8 Challenges Faced by Healthcare Payers in the Pandemic Era and Beyond

At Lateetud, we are acutely aware of the challenges our healthcare payer customers face, in the current public health crisis. We have been working closely with them to assess their needs and apply appropriate Intelligent Automation (IA) strategies to best solve their unique business problems.

In this series of two blog posts, I will cover the challenges healthcare payers are facing and the various automation opportunities - specifically in the claims processing area – available to them to navigate the pandemic successfully.

As COVID 19 continues to impact the healthcare ecosystem, payers will continue to face headwinds. In the post below, I highlight 8 challenges that payers must overcome, considering COVID 19, and the best way to be ready for an unpredictable future.

8 Challenges Faced by Healthcare Payers

1. Margin and Revenue Pressure: On one hand, healthcare reimbursements will continue to rise, due to majority of care is now related to COVID 19. On the other hand, the elective surgeries that were postponed in many states and continue to be postponed in other states will put pressure on the margins, as well as revenue. Furthermore, as people continue to lose access to Employer Sponsored Insurance, they will demand discounted or short terms plans to manage their medical needs. Payers must deal with multiple cost-of-care scenarios and seek more clarity regarding who is responsible for what. Employers will also look for less generous plans to save benefit costs.
2. Medical Loss Ratio: Medical loss ratios will continue to be impacted for a couple of reasons: increased cost in administrative functions and decreased revenue. As states face limited budgets, there will be increased pressure on all aspects of health insurance, even on Medicaid reimbursements.
3. Operations Overhead: Payers are now inundated with more pends and adjustments as new ways of delivering healthcare emerge. Payers will also be faced with reimbursing health benefits to subscribers, who have traveled outside their jurisdiction but had to avail healthcare services. The transfer of data and medical records back and forth between host and home plans will increase. Furthermore, there will be more work to be done in enrollments, as well as stat and rekeys as employment returns, in member services. Payers will need to answer all queries in proactive health management and in audit and compliance to ensure proper standards are being followed. Additionally, payers must expedite claim status enquiry, prior authorizations and eligibility and benefit verification to provide much needed timely care.
4. Metrics and SLA: Payers are not charging customers for testing and treatment, which results in lack of coding, billing and adjudication clarity. This will result in the untimely processing of claims, which will impact the aging of claims.
5. Communication: Payers will have to improve communication with providers and subscribers, to ensure timely and necessary information. Providers need this clarity so that they can take care of submitting claims in a timely manner. Subscribers need this clarity so that they know what level of care if available through what channel.
6. New Product Offering and Resulting Admin Load: As millions of Americans lose their jobs, they will start reaching out to the marketplace to buy individual plans. Payers will have to quickly pivot and start offering plans to cover for this scenario; in my opinion, this will be necessary to cover for losses in premiums, due to reduced employer-sponsored plans. On the other hand, the government will mandate this to ensure proper short-term coverage for the unemployed citizens. Typically, member- submitted claims are highly manual and paper based. So, in this scenario I am seeing more expenses on the claims processing side. Payers may have to adjust their plans and premiums to retains employers and keep them insured.
7. Potential Social Backlash: Payers have to deal with two major challenges: they have to ensure that they quickly reimburse the already stressed out providers who are seeing less hospital/patient revenue and they have to ensure that they are providing all the support necessary to the subscribers who may not be following the right protocols and are struggling to find the right information, regarding what is possible and what is not. If payers are not fast and compassionate during these times, there is a high chance of social backlash. For instance - Humana is expediting claims processing during COVID-19. Conversely, there are direct aspersions being laid on payers for taking advantage of the situation.
8. Staff Morale: Payers must do more with the same staff levels. They can always hire more but with pressure on margins, can they really afford more staff? In this scenario, payers must focus on accomplishing more but not at the expense of staff morale.

In the latest CAQH annual report, the cost to manually service a claim is the highest in the three areas that I previously identified - claim status enquiry, prior authorizations and eligibility and benefit verification.

The below graph by CAQH indicates the level of adoption of Fully Electronic Administrative Transactions in a typical payer workflow. The graph identifies the three areas most impacted by the challenges stated above. Evidently, these three areas that are impacted the most due to the above challenges will further encounter stress, due non-conformance with the electronic standards leading to more pends, adjustments, enquiries, pre-authorizations, and eligibility verifications.

Figure: Medical Plan Adoption of Fully Electronic Administrative Transactions.

Another functional area that will be significantly impacted is “Member Services,” where the payers communicate with the members via phone, emails, and mail. With the projected increase in individual subscribers due to unemployment (>11% as of this posting), this functional area will see increase in cost.

As is apparent from these challenges, the cost of servicing subscribers (relative to the revenue) will increase, which is somewhat impacted by new ways of delivering healthcare and new situations. These challenges are going to force payers to think differently to come out as winners – not only to survive but to save lives.

Post-Pandemic

The pandemic is painful, but it is also a good lesson for all of us to stay alert and prepare for the worst as a disaster can come knocking at our doors anytime. Also, the aftereffects of COVID-19 are long-term that means patients remain at risk for lung disease, heart disease, frailty, and mental health disorders and to add more; with the way we humans are behaving irresponsibly to our environment, health issues may keep coming; therefore, a comprehensive plan for preventing and managing post-COVID-19 complications is becoming a necessity.

COVID-19 is already a medical, psychological, and economic burden on patients with lower income, the uninsured and underinsured, and individuals experiencing homelessness. To avoid further clinical, economic, and public health consequences and to support patients experiencing delayed morbidity and disability, ​policymakers and payers must look toward the future.

Telehealth is booming, and it may become the new normal post-pandemic as healthcare payers have now started segmenting telehealth visits into two categories: cost-related cases - which allows payers to reduce costs through telehealth, mainly by adjusting incentives to shift in-person care to digital visits and convenience-related cases - in which payers use telehealth services to generate loyalty even if the care is complementary and, therefore, increases costs.

One can also expect innovation in reimbursement post-pandemic. Healthcare payers are adjusting reimbursement policies to further encourage the use of lower-cost care settings. They are also seeking to shift reimbursement to value-based care.

Lastly, to survive in the postcrisis era, leading payers are making investments, building partnerships and exploring acquisitions that will further expand their business models. They have started to play more active roles in managing member relationships and making investments or acquisitions to compete with third parties and preserve their historic care management role. Many payers have started investing in a blend of navigation tools, disease-specific care management plays and digital engagement platforms due to the change COVID-19 has bought in the primary care market dynamics.

Wrapping up

The only way to deal with all of this is to automate as much operational overhead as possible to free employees and to provide value to the providers and subscribers. In the next post of the blog series, I will cover the areas that are ripe for automation - the most pertinent and relevant being automation in claims processing.

In the meanwhile, check out why “Digital Operating Model” makes sense in the post pandemic world. Here, I talk about how this unexpected experiment has impacted all of us, what you should consider while creating a pandemic ready “Digital Operating Model” and also talk to Chief Innovation Office of AST Financial – Alan Eddie and CTO of Blueprism – Jon Walden.