Industry Voices—Digital transformation versus digitization for health insurance benefit plans

Today, health benefit insurance plans are as ubiquitous an idea of healthcare itself, but it wasn’t always this way.
In the 1920s, hospitals assumed a new identity as medical care improved, increasingly becoming places of effective healing, where less and less time was required. This transformation left hospitals with a financial issue - people visited the hospital more infrequently, but the costs of the hospital remained fixed. 

To solve this, hospital insurance was created. The first hospital plan was introduced in Dallas, Texas, in 1929 and the first subscribers were 1,500 school teachers who paid six dollars a year in premiums. In exchange, the hospital agreed to provide up to 21 days of care to any subscriber who needed it. This eventually led to the development of Blue Cross organizations in the 1930s. 

Another transition is now upon us, health spending in the U.S. is expected to grow from $3.6 trillion in 2018 to $6 trillion by 2027. An aging population and ever-growing drug costs mean that it is more important than ever for modern plans to be managed efficiently.

Great Opportunity and Great Responsibility

There are now a tremendous number of health insurance benefit plan options available, which has helped to increase the number of service offerings and has also made the industry increasingly competitive.

The business of healthcare and health insurance involves people, unique processes, a vast amount of data and the content of the plans themselves. All of these aspects can be dynamic and unpredictable. So, when changes need to be made, it impacts many aspects of plan delivery. Because of this, it is crucial to ensure that when technology is used to streamline this that it is an enabler, not a roadblock.

Digitization VS Digital Transformation

Digitizing plans and processes was the obvious next step as computer systems became more affordable; however, this is not digital transformation.

Configuring, reviewing and managing plans in programs such as MS Excel and Word can create more consistent documents, but this still involves manual data management. Records must still be opened and updated by a staff member, and other relevant documents must be updated to match. 

Manual data management causes inefficiencies by slowing the creation, approval, and review processes. This can cause delays in bringing plans to market and filing the plans with the correct government departments. Finally, downstream systems need to also be updated with relevant details to support day to day operational activities.

True digital transformation is the integration of digital technology into all areas of a business to improve how it operates and delivers value. Automation software can help to increase efficiency, security, and transparency. When undergoing digital transformation, it is essential to examine current processes and identify how they can be improved and automated.

Three Common Approaches to Digital transformation in Healthcare

  1. Off the shelf software solutions integrate readily with third-party systems and do not require time-consuming custom development; however, this also means that they are not tailored for unique aspects of the business, may contain unneeded features, and may require a company to change its processes to meet those that align with effective use of the system, rather than having the software align to what works best for the business.

  2. Custom solutions avoid the previous issue by having a software solution developed from the ground up that is customized to the organization. However, these solutions can take extensive time and resources and tend to be more costly. The system may require additional development for integrations, custom training, support, and updates.

  3. Platform solutions leverage aspects of both custom and off the shelf deployment. By leveraging a platform such as Appian, OutSystems or Mendix, custom processes can be built on an off-the-shelf platform. These low-code solutions get up and running more quickly without automatic inclusion of extraneous features, integration issues or an inflexible implementation. This approach will typically require external configuration from consultants familiar with their industry and the technology. 

Digital Transformation for Payers and Providers

Healthcare plan management is an area that is increasingly being automated. Historically, it was a time-consuming and complex process to develop customized summaries of benefits and coverage plans that allow brokers and consumers to compare offerings from different providers.

For large and complex plans, an underwriting department will also analyze populations to identify risk factors such as age, occupation, smoker/non-smoker, etc. to determine whether the plan is viable to support the population.

In a merely digitized organization, administrators manually use Excel calculators published by the Centers of Medicaid and Medicare Services (CMS), where an administrator can input plan cost share details to generate the requisite three scenarios for the SBC document. Dental, vision and other specialized coverage can have supplementary documentation associated with them that utilize similar data.

These organizations can easily run into version control issues using MS Excel because it is a decentralized platform and the process requires multiple inputs from various stakeholders. Benefit analysts, managers, and product developers often have to analyze deductibles, out of pocket costs, what services are covered and how much they’re covered while designing plans. One small error on the current master-version can cause major issues that cascade throughout the organization and its customer base.

On the other hand, digitally transforming number-crunching and distributed updates into an automated process can help these organizations to manage time more efficiently, reduce human error, streamline and speed up the plan design and management process. The downstream effects are also seen in improved member and customer experiences, with faster turnaround times and responsiveness.

Benefit analysts and managers can be given the ability to define fee and pricing structures for plans they design, manage nuances of plan services such as visit limits and pre-authorization requirements, and set other financial information that would be utilized when pricing and adjudicating member claims, without having to manage scattered databases. They even allow managers to use claims modeling to see how well the plans may perform in the upcoming year. 

The Transformed Process

Before embarking on a digital transformation project, consider what your goals and needs are with respect to flexibility, and the complexity of your offerings and start by identifying the lowest-hanging fruit that could help to improve accuracy, speed and customer service. The health insurance benefits industry is likely to continue to grow and adapt along with technological advancement and an aging population, and digital transformation can allow your organization to keep pace with that change. 

Jonathan Delulis is the delivery manager of Bits In Glass.