HTN Interview: Unpacking How Oscar is Leveraging its Tech Platform to Enable Oscar’s 2024 Expansion Plans

TL;DR: ​Marking its eleventh year as a carrier in the ACA marketplace, Oscar is introducing new ways of serving its growing and diverse member population. The company is leveraging its tech stack to offer tailored plan designs with high-frequency care routing and engagement for members who suffer from chronic illness, as well as enhancements to its program for Spanish-speaking members.

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We sat down for a recent HTN Interview with Mario Schlosser (Co-Founder, President of Technology & Chief Technology Officer) to discuss how Oscar is leveraging its technology platform and AI to drive innovation, enable its 2024 expansion plans, and power more of the healthcare ecosystem.‍

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Below is a summary of our conversation. 

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Table of Contents

• 0:00 How Oscar's tech platform is enabling new product launches
• 5:18 Understanding the real world impact Oscar’s tech has on patients 
• 9:20 Unpacking the granularity of Oscar’s target member populations
• 11:20 The future of the personalized plan design
• 13:00 Member engagement campaign best practices
• 15:17 Obstacles for ICHRA
• 18:17 Mario's reflections on Oscar's past and future strategy
• 24:18 Managing the technology shift to focus on core insurance capabilities
• 28:38 Mario's advice on building new startups in health tech

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You can check out the full recording of the live interview below. 

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Now, onto the highlights!

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Note: The following interview Q&A has been summarized for brevity. Please watch the full recording for in depth answers from Mario.

How Oscar’s tech platform is enabling new product launches 

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See full recording snippet here.

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Question: How is Oscar’s tech enabling new product launches in a differentiated way versus what another insurer without your tech can do?

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Mario’s Answer: 

• Mario explains that Oscar’s broader focus is on making healthcare more affordable, and that plan designs are one way their technology helps achieve that goal.
• He provides a framework calling out the three key drivers of insurance businesses: growth, medical cost, and administrative performance. Oscar Health carefully considers what to build based on impact across these drivers.
• He mentions that five years ago, he would have ranked those drivers in order of importance as: 1) growth, 2) medical cost, and 3) admin performance. However, today, Mario believes that ordering is actually the inverse, with the most important being: 1) admin performance, 2) medical cost, and 3) growth.
• Mario emphasizes the importance of having a clean infrastructure before launching new plan designs to avoid incurring more technical debt.
• He compares launching plan designs to the Medicare Advantage program and highlights the need for thoughtful configuration of plan designs to differentiate from other insurers.
• Mario explains that Oscar's platform allows for reconfiguring various aspects of plan designs, such as benefit design, network design, member incentives, and customer service messages.
• He emphasizes that the organization of their platform is what makes it powerful and enables them to launch plans with more than just minor changes to claims configuration.

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Understanding the real world impact Oscar’s tech has on patients 

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See full recording snippet here.

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Question: What is actually changing for the patient that is getting them to adhere to a drug when they wouldn't have if they weren't on your plan design? Can you walk through an example of what's actually changing from a patient's point of view, and how you're driving that change?

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Mario’s Answer:

• Mario reiterates that impacting affordability of healthcare is where Oscar has the potential to have the biggest impact, above all else, including clinical outcomes. While part of Oscar’s platform aims to nudge people in the right direction of care, handle usual payer tasks like authorization management and step therapies - at the end of the day, if Oscar can impact affordability of managing their members healthcare, they are doing the job (the role of the payer).
• He digs into an example, talking specifically about their diabetics. They focus on making healthcare more affordable by offering discounts on items like diabetic strips and physician visits.
• He mentions that the impact of plan designs on the bottom line is measured by both unit costs and the length of time members stay with Oscar.
• Mario highlights the importance that Oscar is not just dollar swapping, but delivering value to members by engaging them and offering lower unit costs for desired actions. He concludes that sustainable impact comes from giving members value that exceeds the cost to Oscar.

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Unpacking the granularity of Oscar’s target member populations

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See full recording snippet here.

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Question: As you think about the role of personalized personalized plan design, it makes sense that you're starting with big populations like diabetes, COPD, asthma, and hispanics, which you note  is over a third of your membership. Thinking about the future state of the industry and rise of more personalized plan designs - how granular do we get in slicing up target member populations? What do you think about where this is heading?

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Mario’s Answer: 

• Mario acknowledges the lengthy product planning timelines in healthcare and the importance of pricing and competitive positioning in the ACA for growth. He mentions that these limitations have led insurers away from more flexible systems and incentives design. 
• He explains how the above limitations are a big reason why Oscar has built its own claims system, which allows for more flexibility in plan design and incentive design, enabling them to provide personalized care and incentives for specific members.
• He also highlights other levers insurers have control over, such as network design, appointment availability, and provider payments.
• His dream is to have new members onboard with Oscar in a generic plan that best fits the individual at that given moment and then customize it based on the member's evolving needs and utilization patterns. He believes that factors like social status, healthcare utilization patterns, and geographic location can inform personalized plan designs.
• Mario discusses the potential increase in the lifetime span of members with a particular insurance company due to the introduction of personalized plans like ICHRA and individual coverage HRA plans.
• He goes on to discuss the importance of real-time incentives and how they engage members through campaigns with monetary incentives.
• Mario emphasizes the significant impact of economic arguments in convincing members to make changes, such as switching from one drug to another, by highlighting the stark difference in cost.
• The last point he makes about member engagement is that Oscar has actually seen net promoter scores go up with an increase in messaging members with high quality and highly relevant information to them. This contrasts the notion about overwhelming members with messages.

