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In 2022, HealthEdge once again commissioned an independent survey of health insurance executives to capture and monitor perspectives regarding current challenges and priorities. There were over 300 responses received – from Directors and above in a variety of types and sizes of health plans.

We’d like to focus on one of the reported Top Challenges Facing Health Plan Executives – operational efficiencies.  The challenge of operational efficiencies came in second place and jumped 33% from 2021 to 2022, from 31% to 41% of respondents. To satisfy your curiosity, ‘managing costs’ came in first place, and ‘member satisfaction’ third in the 2022 study. In 2021, operational efficiencies ranked sixth. Member satisfaction and managing costs tied for third in 2021 behind ‘competitive pressure’ and ‘IT/business alignment’ (fourth and fifth in 2022, respectively).

When we began discussing and evaluating this internally, the comment came up about the pent-up demand for care as some consumers stopped seeking care during the COVID years of 2020 and 2021. It’s a complex dynamic, as the varying impact on payers and providers differ and could also be positive or negative.  Capitated health plan members seeking less care might be good for the provider financially, albeit temporarily. The influx of care may also have a positive or negative impact for payors and providers.  The increase in unemployment caused an increase in uncompensated care – but also an increase in Medicaid membership. It is anything but simple and there are many factors to consider – type of health plan, type of patient, type of reimbursement, conditions, diagnoses, contracts, etc.

Managing costs and operational efficiencies go hand-in-hand, so it makes sense that they both increased significantly in the responses for top challenges.  With the “great resignation”, the need to become more efficient is at play in all types of organizations – and is directly related to operational efficiency.

We’d like to focus on three potential areas to consider related to operational efficiency – auto-adjudication and first pass rate, digital transformation and return on investment (ROI), and staffing.

Auto-adjudication and first pass rate

Most health plans continue to focus on improvements to auto adjudication rate, a key indicator for improving operational efficiency. The obvious benefit here is the assumption that fewer claims will be touched by a human. However, first pass rate is often overlooked or not measured, and is equally, if not more important. For those that are unclear on the difference – the auto-adjudication rate is most often measured by simply calculating the percentage of claims successfully processed without manual intervention. Without more complex calculations, what is sometimes overlooked are claims that had previously suspended – maybe even more than once – and are now processed a subsequent time successfully – then counted as having auto-adjudicated, skewing the results.  Some of those claims were actually touched by a human, sometimes more than once.  First pass rate calculates those claims that were never suspended and successfully processed the first time. However, both measures help with evaluating operational efficiency.

Digital transformation and return on investment (ROI)

The buzz words “digital transformation” have been top of mind for the last several years, and remain a priority for improving operational efficiency.  What IS digital transformation? Each organization must carefully define what this means internally, but in general, it is increasing and improving the efficient use of technology. There is a cost to increasing the use of technology. There is certainly a ROI to come, and it’s critical to not only anticipate the ROI, but to continue to measure it.  The measurement can help to justify future improvements to and investments in technology once ROI calculation and measurement becomes routine and is demonstrated. The simple fact is that money must be spent to eventually save money – just like how converting a home to solar power includes a significant initial investment that pays off over time.

Software vendors are being asked more than ever to justify the cost of technology and demonstrate (in advance) the ROI. In some cases, ROI and/or performance guarantees are being built into software licensing agreements. The software industry should be positioned to explain and develop the ability to measure and commit to stated ROI for purchasers of their technology solutions.

Staffing

Operational efficiency related to staffing also increased in importance as most organizations are now trying to do more with fewer resources. Health plans are trying to become more efficient through higher automation of manual processes where applicable – and somehow enabling a corresponding increase in human efficiency. The so-called great resignation has health plans understaffed and has increased the urgency of this shift. Some did not anticipate the increase in staff productivity while working remotely.  While this is not true 100% of the time and not for 100% of employees, it has been true more often than not. Interestingly, in many cases, working remotely improved work/life balance – and consequently improved productivity.  This turned out to be operationally efficient.

Recruitment and retention are more critical than ever. Alternate staffing methods have become important to defend against this phenomenon. This includes some tried and true options such as 9/80 or 4/40 work schedules, part-time and shift work, full- or part-time remote work, additional paid holidays and/or time off, and other common staffing solutions. In addition, internship programs are increasing, as is the untapped value of the intern.  While many internship programs were and remain focused on the summer, many programs are now year-round. Many colleges and universities offer cooperative education (or co-op) programs – where paid full- or part-time jobs are taken for credit during what would be the typical school term (or longer). Internships are being made available to others, including recent graduates or master’s program graduates.

While the need for operational efficiency may increase or decrease in any given year, it is a continual challenge that can be achieved in many ways. We hope we’ve offered just a glimpse into a few potential contributors.

Read the full report here: Annual Market Survey Reveals What 300+ Health Plan Leaders are Thinking

The ‘pay and chase’ model of reimbursement is prevalent in the health care industry. This means many health plans know and accept the fact that payments to providers are simply incorrect and will require remediation.

At HealthEdge, we’re asking lots of questions about this traditional model and challenging the status quo.

