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Payors are still assessing the impact of COVID-19 pandemic on their business model, operations, and profitability but the consensus is that it will be enduring and irreversible.

Major first and second-order implications of COVID on Payors include (not intended to be exhaustive):

Unemployment-Driven Changing Insurance Mix. An unemployment spike could prompt a major drop in commercial insured lives as we could see over 40 million jobs lost in the next six months in the US. Payors who are heavily weighted towards commercial lives – particularly those with a greater portion of small group lives that are more likely to be impacted by the recession – are at risk of seeing significant membership loss. On the flip side, those with exchange and/or Medicaid businesses could see a heavy influx of members this year. For those, the keys to success will be capturing those members as they shift, and also finding a way to be profitable in those segments. Regardless of how you read the above output, its impact is significant.

Surge in Care Needs. While there has been a material drop in elective and routine care over the past couple of months, buoying near-term profitability, Payors should expect a surge in healthcare sought in the coming months as states reopen and infection rates begin to subside. This surge will likely be attributable to both previously scheduled care that was postponed (e.g. elective procedures) and incremental/urgent care needed by members with chronic conditions who were unable to receive the high-touch maintenance that they do under normal circumstances. While we believe that it is safe to assume that there will be an uptick in care needs, it’s challenging to estimate the exact amount. 60 percent of primary care Providers think their patients could incur a preventable illness because of limited care access. Another 38 percent said non-COVID deaths could occur after the pandemic because of delayed care.

Evolving Member Expectations. This crisis is changing how care is delivered and will undoubtedly change how members seek care. Telehealth benefits will become increasingly commonplace and utilization – historically low – will sustainably increase as a greater number of members begin to realize that virtual care is an appropriate substitute for in-person, routine care. There will likely be greater member expectations on being able to find the care they need, when they need it and using the modality they need it through. Moreover, members will likely expect Payors (and Payors will want to) to help facilitate the delivery of greater care in the home.

Evolving Provider Expectations. This crisis has had a dramatic, disproportionate impact on Providers of all shapes and sizes. There is likely to be a great deal of Provider consolidation due to several factors. We anticipate Providers expecting Payors to increase fee-for-service rates, make advance payments, renegotiate certain contractual terms that have a material impact on accounts receivable, and day’s sales outstanding metrics among other things. We believe that Providers will gravitate towards Payors that are easier to work with and with whom there are fewer administrative hassles. In addition, we expect that providers will increasingly seek out payer arrangements that entail lower member out-of-pocket expenses and subsequently bad-debt. More broadly, there will likely be an acceleration towards value-based arrangements given the financial weaknesses surfaced by the pure fee-for-service model and the deleterious impact COVID has had on Providers that derive a lion-share of their revenue from fee-for-service arrangements.

Possible Provider Network Implications

How do we expect the composition, quality, and structure of Provider networks to change as a result of the COVID crisis? While challenging to forecast, we have developed a couple of hypotheses on how networks could change and what network managers could face – this is not intended to be a fully exhaustive list.

Changes in Provider Access Points. Smaller independent physician groups are likely to either close (briefly or fully) or be sold to larger organizations. As this occurs, depending upon the nature and intent of the organizations, Payors should expect network access challenges and potential contract renegotiations along with all of the enormous provider data updates that accompany them. Overall, health plans could experience member disruption and corresponding increase in inbound member complaints.

Contract Renegotiations. Separate but related to the above point, Providers will likely revisit contract terms and seek ways to renegotiate rates as well as non-financial terms that impact their ability to collect cash and collect it quickly. We expect surviving Provider organizations to emphasize wanting to minimize the likelihood of denials of all kinds

Value-Based Arrangements. There may be a movement towards value-based arrangements. Surviving Providers will likely start to insist on tying a greater deal of their revenue to value-based arrangements to blunt the future impact of crises of this kind?

How Santech can help Payors

As member and Provider expectations change dramatically following this pandemic, Payors will need to react accordingly. Many sources of member and Provider friction – exacerbated by this crisis – are rooted in provider data management.

Payors that invest in cost-effective capabilities that allow them to manage their network data more effectively can deliver incredible value to members and Providers alike. A Provider data management system that allows Payors to ensure that they have the most current information attached to all relevant contracts will deliver the following sets of value:

●     Improved provider handling through accelerated provider payment and denial minimization. Payors that more effectively manage their network data not only will be able to reduce the administrative burden their network partners face in working with them but can also use this capability – and its ability to minimize the standard claims back and forth that takes place – as a bargaining chip in rate negotiations that are more likely to arise in the coming days.

●     Improved Provider Communication. As Payors may have different programs, incentive needs etc. as per different events, which need to be communicated to specific groups of Providers (by Network, by region, by group or by Specialty), a robust integrated communication will ease out the challenge by helping users create and configure communication templates for event-based triggering.

●     Provider Self-Service. Most Providers will be short staffed from the admin viewpoint in the office and will be impacted on their ability to send faxes, mails or phone calls (make/receive) for changing credentials, services and office hours. Having efficient self-service capabilities will be helpful for both Payors and Providers. It will enable Provider staff to manage their information data elements in the system and consequently Payor staff could validate the same.

●     Member Satisfaction. Payors that more effectively manage their network data are less likely to have dissatisfied members that are struggling to find in-network Providers and – in the worst-case – visit a Provider thinking they’re in-network when they are not. A failure to effectively manage network data doesn’t just manifest at the beginning of a members journey to find care, but can make for a complicated and overwhelming post-care experience that leaves an indelible negative mark on the member, dramatically reducing the likelihood that they will be retained and the likelihood that they will serve as a positive referral source (i.e. negative net promoter scores).

●     Fewer, Smaller Penalties. CMS levies large fines against Payors who have inaccurate Provider directories. CMS doesn’t want members to have difficulty finding care, so Payors that invest in capabilities that minimize the likelihood of this will likely face fewer penalties.

●     Operational Efficiencies. Payors traditionally spend a lot of resources on trying to ensure that their Provider data is up to date, however, these approaches tend to be manual and not technology-optimized.

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