Four reasons payers need to embrace the digital economy

Every year, Beloit College publishes its “Mindset List.” The list is a collection of things the incoming freshman class has either never experienced or never known a world without. It includes serious topics, such as “There has always been a digital swap meet called eBay” and “The United States has always been at war” along with fun pop culture references, including “They never heard Harry Caray try to sing during the seventh inning at Wrigley Field” and “Instant, tray-less ice cubes have never been a novelty.”

The list points to how much the world has changed in the past 18 years to help the college’s professors understand where the freshman class is coming from in terms of its view of the world. Health payers might be smart to take a look at the list as well, because the world has changed significantly since the 1980s, which was when many of them implemented their core technologies and business processes.

Back then, green screen computers were the epitome of advanced technology and were considered a strategic advantage. Batch processing of claims was acceptable because there wasn’t a faster alternative.

In today’s instant-everything world, it’s all about speed and convenience. Take getting a haircut for example. You used to have to call to make an appointment (or walk in and wait), and bring enough cash for the service and the tip. Now you can use your smartphone to go online not only to set the appointment, but also to pay at the end.

Imagine if getting a haircut was like seeing a doctor, however. You’d have no idea how much the haircut was going to cost you. Weeks later you’d get a confusing statement showing the total cost (which would be shockingly high), but telling you not to pay yet because your insurance company had to determine how much of the haircut they’re going to cover. Finally, weeks or months later, you’d receive the invoice for your portion. A year later you might even receive a separate invoice to cover the person who washed your hair because the salon just realized he/she wasn’t covered in the original bill.

Sounds insane, doesn’t it? Odds are if that’s the way haircuts actually worked, we’d all go back to wearing our hair long. Yet that’s the health insurance model to a tee.

You can see the disconnect. Consumer expectations have changed as a result of the digital economy. So have those of providers, who, at the end of the day, are also consumers in some aspects of their lives. They want convenience, and they want it now! Here are the implications those expectations bring, and the reasons why payers need to start migrating their businesses to the digital economy today.

1.    Members want to know what care will cost. Back in the day, members didn’t worry too much about the cost of care. Their mantra was “the insurance will cover it.” Increasingly, however, the insurance doesn’t cover certain services, either due to plan design or the rise of high-deductible health plans (HDHPs) that increase the member contribution. With more coming out of their pockets, members need to know what they will be paying before they receive services in order to budget. Many also want to price shop. Payers must be able to provide the answers, down to the penny, while the member is in the office (or shopping online). Batch processing at the end of the week doesn’t deliver those answers. Payers must have technology that can generate an explanation of benefits (EOB) instantly.

2.    Members want to know where their benefits stand. Green screen systems can tell members if a service is covered under their plan, but that’s about it. That’s not enough for members today, especially those with HDHPs. If they’re having problems with their eyes, they want to know when they’re eligible for another eye exam, as well as how much it will cost, so they can decide whether to go now or wait. Members with tooth pain don’t want to wait two weeks to learn if they can get a crown. They want the pain to go away. Payers who can’t provide those answers instantly will find themselves losing members to those who can.

3.    Providers want to be paid faster. Cash flow is a huge concern for providers, who are operating on ever-thinning margins. The proliferation of HDHPs has created additional risk in this area. According to a study by McKinsey & Company, there is only a 40% likelihood that patients will pay their remaining balance after they leave the office. This shift places more pressure on payers to speed the remittance process. If it takes 10 minutes to be reimbursed by one payer that can process electronic claims on a continuous basis versus two weeks for another that is doing batch processing of paper claims and sending paper checks, the choice of which provider network to join is pretty easy. Since members have a much closer relationship with their providers than their health insurance company, keeping providers happy must be a core goal for payers who want to keep and grow membership. Once providers experience same-day payments, they will demand it-and move away from payer networks that can’t deliver it.

4.    Providers want less administrative work. Providers go into healthcare because they want to help people, not because they want to fill out forms and perform other administrative tasks. Current green screen systems are administration-heavy. Newer systems designed for the digital economy use technology to eliminate repetitive tasks and remove the administrative burden, saving time and reducing costs for both sides. That’s an easy decision for providers to make.

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