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The lack of payment assurance in healthcare poses a problem for the industry, during a time of rising consumerism and healthcare reform. Here are the top five risks of the lack of payment assurance to the healthcare payer.

1. Provider Network Satisfaction/Discounts

Providers will become increasingly dissatisfied with the arrangements that they have made with payers. Healthcare reform like MLR adds administrative cost pressures that will force providers to re-assess their network relationships — which will likely result in lower discounts as the value of network participation is reduced.

2. Higher Administrative Costs

Administrative costs will increase as call volume increases due to the need to assist network providers in estimating patient liability amounts in advance of the service as providers attempt to reduce their post-service cost of revenue. Higher member liability amounts will also result in additional calls from members to clarify patient responsibility on claims and provider invoices.

3. New Risks Associated with the Financial Networks

Payers will face new challenges dealing with the financial networks as they build new business models, along with the appropriate security and compliance policies and procedures as required by Visa, MasterCard and other bankcard and financial associations — such as PCI, CISP, KYC and the Patriot Act. While most multi-billion dollar banks outsource payments, many payers have a “build-it” mentality and may find it difficult to yield some control to a partner. Those payers that underestimate the nuances of this new territory or fail to properly execute these projects will face significant risks and costs to their business.

4. Unhealthy Dichotomy

The increased level of patient liability means that the value of the discount to the consumer is rising at the same time that the leverage the payer has to drive the discount is decreasing. This becomes even more striking as more employers move from insured to ASO arrangements, since provider networks and associated discounts are the primary differentiators for payers.

5. The Primary Risk

The lack of payment assurance for providers means that provider network discounts available to payers, members and employers are at risk, and since the network discount is the greatest competitive asset that most payers have, the loss of this discount puts their entire business model at risk. Consumers and employers have become ever more sensitive to healthcare cost increases — creating a vicious cycle of increasing emphasis on stabilizing medical premiums, escalating member/patient responsibility and downward pressure on network discounts.

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