With healthcare reform moving ahead, payers have their hands full.
With healthcare reform moving ahead as planned, increased competition from new initiatives such as health insurance exchanges (HIXs) and a host of other challenges, payers have their hands full.
Fraud, waste and abuse (FWA) continues to weigh heavily on payers’ minds, with the National Health Care Anti-Fraud Association (NHCAA) estimating that upwards of $200 billion is lost annually to FWA. Payers that at one time presumed that FWA prevention was too expensive and complicated are now realizing that the problem is too critical to ignore. While methods of post-payment recovery are incentivized in the Patient Protection and Affordable Care Act (PPACA), increasingly sophisticated analytics technologies are being paired with big data, giving health plans an edge in their efforts to combat fraudulent claims and overpayments.
By aggregating data from multiple sources, including claims repositories and electronic health record systems, payers are able to better track and prevent FWA. Analytical tools combined with predictive code edits and clinical aberrancy rules are able to examine hundreds of variables and outliers and represent a great opportunity for payers eliminate duplicate work and ultimately improve the quality and efficiency of their operations.
Premium rate increases in 2012 were at their lowest level in the past six years, according to Aon Hewitt, a global human resource consulting firm. The average healthcare premium rate increase for large employers in 2012 was 4.9%, down from 8.5% in 2011 and 6.2% in 2010. The trend heads in the other direction in 2013, with the consultancy predicting a 6.3% jump in premiums by the end of the year. According to Aon, employees’ share of healthcare costs in the past five years have increased more than 35%, from $3,199 in 2008 to $4,814 in 2013.
Considering all the changes in healthcare today, it only makes sense for employers to take a critical look at their role as a healthcare benefits provider and find ways to lower their costs. Yes, most employers will continue sponsoring medical plans for their employees, but many will also implement initiatives such as health and wellness programs to improve the overall health of employees.
Additionally, many employers are becoming more sophisticated users of care management software and data analytics technologies that help perform evidence-based population and disease management reporting. These employers may also be utilizing analytics to identify major cost drivers, including transitions that lead to gaps in care.
Payers are counting down the days until remaining PPACA rules kick in, which is forcing them to make significant operational adjustments. Already responding with cost containment measures as a result of higher medical loss/administrative loss ratio (MLR/ALR) standards, payers are adding capacity to handle significant growth in individual, Medicare and Medicaid lines of business and planning how they will differentiate themselves in the highly regulated market going forward.
Payers are also integrating HIX concepts into their operational strategies. Management consulting firm HTMS, an Emdeon Company, found in their recent joint Industry Pulse Survey with the Managed Care Executive Group (MCEG) that more than 80% of small-to-medium size payers surveyed are “actively involved” or “minimally involved” in HIX decision making at the federal or state level. The survey also revealed payers’ relatively strong support for a private HIX model, with 40% of the payers surveyed indicating that they planned on participating in a private exchange if government-sponsored models don’t come to fruition.
Healthcare reform, quality improvement initiatives and other activities are converging to drive changes to the industry’s reimbursement models. For example, Accountable Care Organizations (ACOs) and Patient Centered Medical Homes (PCMHs) place a much greater emphasis on pay-for-performance as opposed to traditional fee-for-service initiatives. And while it remains to be seen exactly what role payers will play in this new environment (the HTMS Industry Pulse survey found that 28% of respondents from small-to-medium sized payers were unsure of their company’s plans for joining an ACO), it’s clear that payers are realizing that these models will likely prove an effective means of implementing payment reform that improves access to care at lower costs.
A major part of payers’ responsibilities going forward will be to increase their pricing transparency. Legislators and business leaders alike are calling for payers to make information about the contractually negotiated rates with providers more widely available, thus adding transparency to the healthcare payment system.
Payers are not strangers to a difficult operating environment. But those best positioned for success in uncertain times are addressing the challenges to their businesses with innovative operational and technical strategies designed to help ease the healthcare delivery transformation for themselves, their members and the provider community.
Gary Stuart is the Executive Vice President of Payer Services for Emdeon.