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Obstacles for ICHRA

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See full recording snippet here.

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Question: It feels like people have been talking about ICHRA as a future potential for insurance for as long as I can remember now, yet it still seems like this weird little thing off to the side. What's the biggest obstacle in your mind for these personalized plan designs? And when does that get taken down such that they start taking off?

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Mario’s Answer:

• Mario explains that the biggest obstacle currently is the nature of the role that employers play in healthcare, as it hinders building long-term relationships with payers.
• He mentions that the ability to switch to ICHRA gives payers a chance to convince members to stay with them based on service quality.
• Mario also expresses his belief that employers cannot effectively manage healthcare.
• He discusses that while there has been a slower adoption of ICHRA in the market, now there is a growing interest, which is partly driven by the fact that today employers have  more choice in plan options in the ACA marketplaces. More specifically, he highlights the significant shift in the ACA market, with the inclusion of national insurance companies and Medicaid plans, leading to increased options for consumers.
• Mario emphasizes the lower price inflation in the ACA market and the increased inbound he receives from startups, venture investors, and brokers regarding ICHRA.

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Mario's reflections on Oscar's past and future strategy

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See full recording snippet here.

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Question: I'd be curious about your reflections as a leader over the last decade in the organization. If you were going back and talking to Mario and team when you guys were putting together this chart back in the day - how would you think about what you guys were doing right at the time, and what you were prioritizing well, versus what you would change, knowing what you now know?

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Mario’s Answer:

• Mario explains that he wouldn't change their approach, considering the low survival rate of insurers starting in the ACA. He emphasizes the importance of having control over their infrastructure, which has allowed them to manage risk and build their network effectively.
• He acknowledges the significant amount of money they lost, but believes they are finally making progress towards their goals. He also shares that the company shouldn’t have grown as fast in certain areas.
• Mario discusses the long-term plan of Oscar, including their goal of reaching a million members by 2023 with an MLR (medical loss ratio) of 85% and an admin (administrative expenses) below 15%. He mentions that they have achieved these numbers, with an MLR of 82-84% and around a million members. Mario acknowledges the cost of doubling their numbers earlier than expected and emphasizes the importance of a stable infrastructure. 
• He also mentions the timeline and challenges of building their own claim system, which took several years to complete. Mario reflects on this experience and how it informs their approach to building future modules at a slower, more sustainable pace.

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Managing the technology shift to focus on core insurance capabilities

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See full recording snippet here.

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Question: As the technology leader in the org where it seems like the team has been very focused on member experience disrupting the insurer, and then having to shift the org to doing very insurance-focused activities. How have you managed that change inside of the organization? What've been the biggest challenges that you have faced in doing that?

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Mario’s Answer:

• Mario explains that starting in 2018-2019, they shifted their engineering team's allocation to core administrative tasks, such as eligibility, billing, claim submissions, and management, which has contributed to their success in becoming a profitable insurance business this year.
• He shares how helpful Mark Bertolini has been in pointing out areas for improvement, such as fraud, waste, and abuse. There are also still opportunities for performance improvement, including outdated processes and flows that were hard-coded years ago. He believes that they have a couple of years' worth of opportunities to improve performance by developing additional modules and configuring processes.
• Mario Schlosser discusses the importance of having a core administrative system that functions like a library or a function call, where users don't have to worry about the execution time or how it works. He emphasizes the need for real-time execution and total parameterization. Mario mentions that their app platform is built to work this way, but recognizes that it doesn't work everywhere quite yet. He highlights the progress they have made and how it aligns with venture performance. 
• He goes on to emphasize that member satisfaction is driven by resolving issues, such as prior authorizations or billing problems, and that earning the right to do everything else comes from solving these issues. 

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Mario's advice on building new startups in health tech

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See full recording snippet here.

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Question: What advice do you have for folks in the early stages of building health tech businesses in this different environment, where capital is not as free as it maybe once was back in the day, and how you'd think about growing your business?

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Mario’s Answer:

• In terms of advice for building businesses in the healthcare industry, Mario cautions against growing too fast and encourages not raising too much money, as both can lead to unforeseen problems and expenses.
• Mario discusses the importance of interoperability and modularization in the healthcare industry. He advises vendors to focus on their core aspects and make them available as APIs or algorithms, rather than building everything from scratch. 
• He mentions that Oscar has faced challenges in regulatory compliance and other areas, but believes that others can benefit from their experience and infrastructure. 
• He expresses the need for the digital community to continue innovating and disrupting the incumbents in the industry. Mario concludes by expressing his appreciation for the conversation and looks forward to the future vision of enabling builders to do more in healthcare.