Summary:
The healthcare payments system is beginning to break down due to increased patient responsibility and the lack of Payment Assurance for healthcare providers. In recent years, payers and employers have consistently driven benefits towards higher member/patient responsibility as a way to influence member behaviour and to keep medical cost ratios in check. The increased member responsibility trend is only partially a result of consumer-directed healthcare (CDH) plans, which add alternative payment sources to the mix. Although this trend appears to have the desired effect on member behaviour, it is forcing providers to absorb additional administrative and financial challenges.
Overview:
Most providers are dependent on income from their payer relationships, which payers leverage into deep discount arrangements. providers must work within the administrative rules and transaction requirements of each individual payer in order to receive payment for services. Payers consistently pressure providers with the risk of being removed from the payer’s network, which would result in the loss of patient visits due to re-channelling.
However, the leverage that payers traditionally have had in driving discounts is being eroded by the combination of cost shifting and consumer empowerment. As employers and plans push benefit designs and messages that emphasize member responsibility, patients are acting more like consumers and demanding more choices.
Likewise, providers are increasing their direct-to-consumer marketing efforts and driving demand through methods generally associated with retail markets. Finally, payers are seeing competition from new market entrants who are providing non-traditional healthcare payment vehicles as supplements, limited benefit plans or other replacements for traditional health plan benefits.
Some payers are reacting with attempts to reduce the pain of providers—creating dedicated service units, offering “Provider Portals,” integrating with clearinghouses and proactively educating Providers on new health plan products. Nevertheless, these solutions do not sufficiently resolve one of the most important aspects of the payer-provider relationship: Payment Assurance.
The most significant way for payers to maintain and enhance their market and cost positions with providers is to return to what gave them the discounting leverage in the first place—assuring payment to the providers. A true Payment Assurance capability requires that payers engage and facilitate an administrative and payment framework that includes “All Payers, All Banks and All Cards.” Single payer Payment Assurance models, no matter how advanced, will not address the issue in most markets and in the long run will have limited success.
The healthcare payment system, led by payers, must learn from the credit card banks of the 1990s. These banks, along with their processors and networks, engaged merchants in an “All Bank, All Card” acceptance model. Those payers that do not engage and choose to ignore the provider’s revenue pressures will erode their provider network satisfaction, their discounts and ultimately their competitive advantage in selling health plan benefits to employers and consumers.
