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With a Digital-First Approach, Payers May Hold Key to Healthcare Payments Future


Trends in healthcare payments indicate that payers saw revenue growth and renewed potential for the individual market, while the COVID-19 pandemic caused considerable financial strife for other industry stakeholders. Additionally, payers are well-positioned for growth in the individual member market. Although the individual mandate penalty has been repealed, nine in 10 enrollees intend to keep buying insurance.

Deirdre Ruttle

Deirdre Ruttle

According to the Trends in Healthcare Payments Eleventh Annual Report, payers were highly confident of member loyalty and in their prioritization of consumer payment preferences. This payer sentiment does not necessarily match the reality of the member relationship. The disconnect is especially evident in data on low member engagement with health plan portals and friction in premium collections.

Payer relationships with providers also need attention and prioritization. Although federal mandates have been in place for electronic funds transfers (EFTs) since 2014, most claims payments to providers are paper-based and manual. Additionally, a rise in fee-based claim payments can put an unnecessary strain on providers if not implemented correctly and communicated properly.

Payers are in a unique position to drive digital payments for both payer-to-provider claim payments as well as premium payments and member-to-provider payments. This leadership and digital shift are needed now more than ever.

Paper complicates mattters

The payer-member relationship is particularly hindered by the difficulty members have with health plan portals, where members usually can view and manage information associated with health plans, which includes payment channels for the majority of payers. While 83% of payers let members make some payments via portals, many payers do not have full adoption.

Member portals represent significant opportunity to greatly reduce paper and postage devoted to medical bills and premium collections by hosting a contactless connection for payments and notifications. Additionally, member portals can eliminate friction over paper-induced payment and notification delays and needless billing and posting errors.

That message isn’t getting through to enough payers: 76% of payers receive paper and manual premium payments, while 69% of them will take cash or checks for the payments. Most payers (55%) who issue medical loss ratio-related (MLR) member reimbursements also use paper checks for this purpose.

The consequences of using this legacy approach extend to premium collections. Only half of individual members pay their premium bills on time. Many members are late more than once a year and 70% have to contact the payer about a problem involving their payments or premium bills during the year.

Digital methods that individual members support can give payers options for streamlining payments processes and eliminate the friction of late payments and inbound contacts. Nearly 90% of members prefer to pay premiums electronically, 78% want to pay them online, and 75% want e-statements for premiums.

Demand for streamlined payments

Streamlined payments in the form of contactless options gained traction during the height of the pandemic.In fact, 78% of payers adopted and promoted a contactless option and 71% say contactless options are a top priority for 2021.

The opportunity for streamlined premiums is not specific to the individual market. Payers can work with employer groups to implement streamlined, electronic payments systems and gain a competitive advantage with these groups. The majority of employers (87%) report that their finance departments will become more heavily involved in their workers’ healthcare during the next three years.

To support provider recovery, payers can streamline claims payments with full adoption of electronic remittance advice and electronic funds transfer format (ERA/EFT) among providers. More than half of providers can’t enroll in ERA/EFT with at least one payer, and more than 60% of payers employ paper and fee-based instruments such as automated clearing housing (ACH) networks and virtual cards to pay providers. However, 84% of providers prefer EFT from payers.

Additionally, recent data on electronic payment transactions shows the time and money savings for both payers and providers. From eligibility to claim payments, electronic transactions save $5.42, on average, over manual transactions and take nine fewer minutes to complete.

Looking ahead

Trends in healthcare payments related to payers show that payers play a vital role in shaping industry trends. In 2020, payers were the sole industry stakeholder seeing positive financial outlook. This has the potential to be short-lived based on many factors including a hard look at the experiences they deliver to members, provider networks and employer groups. Payers are in a unique, powerful position to drive digital payments for both payer-to-provider claim

payments as well as premium payments and member-to-provider payments. This leadership and any digital shifts have the potential to make a meaningful impact on the pandemic recovery.

Deirdre Ruttle is chief marketing officer, InstaMed, and head of wholesale payments healthcare marketing, J.P. Morgan

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