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Feb 13 2012   11:22AM GMT

Usage-based health insurance: Coming soon to a payer near you?

Posted by: Jenny Laurello
mHealth, mHealth applications, Usage-based insurance

Meet “Snapshot,” the newest idea to come out of the Progressive Insurance labs. The monitoring device, no bigger than a garage door opener, is part of a voluntary program from Progressive and is grounded in the usage-based insurance model, affording discounts for good driving behaviors.  

Plugging into a vehicle’s on-board diagnostics system, typically right under the steering wheel, the device takes specific readings of a driver’s habits — vehicle speed, number of sudden stops and time spent on the road, among them — and reports back. After 30 days, Progressive uses the diagnostic data to calculate an initial premium discount. The device is then reanalyzed six months later, where a final premium policy discount is calculated. 

With the growing number of health and fitness apps available to consumers, many of which include basic activity tracking and remote monitoring capabilities via a web portal component of some kind, I couldn’t help but wonder: is usage based insurance coming soon to a payer near you?  Rewarding for healthier lifestyles is not a new concept — many health insurance companies have been rewarding for wellness initiatives, such as reimbursing gym membership fees, for years. But what if this takes one, or literally many, steps further by using mHealth technology?

What if payers began gathering member activity data and offered premium discounts based on activity level?  Members could be monitored on a voluntary basis, either using a Fitbit or similar mobile health device, or else through an app that could run directly on a member’s mobile phone. Payers could use the data, such as steps walked and time spent active, and reward with lower premiums or other incentives.

Providers could also use the data to ensure that both they and their patients are taking on a more active role in a patient’s health maintenance. Similar to how many dieters and health conscious individuals tend to eat less — or are at least more aware of what they eat — when they write it down, patients might be more apt to use and manage their personal health record (PHR) if it was tied to health monitoring tools that they could easily track at home. SearchHealthIT colleague and features writer, Don Fluckinger (@DonFluckinger), would be a great guinea pig for this type of plan model, especially given the upcoming walking challenge with fellow #HITsm-er Brian Ahier (@ahier) at this year’s HIMSS 2012 conference.

However, as with any sort of monitoring and rewards-based system, especially at the insurance level, there are certainly “Big Brother” concerns to be addressed. If this type of model was to become an industry standard, a chief concern would be around patient privacy and the potentially negative ramifications from transparency into lifestyle. For many members, the data collected and patterns presented could easily be detrimental, painting the picture of a risky (aka, more expensive) patient, which could in turn drive premiums up for many patient populations.

If operating the same way as Progressive’s program though, opting to use a monitoring device tied to incentives could be completely voluntary, with rates never increasing based on activity data.  Progressive maintains that a member’s rates will never increase with the information gathered from Snapshot, and that the only cost incurred is the initial $28 fee for the device itself. As with purchasing any insurance coverage, though, caveat emptor (and do your homework!). After seeing a recent YouTube video about how the Snapshot program can actually increase rates in certain states and other asterisk type of restrictions, I’m not inclined to believe Flo anymore either. 

There would also be huge concerns around the security and intended use of the data in general — where it would live, how it would be used, who owns it and how would it be integrated into an EHR. Also, because humans do not come with an on board diagnostics systems, there would be elements of fraud and abuse to combat and safeguards that would have to be in place to be sure that the technology was being used as intended.

What do you think? If your health care insurance provider offered a program similar to Snapshot for potential premium discounts, would you volunteer, or steer clear?

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