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Managing costs and improving operational efficiencies jump to the top of the list in 2022 Health Plan Market Survey

Every year, we conduct a survey of hundreds of health plan executives. This year, more than 300 health plan leaders responded, and the full research results can be found here.  One of the biggest changes that surfaced in this year’s results was the sharp increase in the number of executives who are concerned about rising administrative costs. This blog explores the research results and some of the drivers that are impacting costs – along with some practical advice on how some of the most successful plans are taking the challenge head on.

Results Reveal Heightened Attention on Managing Costs

As “managing costs” jumped from near the bottom of the list in 2021 to the top of the list in the 2022 Health Plan Market Report, the shift reflects the monumental changes that are going on in the market today. Everything from aging technology that is not able to keep pace with market changes to increasing regulatory pressures, administrative costs have been rising. Let’s break down the key factors driving the heightened focus this year.

1. Aging technology: As member expectations of their health plans evolve to be more in line with what the experiences they have with other parts of their lives (retail purchases online, personalized service, price transparency), payers are being forced to respond with higher service levels. The growing number of regulatory requirements are also putting pressure on aging systems to make available data to members and other stakeholders. New market entrants with more innovative approaches to benefit plans and services are threatening the market share of traditional payers, resulting in the need to be more agile and creative.

Aging systems directly impact administrative costs. For example, systems without flexibility to support new payment models requires more manual work or results in missed opportunities. Legacy systems that are incapable of seamlessly exchanging data with other systems require manual data entry that increase labor costs and introduce the risk of human error. Also, systems that can’t facilitate advanced automation increase the cost per claim by adding even more manual intervention. In fact, in this year’s survey, we saw the cost per claim increase for more health plans this year – with 58% of survey respondents reported their cost per claim is $8 or more, compared with 44% the previous year.

Outdated, legacy systems were never designed to be flexible and open. They were mainly designed to process claims. As payers seek to respond to the market demands, they are having to make tough decisions about whether to continue to invest in their aging systems and more manual resources or move to more modern, open systems.

2. Workforce dynamics: The labor shortage is also driving up administrative costs. With fewer staff members and rising wages required to attract and retain qualified resources, operating expenses are increasing. In addition, when the technology is not easily adaptable, health plans are forced to hire more people just to cover the basics, like maintain compliance with new regulations and meet member and provider expectations. As backlogs build up and service levels go down, so does the health plan’s ability to positively impact member outcomes. The impact of having fewer resources available in a business that is heavily depending on manual processes has far-reaching effects on virtually every component of the organization.

3. Regulatory Changes: More regulatory changes have occurred in the past two years than in the previous 10 years. All of this change typically requires modifications to the underlying systems that generate the data and run the workflows. Without a modern, flexible system, health plans have to use manual resources and add more work to their already overwhelmed IT departments, which in turn, impacts costs.

When asked what their top challenges were when it came to staying compliant with CMS’ frequent changes to quality standards and payment rules, the top two responses were:

1. Technology/infrastructure cannot keep up

2. Lack of IT staff or resources to make changes

3. Interoperability mandates

4. Post-Pandemic Care: During the pandemic, patients delayed care, creating gaps in care and sometimes costly complications. As those patients return to their physicians and hospitals for care, claims volumes have increased and so has the cost for the care. This surge in claims is putting further strain on inefficient and manual processes.

Digitization Can Drive Savings and Growth

To address these challenges, health plans are looking for ways to get more from less and finding investments in modern technology to be a smart solution. And when costs are reduced and efficiencies are gained, leaders are bullish on the future of the industry.

When asked what leaders would do with the savings captured from lowering costs and finding new operational efficiencies, the top three answers were:

1. Invest in new geographies or lines of business
2. Consider new partnerships or acquisitions
3. Reallocate for further innovation

HealthEdge currently provides best-in-class solutions delivered on powerful, digital transformation platform that enables more than 100 health plans tackle these tough challenges today. Modern systems from HealthEdge provide the true integration capabilities, advanced automation, and access to real-time data that is necessary to drive down costs. Replacing outdated, legacy systems with modern technology made to support the demands of today’s market not only opens the door to new operational efficiencies, but also enables greater opportunities to increase member satisfaction and drive new revenue opportunities.

For more information on how HealthEdge can help your organization manage rising administrative costs, visit www.healthedge.com or email [email protected].

Each year, HealthEdge surveys hundreds of health plan leaders to better understand the market’s top priorities and business challenges. This year’s study captured data from more than 300 leaders and revealed a heightened priority among CEOs and CIOs when it comes to implementing modern technology to achieve organizational objectives. The full report can be accessed here.

