I swear by Apollo to meet all service levels...
At HfS Research (sorry, we have to start using that acronym - if I have to keep spelling out "Horses for Sources" every five minutes...), we're focusing our microscope on the healthcare industry with our new research agenda (drop us a note if you'd like more details on our research coverage). Our resident healthcare analyst, Anthony Calabrese, has a pretty decent point of view here...
Healthcare Payors Reshuffle Their Priorities
Unlike medical product manufacturers and pharmaceutical companies’ industries, healthcare reform will absolutely transform the healthcare payor industry. Mandated medical loss ratios, state-run insurance exchanges, guaranteed coverage, and required purchase requirements will restructure the payor’s business models. The trickle-down impact on operations will be significant, shifting priorities in a manner that will eventually impact outsourcing priorities.
Healthcare Reform – The Big Changes
Few people understand the healthcare reform laws signed by President Obama. While the laws are lengthy, the list of major changes is not:
Consumers must purchase insurance and companies with more than 50 employees must provide insurance. Those who fail to do so will be subject to fairly substantial fines.
Insurance companies cannot deny coverage or price individual policies based on prior medical conditions.
State-run exchanges will be created to directly offer individual policies.
Federal electronic enrollment protocol standards will be developed to allow consumers to enroll, view, and manage their enrollment in insurance.
Healthcare companies have mandated medical loss ratios (MLRs) of 85% for large groups of more than 100 and 80% for small groups and individuals. If payors manage to generate lower MLRs, they must refund the difference to enrollees.
What does this mean to the heathcare payor industry?
The changes are substantial:
First: payors can expect to compete for over 30 million new enrollees that are required to purchase insurance. While some of this business will be generated by small groups who previously did not provide insurance to employees, the bulk of the 30 million new enrollees will come through individual insurance. As witnessed by the payors go-to-market implementation of Medicare Part D, the enormous spike of sales and new customers requires significant planning and operational bandwidth. This impact sales and customer service activities, requiring substantial investment in customer service teams, technology readiness, and enrollment processes.
Second: transactional workflow associated with individual enrollment will need to be completely reengineered. Prior to reform, transactions flowed through underwriting groups who priced each individual plan. With the advent of state-run exchanges, insurance plans will be codified in just four basic formulas (Platinum, Gold, Silver, and Bronze) and offered through online exchanges. There will no longer be a need for underwriting to review enrollments for pricing or previous medical conditions. Furthermore, the implementation of federal standards for electronic enrollment transactions will require investment in transaction gateways and internet portals.
Business Process Outsourcing (BPO), Buyers' Sourcing Best Practices, Healthcare and Outsourcing