Value-based models are doomed to fail without claims automation

The health insurance industry is in a major state of flux right now as the payer community is "starting to really gets its arms around what's next" while figuring out how it will compete and succeed in the new healthcare marketplace, Ray Desrochers, HealthEdge executive vice president, told FierceHealthPayer.

That's one of the conclusions he reached based on preliminary results of 100 responses to a HealthEdge survey released Thursday at the AHIP Institute in Las Vegas.

For example, when HealthEdge asked payers which next generation delivery models they're planning to participate in or support over the next three years, more than 71 percent said they would participate in value-based payment models, 77 percent said they would participate in Medicare and Medicaid expansion, and 61 percent will participate in accountable care organizations.

"It's clear that we have a significant number of organizations that are indeed planning to participate in these delivery models," Desrochers said. "So that really seems to be a key focus right now."

Dovetail that strong interest in next gen models with payers' low adoption of electronic claims processing and, unfortunately, there's a problem brewing. The survey, for example, found only 13 percent of payers electronically adjudicate 90 percent of their claims, while 54 percent of payers said they're processing less than 80 percent of claims electronically.

The challenge here, according to Desrochers, is next gen models will ultimately fail without the necessary technology which, based on the survey results, most payers don't already have in place. "Many of the new delivery models will require capabilities that the legacy core administrative systems simply do not have," he explained.

As a result, if payers want to automatically adjudicate these new claims--and not further add to the amount of costly, error-prone manual claims processing they need to do within their organizations --they first must automate their claims processes, Desrochers said.

Otherwise, they risk ending up in a "never-ending cycle" of manual processing for each new line of business."Payers that go too far in the manual direction, regardless of how much new business they are able to achieve via these new healthcare business models, may find that they are simply unable to compete effectively in this new healthcare economy," he warned.

So what's the takeaway message with HealthEdge's latest survey? Desrochers believes it's change: "It's very clear the market is in a state of flux. It's very clear that people are realizing they have to participate in some of these new business models and cost-cutting initiatives to be successful."

And he also thinks it's uncertainty: "Unfortunately, it's also very clear that people don't really know how they're going to do that yet, in terms of how they run their businesses, their internal processes and controls and their people. Ultimately you can deploy any technology you want but if you don't reform your internal processes, controls, the types of offerings that you put out to the market, it doesn't really matter."

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