3 Functional Areas That are Ripe for Immediate Operational Efficiency Gains

Operating margin improvement is a top three critical outcome for digital investments in 2024 for 67% of U.S. healthcare payers.”
— Gartner®, Three Operational Excellence Best Practices to Optimize Costs for U.S. Healthcare Payers, 1 November 2023, Mandi Bishop 1 

Healthcare payers’ operating margins are being squeezed like never before. As many payers turn to technology and automation for answers, it is important to identify areas in the business where manual resources are being used to do work that modern technology can easily accommodate.

Barriers to Margin Optimization 

The problem is that many payers are still dependent on legacy, outdated core administrative processing systems (CAPS), siloed claims pricing and editing solutions, and disjointed care management systems. These systems are not able to accommodate today’s:

• Highly complex payment models, including value-based care 
• Ever-increasing demands from providers to get paid faster and more accurately with more customized contracts 
• Rising healthcare consumer expectations that are being shaped by their retail experiences. 

Again, referencing the Gartner report, “The prevalence of legacy IT systems and number of custom practices mean payers have significant human-involved processes.” 

As a leader in integrated digital payer solutions, HealthEdge has identified three main functional areas of the business where operational efficiencies can be gained to impact payer operating margins directly and positively. 

1. Claims Processing

Many payers are wasting valuable resources and time by manually reworking claims and reconciling inaccurate payments. In fact, according to a recent HealthEdge survey on the current state of payment integrity, the waste is pervasive: 

• • 90% of payers depend on two or more payment integrity vendors, which means multiple datasets, update schedules, and instances across lines of business. The IT burden and workflow complexities associated with this approach have become overwhelming for many health plans.  
  • 55% of payers report that more than 20% of their claims require rework due to inaccurate first-pass adjudication. Claims rework not only requires additional time and effort from the payment integrity team, but it also downstream work for other teams, such as provider relations. 
  • 70% of payers have more than 10 full-time employees (FTEs) dedicated to payment integrity, and 45% have more than 25 FTEs. When asked what the future looks like when it comes to dedicated resources, 56% say they expect that number to increase over the next one to two years, further compressing operating margins.

2. Contract Configuration

As healthcare providers attempt to manage many diverse contract types, the complexities continue to grow. This often requires hundreds of different configurations to be created, which results in additional manual oversight and administrative burdens to avoid compliance issues and payment inaccuracies. In the end, many payers find themselves wondering if these complex configurations are really worth the impact they have on operational efficiencies.

3. Care Management

With rising healthcare consumer expectations for more personalized engagement and greater transparency, payers are struggling to assemble the right mix of digital solutions that support positive member experiences and compliance with new price transparency rules. According to the HealthEdge Annual Consumer Survey, only 55% of healthcare consumers are fully satisfied with their health insurance provider, leaving much room for improvement. And as CMS doubles the weight of the member experience when it comes to Star ratings for Medicare Advantage plans in the new year, it is more important than ever for payers to address the rising expectations.

Striving for Operational Excellence 

There are modern, tightly integrated digital payer solutions on the market today that can help payers find new operational efficiencies in these three areas. As the only provider of integrated digital payer solutions, HealthEdge® offers payers the opportunity to identify these efficiencies through hyperautomation of manual process across multiple functions and lines of business. 

Here is a brief summary of those HealthEdge solutions and how they work together to help relieve some of the pressures on today’s health plan margins. 

• HealthEdge Source™ (Source), is HealthEdge’s prospective payment integrity solution. With Source, payers get one source of truth for payment accuracy and accountability across all lines of business. And because it is a cloud-based solution, fee schedules and policy changes are updated automatically every two weeks. Designed specifically to integrate through a single API to any core administrative processing system (CAPS) for improved speed and performance, Source helps minimize the IT burden of implementing, connecting, and maintaining multiple editing and pricing tools. Plus, with Source Platform Access, payers are finally able to identify the root cause of inaccurate payments and resolve issues upstream so the errors do not repeat month after month.  

“By investing in a prospective payment integrity solution that highlights inaccuracies before the payment is made, you can stop the costly retroactive repayment process that negatively impacts your providers and members through administrative costs.” 2 

• HealthRules® Payer is HealthEdge’s next-generation core administrative processing system (CAPS) that enables transformational outcomes and business agility for all types and sizes of health plans. Recognized as a Best in KLAS CAPS for the third year in a row, the platform helps payers unlock new efficiencies through a combination of modern technology and highly flexible solutions that support real-time automation of business processes, such as claims adjudication, enrollment, and billing. In addition, HealthRules Payer automates many of the workflows associated with rapidly emerging regulatory requirements and seamlessly integrates with other HealthEdge solutions through productized integrations like Payer-Source and Care-Payer, for improved transparency and interoperability. When it comes to contract modeling, the system allows health plans to easily configure and manage a wide range of contract types, including value-based care arrangements, bundled payments, and traditional fee-for-service contacts – for all lines of business in one system. 
• GuidingCare® offers comprehensive solution that bridges the gap between payer capabilities and member expectations by facilitating more personalized member engagement. The platform achieves this through a set of integrated solutions, including Population Health, Utilization Management, Appeals & Grievances, Authorization Portal, and Business Analytics. In addition, GuidingCare provides a robust set of tools that support the unique requirements and complexities of many different state Medicaid programs. GuidingCare also integrates seamlessly with HealthEdge’s HealthRules Payer (Care-Payer) to give utilization management staff and care managers seamless access to real-time benefits information.  
• Wellframe™ digital care management solutions offer care team members the ability to seamlessly connect with members through multiple channels to reduce inpatient admissions by an average of 17% and increase preventative medicine utilization by an average of 29%. Integrated with GuidingCare (Care-Wellframe) or used as a standalone application, the system delivers a framework for engaging members of target populations to help them get access to the support they need outside of traditional care delivery settings. Wellframe also supports self-service digital resources that empower members to proactively reach their health and wellness goals. With Care-Wellframe, care managers can work seamlessly within both systems to gain greater visibility into member benefit plans and utilization while also offering a closed-loop referral process for social care services. With greater member engagement, member satisfaction rates and outcomes increase while operating costs decrease.  

Looking Ahead 

When a series of integrated digital payer solutions, like those offered by HealthEdge, are in place, payers are able to achieve new levels of operational efficiencies and minimize administrative burdens of working with many different software vendors. These efficiencies relieve some of the pressure on payers so they can focus more on providing high-quality care and services to their members and develop collaborative relationships with their provider networks. 

Sources: 1 Gartner®, Three Operational Excellence Best Practices to Optimize Costs for U.S. Healthcare Payers, 1 November 2023, Mandi Bishop, GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

To learn more ideas on how to navigate the growing pressures on payer operating margins, download this complementary Gartner Report or visit HealthEdge at www.healthedge.com.