Health plans that focus their energy on the four areas of health reform compliance, increasing administrative efficiency, improving quality of care and finding a successful method of competing in health insurance exchanges are those that will prosper over the long-haul.
"The next 18 months may well be a make or break period for many payers," said Dan Spirek, executive vice president and chief strategy and marketing officer for TriZetto Group. "For those that seize the day and invest for the future, there are tremendous opportunities for competitive gains, regardless of the pace healthcare reform proceeds."
Spirek will outline how payers can effectively position their companies for success in the new healthcare environment in his Thursday morning presentation "Four Imperatives for Post Reform Healthcare" at AHIP Institute 2011 this week in San Francisco.
The first imperative for health plans is to comply with specific mandates required by the law that are both included in the Affordable Care Act and also pre-date it. Spirek said many health plans were "knocked on their heels" by the passage of reform and that has caused them to fall behind in their implementations of both 5010 and ICD-10, areas that he recommends should be receiving maximum focus.
"The biggest looming part of the legislations though, is health plans need to be prepared for how they are going to work with the local insurance exchanges," he said.
Medical loss ratio requirements under ACA have also caused health plans to take a look at improving their administrative efficiency. "The trouble is this industry has been whittling on internal transaction processing for 20 years so there is not a lot of low-hanging fruit within the existing processes," Spirek noted.
The big opportunity he sees to improve efficiency is for payers to begin to actively look for ways to outsource many of its functions.
"In virtually every other industry there are examples of outsourcing on both a U.S. and mixed-shore basis and healthcare has been extremely resistant to this," Spirek said. "If you can't make it more efficient, you need a lower unit cost on labor. [Outsourcing] could save 40 to 50 percent of expenses in a number of key processes in a health plan."
These processes include activities such as enrollment claims processing and benefit management and configuration –virtually everything payers do aside from their customer-facing functions.
Another way to squeeze cost out is by employing technology to help insurance plans more effectively manage their business relationships with members, providers and other constituents and to move from the largely paper-based system employed today to one that is electronic and more efficient.
"While the relationship has historically been adversarial, there is a true and genuine new degree of interest in partnering, so that health plans and providers can deliver more value for every dollar spent," Spirek said regarding the third imperative for health plans – the need to play a role in improving the cost and quality of healthcare.
A key element of this cooperation is the willingness of health plans to leverage their claims data to help providers develop more efficient models of care. The data health plans have today to help inform effective treatment put in the hands of the practitioners "is a very palatable idea, since it is better perceived by the patient and is better perceived by the provider," Spirek said.
The final imperative for payers is to prepare for the new market landscape coming in 2014. Once the exchanges are in place there will be a marked shift in how people consume insurance, and that will require payers to adopt new strategies in order to win these consumers for their business.
With health insurers expecting as many as 100 million people to move from their current form of insurance to a different form after 2014, the market will be exceedingly fluid and could make or break companies that don't have an effective strategy for both retaining current customers and attracting new ones.
"That means huge volatility across books of business, if you are a health plan," Spirek noted. "If you have no retail capability and that is the direction everything is going, then that is bad news."