Top Challenges Reported
Today’s healthcare insurance market is highly dynamic due to rising healthcare consumer expectations, workforce shortages, growing complexities of the regulatory environment, shifting payment models, and rising administrative costs. Survey respondents ranked the following as the top challenges they are facing this year:

• Managing costs
• Operational efficiencies
• Alignment between IT and business
• Member satisfaction

When asked about their plans are to overcome these challenges, more than half of respondents indicated they are focused on making significant investments in innovation (53%), modernizing technology (51%), and aligning the business and IT organizations (53%).

The most common theme across these approaches is technology, or as some experts describe it – digital transformation.

For those who can leverage modern technology to become nimbler and more efficient in today’s highly dynamic market, there is significant opportunity to creative competitive advantages, improve the member and provider experience, reduce administrative burdens, and ultimately increase profitability.

Aligning for Success

Health plan leaders also highlighted the need for better alignment between their IT and business resources. In 2021, survey respondents indicated aligning the business and IT organization was the lowest priority when it came to steps needed to achieve business goals. However, in 2022, this priority jumped to the top 3, only slightly behind managing costs and creating operational efficiencies.

The shift indicates that leaders are acknowledging the vital role technology now plays in their ability to achieve their business and revenue goals. Together, CEOs and CIOs can evaluate how technology can support strategic business needs:

• How can our IT systems allow us to do more with less?
• What more can we get out of our technology investments?
• How can we adapt faster to changing market conditions?
• How can we use technology to better connect our disjointed member and provider experiences?

The Answers are Clear

Three common themes have emerged among some of the most successful leaders leveraging modern technology today are true integration, advanced automation, and access to real-time data.

• True Integration: Through a fully integrated ecosystem, digital payers can lead the way in shaping the member-centric, connected healthcare ecosystem of the future. Continued innovation is enabling digital payers to break down siloes and improve access to real-time data among payers, providers, partners, and members. Next-generation payers are investing now in platforms that facilitate this heightened level of connectivity across their own organizations as well as the entire healthcare delivery system.
• Advanced Automation: Automated processes improve accuracy, while reducing manual intervention and operating costs. Investing in modern technology with automation capabilities to improve claims accuracy and remove manual processes that often prohibit health plans from being nimble enough to explore new market opportunities.
• Real-time data: By enabling greater access to the real-time data, whether it be claims data, benefits information, and eligibility checks, or provider performance metrics, all stakeholders will be better equipped to improve the way care is delivered and paid for. In fact, survey respondents say that lack access to real-time data is the number one issue negatively impacting provider relationships. With better, more timely data comes better outcomes and a better experience for all. Health plans leading the way in delivering real-time data improve clinical and business outcomes for all.

Accelerating your Digital Transformation Journey

Learn more about why health plan executives are prioritizing modern technology investments and how HealthEdge supports the digital transformation for payers in our latest white paper: Annual Market Survey Reveals What 300+ Health Plan Leaders are Thinking.

HealthEdge has identified five key attributes that drive digital payers, enabling them to rise above the competition and lead the way to better outcomes across the entire healthcare delivery system.

Digital Health Payers focus on:

1. Improving end-user and member centricity
2. Achieving higher levels of quality
3. Increasing transparency
4. Advancing customer service
5. Reducing transaction costs

In this five-part blog post series, we’re diving deeper into each attribute, delivering resources, information, and insights to enable health plans to transform into digital health payers. As we continue the conversation around what it means to be a digital payer, this discussion focuses on reducing transaction costs.

Constantly Reducing Transaction Costs

Transaction costs are a true indicator of the level of efficiency that exists within a health plan. Typically, the higher the costs, the lower the efficiencies. In HealthEdge’s Annual Market Survey of more than 300 health plan leaders, managing costs and operational efficiencies topped the charts as this year’s biggest challenges leaders are facing.

According to McKinsey & Company, “The rising cost of claims and the complexity of claims management are among the most pressing challenges health insurance companies and other private payers face today. Digitizing every step of the claims process, from data input to payment, has the potential to streamline claims management, as well as boost its efficiency and accuracy. When done right, the result can be both lower costs and better customer experiences.1”

Digital payers are in tune with the challenges driving the costs of transactions and are focused on identifying new, innovative solutions to reduce them.