• What if health plans modeled contracts before or during negotiations with providers?
• What if health plans understood how contract terms would affect their claims before putting them in place?
• Could health plans streamline contract terms and ensure that reimbursement methods pay correctly and automatically?
• Could health plans remove manual processes and rework?

Getting to the root cause of conflict

The friction between providers and health plans is multi-faceted. Erroneous payments are simply accepted, allowing the pay and chase model to be normalized and standard. But consistent errors wear on both health plans and providers. Allowing a claim to be underpaid or overpaid by even a few cents, will become a substantial amount over time, increasing tension between health plans and providers.

The pay and chase model also takes time away from the individuals working to remediate the discrepancies. Rework requires time to be spent on the same tasks that could have been correct the first time. Overall, this leads to waste in the form of time and dollars.

What is contract modeling?

Contract modeling can be thought of as testing terms for reimbursement. This allows a health plan to gain valuable insights into impacts of the terms within contracts prior to applying them to production claims.

Contract modeling can build a comparison of ‘what if’ scenarios to help a health plan make important decisions when it comes to negotiating provider contracts.

The benefits of contract modeling: how it can resolve the abrasion between health plans & providers

Contract modeling can also be valuable to a health plan that is negotiating contract terms with a provider. It will allow for the health plan to understand the contract terms and their application to claims, while also bringing the same clarity to the providers, creating a strong and transparent relationship.

A comprehensive approach to accuracy & efficiency

Can we change the status quo of reimbursement with contract modeling? Perhaps the process of creating provider contracts is backwards. Instead of the traditional approach, what if we first know and understand the payment that providers are expecting and how contracted terms will behave on claims prior to negotiations? With a complete and transparent approach, we can stop the pay and chase model and start paying claims accurately and efficiently the first time.

We all get the emails – mid-year check-in, annual reviews. These performance reviews are designed to help us continuously grow and develop throughout our career. Your manager and/or mentor can provide you with the support to grow and evolve – but there’s only one person who owns your growth and how you invest in yourself.

Your personal development is your responsibility – and it comes with a host of benefits, including personal satisfaction, increased career opportunities, improved brain health, and the joy of continuous learning and mastering something new.

What does owning your growth mean?

Personal growth and development means developing a vivid vision of what you want your life and career to become and establishing goals and a plan to achieve that vision. And taking the personal responsibility and accountability to commit to achieving that vision.

An important component of owning your growth is feedback. Along your path, are you asking for feedback? A helpful 3-question framework is:

• What am I doing well?
• What do I need to do more of?
• What do I need to do less or stop altogether?

It’s so easy to get off-track on our quest for personal development. Work, family, digital distractions, information overload, the feelings of failure/not progressing fast enough are demons lurking in the wings – waiting to derail us from our personal growth. This is why it’s so important that the drive for personal development comes from you – it has to be internally driven to stick. Develop a vision of your life that’s so compelling you can’t help but be pulled toward it.

Why invest in your personal growth?

What happens if you don’t invest in your personal and professional growth? One of the biggest risks is stagnation. Another is if you’re given feedback and don’t do anything about it.

A growth mindset coupled with personal development can lead to increased creativity, opportunities at work, problem solving, and even improved brain health. According to neurosurgeon Dr. Sanjay Gupta, learning new skills is one of the best ways to keep your brain sharp.

How do you invest in your personal growth?

There are many ways to learn – YouTube, classes, webinars, coaches, books. The options are nearly endless – but the key is to select what you want to learn, how you’re going to learn, how you’re going to immediately apply it – and make a commitment to yourself to see it through.

For example, if we think about learning a second language. There are so many things to learn – how do you learn without feeling overwhelmed by the magnitude of the task. We follow this framework and break down a big goal into manageable chunks:

• Select what you want to learn: I’d like to learn Spanish and be proficient enough to have basic conversations.
• How I’m going to learn: I’m going to take a weekly class, learn vocabulary with notecards for 15 minutes a day, and do Duolingo every day.
• How I’m going to immediately apply it: I’m going to find a weekly Spanish meet up group, join it, and practice speaking.
• Commitment: I commit to taking full ownership of this goal. I am responsible and will see it through.

A couple important notes include:

• Make sure to give yourself permission to take the time. It can be so challenging with work, family, and life obligations to make the space for something that feels like an indulgence. But personal growth is not a treat – it’s vital to your life and career.
• Turning your goals into daily habits is a great way to see success at something new. The book Atomic Habits is a great read on effective habit building. Comedian Jerry Seinfeld uses a calendar technique to keep his daily habits on track.
• We don’t retain new information unless we apply it. Any time you learn something new you have to immediately apply it. The more you use your new knowledge the stronger those neural connections become.
• There’s no one size fits all when it comes to personal development and/or learning. This is why it’s so important for you to own your growth.

Owning your personal growth

The feeling of mastering something new after a concerted effort is sublime – a potent combination of pride, accomplishment, and gratification. Leaving your personal development to only what is mandated by your manager robs you of the opportunity to feel this joy.

Give yourself permission to invest in yourself. To your success!

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