The Patient Protection and Affordable Care Act (PPACA) offers health plan providers a new opportunity to serve millions of individual consumers, each motivated to purchase health insurance, perhaps for the first time.
For insurers, the revenue opportunity is vast. However, the regulations around servicing these members also are new to every health insurance provider. Without proper planning around the business processes for meeting new regulations, this new revenue source quickly could turn into a spiral of costly manual interventions and fines for being out of compliance.
Revenue assurance is a combination of monitoring controls and automated reconciliation tied to specific business processes that ensure proper member administration and an accurate record of revenue events for each member.
For the individual marketplace, revenue assurance revolves around three business areas:
* Eligibility and membership
* Premium billing and collection
* Cost sharing reduction collection
These areas are highly dependent on each other, making a cohesive, integrated approach essential to revenue assurance.
Looking specifically at premium billing and collection, for example, we quickly can identify a primary issue: In the individual marketplaces, many of the new members will be eligible for a federal subsidy, due to their financial circumstances relative to the federal poverty level, to help pay for their monthly premium.
This subsidy would immediately create several challenges for health plans, including:
* Accounting for and tracking two separate payments from two different sources for a single premium amount
* Delays of up to 270 days for the subsidy payments from the government
* Potential gaps in federal payments due to retroactive changes in the subsidy calculation for the member as their financial circumstances change
As a result, financial reporting may become inaccurate or incomplete, membership administration could fall out of compliance and managing financial audits would be more difficult.
The solution is multi-layered. First, by introducing an automated tracking mechanism to monitor the expected premium and federal subsidy for each member, insurers would reveal discrepancies between the expectation for collection and the government's expectation of remittance. This could then feed into an automated resolution process that would apply predefined actions to reconcile those discrepancies.
For example, the premium comes from two parties, the consumer and the federal government, which provides a portion of the payment through a premium tax credit. This monitoring process would look across both current billings and the plan's historic receivables, sourced from the financial system, in order to account for the lag time for payment of the subsidies. Business rules then would be applied to both subsidy and non-subsidy premium, with clean situations identified and passed along for final processing.
However, many situations won't be clean and will require additional handling. Additional business rules could be applied to resolve those situations through write-offs, additional billings to members or the government, or letting coverage lapse. The reconciliation process would then have to offer a refined adjustment process for those situations requiring manual intervention.
The demographics of this population indicate there would be frequent eligibility changes, requiring higher levels of management. The benefits of automated reconciliation would be threefold:
1. Receivables control. While large volumes of membership are expected to come through the exchanges, the margins associated with this business are likely lower than those today. Keeping tight control on this revenue is essential to profitability.
2. Member satisfaction. This population, for the most part, will be new to health insurance products and the customer experience. Accurate and frequent communication will be vital to keep customer satisfaction high and prevent escalating costs from customer service interventions.
Cost control. The pressures of attaining the federal medical loss ratio guidelines require health plan processes be as automated and streamlined as possible.
When making the decision to engage in health insurance exchanges, it's important that health insurers put a revenue assurance strategy in place to yield the best possible outcomes from this new distribution channel.
John Danza is a product management specialist for Infogix. Jordan Taggart is a manager for HealthScape Advisors LLC.
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