Identifying The Causes

There are a variety of factors to blame for rising costs – from skyrocketing claims volumes following the pandemic, to rising costs due to long delays in care, and outdated systems that require manual intervention and hefty investments to meet industry demands. As workforce shortages continue to plague the market, health plan leaders are evaluating every opportunity to reduce costs and administrative burdens.

In the 2022 Annual Market Survey [link to published white paper] conducted by HealthEdge each year, more than 300 health plan leaders revealed that transaction costs continue to rise. In the study, respondents indicated the average cost per claim increased this year, with 58% reporting that their average cost per claim is $8 or more, compared to 44% in 2021. However, according to the most recent CAQH Index, adoption of electronic claims submission is high – at 97%.2 So, if plans and providers already have electronic systems in place, what is driving the increase in transaction costs?

Transaction Cost Drivers

Experts indicate the increase in transaction costs is partially being driven by inaccurate claim payments and manual rework. In fact, only 26% of respondents said that greater than 80% of their claims were paid accurately the first time. Both result from disparate systems involved in the process and the complexity of continuous changes associated with claims processing. This occurs even with electronic solutions in place.

The fact that many organizations are using multiple tools to manage claims, all with limited connectivity, is to blame. When updates are made – which frequently happens – chaos and inaccuracies are likely to follow with outdated, disconnected systems. For example, providers, government agencies, state programs, and Medicare make pricing updates at different times. Each solution from a different vendor involved in claims management is also updated at various times, further complicating the process. That’s why using multiple, outdated technology systems can increase costs.

Recent cost increases have also been driven by new and added complexities to claims management. Not only is pricing continuously updated, but drastic changes in healthcare over the past two years have introduced new challenges. According to the most recent CAQH Index, the rapid increase in use of telehealth and the introduction of COVID-19 further exacerbated transaction complexity. The 2021 CAQH Index explained, “Providers had to submit new information related to telehealth and COVID-19 and often engaged extensively with health plans using manual methods which increased the time and cost to conduct a manual transaction.”2

How Digital Payers Reduce Transaction Costs

Digital payers are laser-focused on these problems and are constantly seeking new ways to reduce costs by using modern technology to automate more of the claims processing workflows and eliminating many of the time-consuming, error-prone, manual processes they’ve typically followed. By doing so, they are able to eliminate the IT and business burdens associated with bolting together multiple, disconnected solutions with a single, fully automated platform to achieve payment accuracy.

A single digital platform enables digital payers to:

• Centralize data so it can be shared across the healthcare ecosystem, minimizing the impact of frequent updates
• Consolidate claims processes and streamline workflows to save time and reduce errors
• Eliminate limitations associated with linear claims processing, allowing full automation, and minimizing manual intervention

As a result, digital payers ensure claims are paid accurately the first time, which in turn, reduces rework and improves productivity that leads to lower transaction costs.

To learn more about how HealthEdge can help your organization lower transaction costs, visit www.healthedge.com or email [email protected].

1McKinsey & Company. For better healthcare claims management think “digital first.” June 19, 2019.

2 2021 CAQH Index. Working Together: Advances in Automation During Unprecedented Times

40-cents per professional claim. That’s the average savings payers generate after turning on a single feature in Source, HealthEdge’s payment integrity solution.

How is that possible? The process is  complex, and the rules change often, but the History-based Editing capability embedded within Source automates the entire process – identifying any claims over the past three years that may be impacted by current claims during the normal editing process. It then returns the accurate claim amount prior to the payment being made.

On average, health plans that use history-based editing report a savings of 20% per impacted claim. And this comes at a time when managing costs and creating new operational efficiencies are the top two most important issues facing health plans today, according to the latest Annual Health Plan Market Report that surveyed more than 300 health plan leaders.

Let’s look at a real-world example.

The Source professional services team recently partnered with a large payer to perform a data study to determine the impact of this functionality on the organization’s 3.9M professional claims. The team was able to quickly identify $1.5M in savings.

Here are the raw stats:

• Average savings per all professional claims: $0.40 per claim
• Average savings per impacted claim: $38.26 per impacted claim
• Average % savings on impacted claims: 20.9%
• Most common edits: Multiple surgeries, multiple E&M, NCCI, improper billing

While exact ROI depends on a payer’s unique claims, payers have the potential not only to save money on the claims themselves, but also save on the costs associated with downstream efforts that are often necessary when history is not applied upstream in the adjudication process.

With Source, complex situations like the Medicare 3-day rule suddenly become simple. This rule requires all diagnostic services and items that are tied to an inpatient procedure three days prior to be captured and bundled on the same professional claim. Too often, items are not tied to the proper claim, and the claims get paid twice. But with History-based Editing, Source identifies this issue prior to payment being made.

