Glen Schuster, SVP and CTO at Centene Corp., a St. Louis-based multi-state government services managed care company, is coping with some exceptionally difficult challenges.
"We are trying to figure out how to do more with less in a period of tremendous change," Schuster says. "We are dealing with clinical and regulatory disruptions and other changes on the administrative side."
Schuster is far from alone. Health insurers across the country are facing similar challenges as health care reform, the move to consumer-directed care and massive coding changes are all converging to place strain on their operational capabilities.
The breadth of these challenges could prompt health insurers to take a second look at their IT systems, and determine whether to implement new systems or leverage existing ones. According to "U.S. Healthcare Payer 2011 Top 10 Predictions: The Year of Disruption," a report from IDC Health Insights, health insurers will increase investments in technology to deal with reform and ICD-10.
"Insurers are facing some of the biggest challenges ever," says Ann Brisk, VP, banking solutions at OptumHealth Financial Services. "Topping the list is health care reform and how it impacts a health plan's ability to stay profitable. To make it through these challenges, insurers need to take another look at how they are embracing technology."
Squeezing More Out of It
Hartford, Conn.-based Aetna Health, for example, has been making substantial investments to its IT systems to comply with the benefit provisions of the Affordable Care Act (ACA), according to Matthew Wiggin, a company spokesperson. For instance, policy administration and billing systems had to be adjusted to reflect new life-time benefit limits and other changes that emanated from ACA. "Dozens of applications were impacted, and we had to comply with hundreds of systems requirements," Wiggin says. "So, we had a dedicated project management team work with our IT department to implement all the changes."
Similarly, Centene's Schuster is creating a billing environment that can handle the expected increase in patient demand that is emanating from reform. Equally important is easing the interaction between insurers and similarly hard-pressed physicians, Schuster says. Centene is working with Emdeon, a Nashville, Tenn.-based provider of revenue and payment cycle management software, to provide electronic billing transactions to providers. If providers are able to submit claims faster and more accurately because it is easier for them, Centene is able to process the bills quicker.
"The environment presents many challenges, and it is painful for insurers, but it is even worse for small providers," Schuster says. "To make electronic transactions successful, we are purposefully partnering with a company that focuses on the needs of providers. We are leaning on them to keep providers happy so that we can experience the benefits of electronic transactions."
As consumer-centric care becomes more common, health insurers will need technology to facilitate the flow of information between doctors and patients. Centene is leveraging IT from Emdeon to actively participate in a new consumer-directed health contract in Indiana. The technology includes a payment estimator, which enables the doctors to understand, in real time, exactly what the patient owes for the service at the point of care. "This consumer-centered program in Indiana is the first of its kind in the nation," Schuster says. "The technology makes the communication between us and the provider much easier, and streamlines the entire billing function. It also makes it much easier for the patients."
Bidirectional Data
Elsewhere, health insurers are leveraging data flowing back from physicians to improve their operational performance. athenahealth Inc., a Watertown, Mass.-based provider of Internet-based business services for physician practices, is offering some assistance. InsurerView, a research initiative that leverages data from athenahealth's network of physicians to provide objective insight into insurer performance, is helping health insurers make changes that result in improved performance. The data helps to pinpoint the problems that are causing inefficiencies in the system.
"Many insurers-especially some of the larger ones-have grown through acquisition, and are now operating so many adjudication systems that it is difficult to know why a claim is or is not going through the way it should be," says John Hallock, director of corporate communications at athenahealth. "They have come to us and asked how to correct these things. Because we are on a centralized platform and have insight into what works, we can say 'if you correct these certain things, then the claims will traverse through the system a lot faster.'"
Overall, the participating health insurers have culled insight from the data, and then applied the knowledge to realize improvements in days in accounts receivable, first-pass resolve rates and denial rates. For example, according to the InsurerView report, days in accounts receivable decreased an average of seven days between 2008 and 2009 for all insurers participating in the program. Such efficiencies are expected to help health insurers more adequately deal with the influx of patients that will be brought on by health care reform.
