The health plan market is undergoing a drastic transformation. In the past, the competition had been lean with just a small number of payers. However, the market dynamics are changing. Since 2017, the number of Medicare Advantage plan choices per county has increased by 49 percent. The competition is projected to grow even more in the coming years as more health plans are set to enter the market with 26 million baby boomers aging into Medicare through 2030.
With additional members, the “paperwork” and administrative costs are also increasing. A recent report revealed that there was almost a 6 percent increase in administrative expenses for MCOs in 2017. The substantial rise in membership with soaring costs means many health plans might find themselves in a financially untenable situation.
Along with the growing administrative burden, the compliance requirements are also weighing on the workload and costs. The push towards improving accuracy, completeness, and timeliness of the data is intensifying to “ensure that provider claims for actual healthcare spending matches the health plans reported financially,” said Seema Verma. To fulfill the reporting requirements and avoid financial penalties, health plans will have to improve their data submission process to align with the specific rules, formats, and regulations of a given state, which also ensures an increase in cost.
Payers don’t have much control or influence on the administrative and compliance costs. The member population will increase, and so will the requisites by regulatory authorities. The costs are likely to keep increasing on these fronts in the future.
The growing financial pressure has made it inevitable for payers to explore measures to contain costs from spiraling out of control. Since operations account for around 50 percent of an insurer’s base cost, reducing expenses in this segment can result in significant cost savings.
Reducing costs by optimizing operational activities
There are certain operational activities such as claims adjudication, reprocessing, and post-call documentation which are highly repeatable and are executed manually. With the addition of more members each year, the burden of these tasks ought to grow even more. Automating these tasks can give a significant boost to operational efficiency; at the same time, it can help reduce overall costs. According to an article, automation technology can lead to additional operational cost savings of up to 30 percent within five years for many payers.
Apart from cost savings and reduced utilization, automating operational tasks has multiple other advantages. Automating routine tasks can ensure that the tasks that previously took days to finish are completed in minutes. The accelerated service delivery can build more synergy between members, providers, and internal stakeholders.
Automation technology can operate 24/7 and can be scaled up or down with demand. It provides a lot of flexibility that wasn’t previously available. By creating room for more capacity (with flexibility), automation provides the necessary capabilities for payers to remain competitive. Not to mention, automation reduces the scope of manual errors, resulting in efficient documentation, network performance tracking, and reduced coding and care gaps.
Challenges in implementing automation technology to reduce the cost of care
There aren’t many disadvantages to embracing automation; however, implementing the technology is a challenge. The core systems that most payers use cannot be easily modified. For effective deployment of automation, it is important to standardize and integrate the data and workflows that span across multiple disconnected systems. Quite often, payers don’t have the technological capabilities to support data standardization and require duplicative manual data entry to fulfill the task.
Fragmented data is the reason behind increasing IT costs and subsequently rising operating costs. Unstructured data prohibits health plans from leveraging new technologies and venturing into fresh business opportunities. The complicated legacy IT landscape prevents payers from building better collaboration in their network, which has considerable negative implications on their operational efficiency.
Streamlining patient data with a FHIR enabled data activation platform
Payers can streamline data through a data activation platform and make it usable for other digital platforms. A FHIR-enabled data activation platform can clean and aggregate healthcare data from numerous sources, including electronic health records, claims, pharmacies, hospitals, labs, and so on. This is a quick and inexpensive way to enjoy the benefits of automating operational activities without undertaking major core system transformations.
Apart from data aggregation, a data activation platform can also provide some relevant and useful information. By leveraging artificial intelligence and rich analytical capabilities, it can offer dashboard views, custom insights, and decision support that can reveal the existing coding and care gaps. Not only will this information help payers to improve care delivery and member experience, but it will also reduce unnecessary utilization of resources, and thereby the expenses.