Here’s how it works.

Embedded in Source is the capability for payers to more accurately assess a claim that is currently in the adjudication process based on historical claims. Source securely houses a rolling 39 months’ worth of historical member claims in an isolated, encrypted-at-rest database. The system identifies claims in history that may impact current claims during the normal editing process. It then returns editing and pricing data for the current claim in real time.

Additional details on specific historical claim line items affecting the current claim are saved to an audit database that is readily accessible to assist in reconciliation and provider relations.

 

Evaluating the Value: What’s Your Potential Savings?

To demonstrate the value of the Source history-based capabilities, the Source professional services team assesses three months of your data and re-runs the claims after applying optimized configurations that utilize a claim’s history. The results are compiled and reviewed with your team to estimate long-term savings and opportunities.

Optimize Your Accuracy with History-Based Editing: Getting Started

Once your team fully understands the potential savings from the data study, your organization follows these four, easy steps to start realizing the benefits.

• License the solution from Source
• System configurations to the system are made to utilize the feature
• Three years’ worth of historical data is submitted to the system via one-time transfer to initially populate the history database which informs edits
• A new data feed is established to keep the history data up to date.

To schedule your data study and determine what Source’s history-editing capability can do for your organization, visit https://healthedge.com/solutions/prospective-payment-integrity/ or email [email protected]

HealthEdge has identified five key attributes that drive digital payers, enabling them to rise above the competition and lead the way to better outcomes across the entire healthcare delivery system.

Digital Health Payers focus on:

1. Improving end-user and member centricity
2. Achieving higher levels of quality
3. Increasing transparency
4. Advancing customer service
5. Reducing transaction costs

Over the next few weeks, we will dive deeper into each attribute, delivering resources, information, and insights to enable health plans to transform into digital health payers. As we continue the conversation around what it means to be a digital payer, this discussion focuses on advancing customer service.

Ever-Increasing Customer Service Levels

In a service-oriented economy, the organizations that deliver the best service typically win – and healthcare is no different. Health plans that are not able to optimize customer service are not only frustrating their members and providers, but they are also missing out on significant efficiency gains and cost savings.

The recent study, The State of the Healthcare Consumer, conducted by Porter Research, found that 25% of respondents required two or more calls to achieve a resolution when contacting their health plan for support. The study also indicated that health plans waste more than $654.5M per year in unnecessary claims resolution calls.

Digital payers focus on resolving these challenges by leveraging technology to deliver consistent, high-quality customer service. By using next-generation, digital solutions, health plans can better equip customer service teams to support inquiries, automate processes to speed service, and advance personalization.

Support Inquiries from Members, Providers, and Other Stakeholders

Digital payers empower customer service teams with access to real-time, accurate information to support inquiries from members, providers, and other stakeholders. Providing immediate answers to those seeking benefits information, cost estimates, and claims status improves member engagement, satisfaction, and financial clarity. Payers that embrace digital transformation use next-generation tools and connectivity to ensure customer service teams have the information they need when they need it.

Automating Processes to Expedite Service

Reducing costs and improving operational efficiencies are today’s top priorities, accounting to the 2022 Annual Health Insurance Market Report of more than 300 health plan executives [link to exec survey summary].

To help manage costs and identify new efficiencies, digital payers turn to modern technology to automate repetitive business processes that can improve customer service. By making critical information more readily available to support inquiries and self-service activities, customer service representatives are able to focus their time on more complex inquires requiring high-touch, one-on-one engagement. In addition, customer service representatives can respond faster and with more accurate information to member inquiries.

Advancing Personalization

Consumer have grown to expect a personalized experience because of their regular interactions with retailers and digital giants. Digital payers have the data, information, and tools to deliver a personalized experience from their members. With next-generation solutions, digital payers have greater access to more real-time member data that allows them to personalize their communications with members, further improving member satisfaction and loyalty.

Increasing Service Levels as a Digital Payer

HealthEdge provides the digital foundation to enable digital payers to improve processes for handling member inquiries, automate and speed workflows, as well as add the personalization that today’s healthcare consumer has come to expect. Next-generation solutions from HealthEdge deliver a connective transformation that improves the flow of accurate, up-to-date information. As a result, digital payers can use that information to align communications, improve access to data, and continually elevate levels of service.