Humana, a health insurer headquartered in Louisville, for example, has leveraged insight from the initiative. According to a statement from Bruce Perkins, SVP of healthcare delivery systems and clinical processes for Humana, the data has helped the insurer streamline and standardize claims processing and improve payment performance.
Making the changes that support and optimize electronic billing transactions can help health care plans deal with the challenges in front of them, says Nina Smith-Garmon, SVP and GM of the Mitchell Workers' Compensation Solutions Division, a part of Mitchell International, San Diego.
"We worked with a workers compensation client to implement electronic billing transactions," she says. "We went through and improved all of their processes to increase efficiency. Throughput improved 20% to 30%, which means that not as many staff members actually need to physically touch a bill. As a result, the insurer is much more efficient, and there is a bottom-line improvement."
Regulatory Complications
Health insurers are dealing with regulatory changes that will both speed and complicate the transition to new technologies.
Simply consider the following: The administrative simplification provisions of the Affordable Care Act include a medical loss ratio that requires health insurers to spend 80% to 85% of consumers' premiums on direct care for patients and to improve care quality, rather than on administrative costs, starting in 2011. If insurers don't spend the money on clinical care, the insurance companies will be required to provide a rebate to their customers starting in 2012.
At the same time, though, the Centers for Medicare and Medicaid Services (CMS) is calling for the adoption of the expanded International Classification of Diseases, 10th Revision, Clinical Modification, or ICD-10-CM, for diagnosis coding to replace the ICD-9 coding, which has been used in the United States since 1977. The updated codes, which are used in most other industrialized nations, offer greater detail and increased ability to accommodate new technologies and procedures. Data captured by the code sets could help health care organizations improve clinical quality, more rapidly identify pandemics and better support clinical research studies.
Robert Zirkelbach, press secretary at America's Health Insurance Plans, the Washington, D.C.-based health insurance association, says the limits on administrative spending could dissuade health insurers from investing in innovative technologies. "The limitations could crowd out innovation and inhibit health plans' ability to invest in health care information technology that is essential to bringing costs down," he says, noting that the costs associated with transitioning to ICD-10 are considered an administrative expense.
Health care plans also are in a rough spot when it comes to electronic billing, Zirkelbach says. Under the law, health plans must accept the electronic transactions but health care providers are not required to electronically submit claims. "Health plans supported the law-and health plans believe that there is a great deal of cost-cutting potential with electronic billing," he says. "But basically, the government is just building a half-bridge. Unless providers are required to adopt and use the new technology to electronically submit transactions, we won't achieve any efficiencies."
John McCormack is a freelance business writer based in Riverside, Ill.
Billing a Priority for P&C Carriers, Too
As a primary point of contact, a bill sent out by an insurance carrier is one of the most important customer service tools. As such, insurers across all lines of business have key strategies in place to improve how the billing area functions.
Personal lines property/casualty carriers looking to invest or enhance their billing function have much to consider: Will the billing system integrate with back-end policy systems, third-party data services and enterprise document management solutions? Will it tie to the agent portal? Will it provide billing inquiries with payment capabilities through its agency management system? Finally, should they invest in a stand-alone product or a bolt-on to an existing policy administration system?
Regardless of their strategy, it's clear that property/casualty insurers of all sizes view billing as a core systems priority.
Recent research from New York-based research firm Novarica confirms this: Of 122 P&C CIOs queried in late 2010, 3% ranked stand-alone billing systems as a top project for 2011, while 2% of mid-size insurers reported billing as a top initiative. However, 14% of large, 13% of midsize and 12% of small P&C carriers said billing was a top priority as part of a larger policy administration system.
The same is true for outsourcing of the billing function, notes Mike Fitzgerald, senior analyst with Boston-based Celent. "When budget dollars for billing are included in outsourcing allocations, it's almost always included in more general policy/customer service functions," he says.
For both personal and commercial lines P&C carriers, budget allocations for modern billing solutions may include both the functionality of traditional systems, and the benefits of modern ones to give insurers the flexibility and configurability to manage a variety of ways to deliver billing touch points across the distribution chain.
-Pat Speer
