The concept of health insurance in the U.S. first started during the Great Depression when Baylor University Hospital in Texas offered teachers the benefit of prepaid hospital expenses for a $5 per month fee. However, it wasn’t until World War II that health insurance became a widespread benefit offered by employers. WWII forced employers to rely on “fringe benefits” like health insurance to attract more workers to meet the higher demand for resources to help fight the war, while food and other essential goods were being rationed by the government.
Since then, payer organizations have grown in size and complexity not just in the types of plans offered but in the many ways in which payments move through their organizations. This is especially true in recent years as payers try to keep up with the increasing role of members in the industry, and mergers and acquisitions become an attractive option to diversify plans.
However, payers are not immune to “growing pains” that often accompany change of this kind. In particular, agile innovation grounds to a halt, security risks increase and lack of seamless integration between systems creates inefficiency. The only way to avoid or remedy these issues is with an enterprise-level audit of all current payment use cases and those planned for the future.
Below is a list of the most common payment channels for payers to help get the audit started. This list is designed to help identify room for improvement, find ways to scale growth and best practices for optimizing each channel.
- Payments to Provider Organizations
- Current State: Payments to providers are done in multiple ways, including paper checks, ERA/EFT and virtual cards. Frequently, different payment processors support the different payment types for payers, making it difficult to report back on the payer’s source system of record for all of the payments disbursed in each cycle and manage which payment method any given provider is supposed to receive.
- Future state: Consolidate all payments to a single payment processor for 100% of payments to providers – regardless of payment type. This will simplify reconciliation, reduce complications with different handoff points, and most importantly, is the quickest path to ERA/EFT adoption.
- How to get there: Ensure that paper checks and ERA/EFT are on the same payment network to help drive provider adoption of electronic transactions.
- Payments for Premiums from Members and Employer Groups
- Current state: The majority of premiums are billed every month so that members and employer groups must send a paper check or log in to pay every month.
- Future state: Members and employer groups are able to set up automated payments to pay their balances on a recurring basis as they do other household expenses, like their cable bill or gym membership.
- How to get there: Payers can ensure payments by better understanding how members and employer groups want to pay premiums.
- Consolidated Payments for Premiums for Multiple Plans or Products
- Current state: Members and employer groups must navigate multiple paper bills, portals or payment steps to pay premiums for all the plans covered, including medical, dental, vision, etc.
- Future state: Significantly reduce costs by using a single solution for all plan premiums to streamline the end-to-end premium billing and payment process.
- How to get there: Consolidate all the premiums across products, employees or family members in one place with easy-to-understand balance information and convenient payment options that allow automation on a recurring basis.
- Payments to Providers From Members
- Current state: EOBs are essentially a dead-end for members by presenting how much a member owes for their healthcare services without any way to pay that amount, while engagement metrics lag within member portals.
- Future state: Members can easily pay their responsibility to a provider with a Pay Now button on the EOB in the member portal. They can then see how that payment affects their deductible and out-of-pocket maximum balances.
- How to get there: Work with a payment network that providers already trust and are connected to, so that the providers can easily receive that payment electronically and reconcile it with their other payments.
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