Show Coverage: Affordability still the sticking point

June 16, 2011

The industry is in an affordability crisis, according to Dan Spirek, executive vice president, chief strategy and marketing officer for TriZetto. He was a speaker during a Thursday presentation on managing post-reform healthcare. While he said that reform has increased access to care, he questioned its role in abating cost trends

The industry is in an affordability crisis, according to Dan Spirek, executive vice president, chief strategy and marketing officer for TriZetto. He was a speaker during a Thursday presentation on managing post–reform healthcare. While he said that reform has increased access to care, he questioned its role in abating cost trends.

Spirek proposed four imperatives to cope with a reformed marketplace:

Comply with reform. Payers need to adopt integrated enterprise systems to support administrative, care and network functions, while driving better coordination of benefits and delivery of care. If payers can efficiently implement benefit design changes, they can effectively comply with the mandates of reform and its future requirements.

Increase administrative efficiency. To meet medical loss ratio requirements, payers must reduce administrative overhead. To cope with “reform–related margin compression,” he recommends non–traditional strategies such as outsourcing business processes.

“Labor strategies [such as use of on-shore and mixed-shore models] have generally not been deployed beyond mailroom operations,” he said. “If we apply these initiatives to enrollment, billing, claims processing and benefit design, we can cut labor costs by as much as 50%.”

However, he emphasized the importance of using local resources for delivering customer–centered functions.

Improve cost and quality of care. The key is aligning incentives by rewarding value instead of volume through value–based strategies. Value based insurance design, which encourages higher value healthcare choices and sets barriers for lower value services, is an example of a consumer–driven strategy.

On the provider side, value–based reimbursement can help shift risk from payers to providers who are better positioned to manage risk, and influence the way providers deliver care. The potential to shift risk is represented by accountable care organizations, patient–centered medical homes and bundled payments.

Compete to win. Standing out from the crowd to effectively compete in a marketplace filled with new players can be achieved by leveraging technology. The results: attracting and retaining customer interest, increasing transactional efficiencies and engaging constituents.