- Medicare Advantage plan Clover Health gambled on a unique approach to making money and wound up with angry customers, CNBC reported.
- Before paying for procedures, the San Francisco-based startup wanted patient data from Quest Diagnostics and LabCorp, the two largest testing laboratories. Clover planned to use the data to developed predictive analytics technology to help hold down costs and improve patient care.
- When the company pushed back on claims, labs billed the patients instead. After CMS got involved over an unpaid Quest bill, Clover paid its bills and negotiated contracts and data-sharing deals with Quest and LabCorp.
Clover’s story is indicative of the difficulty payer startups face in today’s healthcare insurance market.
Valued at $1.2 billion, Clover has suffered financial losses. The company, which sells Medicare Advantage plans in New Jersey, lost $34.6 million in 2016, seven times what it lost in 2015. That loss came despite close to $300 million in venture capital funding and $184 million from the MA program. The company raised another $130 million in venture capital in 2017.
The company is expanding outside of New Jersey this year into Georgia, Texas and Pennsylvania.
In November, CTO and co-founder Kris Gale told employees he was stepping down but would remain an adviser to the company.
Despite the push for digital solutions in healthcare generally, insurance continues to be dominated by larger firms with more negotiating muscle. To lower payments, payers have opted for policies that emphasize outpatient settings, increase patients’ share of healthcare utilization costs and replace fee-for-service payments for risk-based contracts.
A coming trend to watch will be younger insurers adopting telemedicine. The move will require insurers, like Oscar offering telemedicine services, to assume some financial risk but would allow for a more consumer-based user experience in hopes to attract customers accustomed to and who want to move away from an anachronistic insurance experience.