Insights: AI can identify high-performing brokers, allowing health plans to provide targeted support and resources, thereby strengthening relationships.
• Provider Network Management: AI can optimize network management processes, ensuring better coordination and satisfaction among providers, which in turn reflects positively on the plan’s reputation.

4. Reduced Costs and Process Optimization

Health plans have historically operated with high levels of manual processes, leading to inefficiencies and higher operating costs. AI presents numerous opportunities to reduce costs and improve process optimization, including:

• Process Automation: AI supports moving from manual to automated processes in areas like claims processing, provider network management, and prior authorizations.
• Claims Processing: AI can optimize claims processing, reducing delays and improving member and provider satisfaction.
• Provider Network Management: AI can assist in optimizing contracting processes by creating standardized contract templates, ensuring consistency and compliance with legal and regulatory requirements. AI-powered tools can analyze historical data from previous contracts to provide insights and recommendations during negotiations. This helps in achieving better terms and conditions that are favorable to both the health plan and the provider. AI can also alert administrators to upcoming contract renewals or terminations, facilitating timely negotiations and decisions.
• Prior Authorizations: AI can automate prior authorization processes, improving efficiency and member experience, especially in Medicare Advantage plans.

5. Smart Fraud Detection

AI is set to revolutionize fraud detection in the healthcare sector, addressing an issue that costs the U.S. approximately $30 billion annually. By utilizing advanced AI tools, health plans can more effectively identify patterns indicative of fraudulent activities. Machine learning models, in particular, can analyze historical fraud data to discern common characteristics and enable predictive fraud scoring. Unlike traditional methods, AI can be

deployed to scrutinize every claim in real time, allowing payors to detect fraud earlier and either prevent or significantly mitigate its financial impact.

Bring AI to Life with Hitachi Solutions

As a recent Forrester references state, “With gen AI, it’s all about the data. The value of health data has increased significantly with dependency on large language models and training data. Increased reliance brings higher demand for improved data quality, data literacy, and management. Experiences are only as good as the data behind them, and insurers will continue to see the importance of data increase.”

Hitachi Solutions leverages its data & security expertise to bring AI to life for health plans. Whether it is to leverage generative AI for personalized member experiences, optimize operational processes through intelligent automation, or enhance decision-making with predictive analytics, leading insurance companies are moving fast to find new and effective strategies to remain profitable and competitive. With our expertise and unique ability to innovate, Hitachi Solutions can help you do the same.

As a long-time premier Microsoft partner with the technical and industry skills to bring AI to life for health plans, Hitachi Solutions is ready to help you explore AI for advanced data insights, streamlined workflows, and superior member engagement. And we are committed to responsible AI development to ensure our solutions are not only effective but also ethically grounded. So, you can be confident that we are the trusted and dependable partner you can count on. Contact us today to take the next step in your AI journey.