To learn more about how your health plan can leverage modern solutions from HealthEdge to improve customer service and become a digital payer, visit www.healthedge.com or email [email protected]

HealthEdge has identified five key attributes that drive digital payers, enabling them to rise above the competition and lead the way to better outcomes across the entire healthcare delivery system.

Digital health payers focus on:

1. Improving end-user and member centricity
2. Achieving higher levels of quality
3. Increasing transparency
4. Advancing customer service
5. Reducing transaction costs

In this five-part blog post series, we are diving deeper into each attribute, delivering resources, information, and insights to enable health plans to transform into digital health payers. As we continue the conversation around what it means to be a digital payer, this discussion focuses on embracing business transparency.

Embracing Business Transparency

Transparency is increasingly becoming a hot topic for health plans. Consumers are demanding more transparency in terms of benefits, costs, and care choices. Government mandates like the Transparency in Coverage Rule and the No Surprises Act are requiring payers to make more data available to more healthcare stakeholders. Everyone across the healthcare ecosystem including members, providers, and other partners need greater access to data as they attempt to improve health outcomes and financial decision making.

Digital health payers are embracing this new emphasis on transparency that is possible with modern claims processing, care management, payment, and member engagement technologies like those from HealthEdge. They are able to use their next-generation systems and automated processes to support better integration, break down silos across departments, and optimize the flow of information.

Consumer Demand for Transparency

Today’s more tech-savvy consumers have grown accustomed to having information at their fingertips. Digital giants like Amazon and Google make price and quality transparency simple for just about any product or service – delivering ease of comparison across multiple retailers and products.

However, consumers remain in the dark when it comes to cost and quality information to support their healthcare decisions. Patients visit doctors, schedule surgeries, or visit urgent cares with limited-to-no visibility into quality or costs to inform decisions and plan ahead.

According to McKinsey & Company, more than 60% of patients report they want more information when deciding where to get care. Digital payers are leading the way to meet this consumer demand for greater transparency by making plan pricing and information more accessible. Through member portals, digital tools, and integration with other systems requiring information for consumers, digital payers can help the healthcare industry make a giant leap forward when it comes to increasing transparency.

Transparency across the Healthcare Ecosystem

Access to real-time health data and benefits information can improve care decisions for providers, members, and other partners. Better cost and pricing transparency can also enable providers and patients to make better financial decisions. Health plans have an opportunity to lead the way in this transparency effort by improving the exchange of information across the healthcare ecosystem.

Digital payers make data more accessible to internal team members, including care mangers, customer services teams, and external stakeholders such as providers and caregivers, through fully integrated systems that optimize the flow of information. With the right information available across the ecosystem, healthcare organizations can improve care and financial outcomes for all.

Regulation-Driven Transparency

Transparency does not just benefit health plans, members, and providers. New rules require more transparency from health plans and enforce penalties for those who do not comply. According to CMS.gov, as of July 1, 2022, group health plans and issuers of group or individual health insurance are to begin posting pricing information for covered items and services. More requirements will go into effect starting on January 1, 2023 and January 1, 2024 as part of the Transparency in Coverage rule.2

In addition, the No Surprises Act implemented on January 1, 2022 is also driving the need for greater transparency and information sharing as health plans are now required to cover some out-of-network claims and apply in-network cost-sharing if their provider directories are not kept up to date, according to Kaiser Family Foundation.

To maintain compliance, digital payers are using modern technology that can support the flexibility and digital connectivity necessary to seamlessly exchange data with those needing access. Whether is it care managers needing faster access to benefit utilization numbers or prior authorizations, or members needing insight into care networks, digital payers are able to provide transparency across the ecosystem.

Enabling Transparency with HealthEdge

HealthEdge delivers next-generation solutions for health plans to transform transparency requirements into business advantages. With best-in-class solutions that seamlessly integrate and share data across the ecosystem, HealthEdge technology delivers the digital foundation that enables digital payers to use and exchange critical data in a way that is meaningful for members, providers, and other partners. Solutions including, HealthRules® Payor and GuidingCare® leverage the power of true integration capabilities to streamline data flow across all lines of business and functional departments as well as third-party systems. With HealthEdge, payers transform into digital payers, leading the way in delivering transparency in healthcare.

Learn more about how to become a digital payer and turn transparency into your business advantage by by visiting www.healthedge.com or emailing [email protected].

1 McKinsey & Company. Consumer decision making in healthcare: The role of information transparency. July 13, 2020

2 Centers for Medicare & Medicaid Services. Transparency in Coverage

3 Kaiser Family Foundation. No Surprises Act Implementation: What to Expect in 2022. December 21, 2021