On January 1, 2014, health insurers must comply with the Affordable Care Act (ACA) and be ready for an estimated 12% surge on their existing infrastructure and onboard 30 million new subscribers . Normally, the addition of this many new "customers" would be perceived as an opportunity to grow revenue and market share, however, politics, fear of unknown regulations, over-service and underpayment have clouded grand visions of growth.
Despite the advances in business processes, senior insurer executives are grappling with four major considerations that focus on profitability and making the Affordable Care Act affordable for insurers.
1. The sudden influx of new customers will tax staff infrastructures that were scaled back by cost cutting measures during the recession. During the past five years, organizations reduced staffing levels due to economic cutbacks. With an estimated 12% increase of new consumers entering the insurance system starting in 2014, there must be a fine balance between maintaining the same level of service to existing customers while managing the influx of new subscribers.
However, hiring more people is not always the first solution to onboarding and coordinating the services for more customers. Increasing headcount brings high cost of manual labor and associated training, higher risk of manual processing errors and costs to resolve, and higher risk of fraud or security breach of sensitive customer data.
2. Significantly higher volumes of new customers will stress every stage of the customer engagement, including: new business, underwriting, claims, policy management and customer service. With ACA, there is an expectation that there will be more one-off applicants needing to be processed individually or by family, rather than as part of a larger group plan. Also, incoming subscribers may have pre-existing conditions and/or may not have had regular healthcare, resulting in a higher number of claims than an average policy. Manually processing this additional volume can result in longer claims resolution cycles and increased errors in keying patient information. Likewise, managing a 12% increase in policies will burden legacy core systems and escalate inquiries into customer service. Technology will play an integral role in lowering fixed costs, increasing speed, accuracy and security, and better managing workflow.
3. Insurers will need greater levels of operational efficiency as they face heightened profitability pressure. It is a reality that insurers will need to cover some high-risk consumers due to pre-existing conditions, and therefore, will have to carry unprofitable and lower value policies. To adjust and manage profitability targets, insurers will need to quickly and efficiently bring new products to market to attract more desirable policy holders to offset high risk individuals, and identify cross-selling and up-selling opportunities to offset unprofitable and lower value policies. Technology will also be instrumental in enabling the sharing of information across business units for insurers to gain better insight into customers and ultimately make better decisions about offering the right products to the right consumers.
4. New regulations open up new risks. There is a great deal of uncertainty in ACA's components. ACA mandates 80 to 85% of premiums be paid out by the carrier in care or in quality improvements or the carrier will be fined. But it is not known how this will be tracked or audited. Some states are considering opting out of the program, creating complications for national and regional carriers that cover multiple states. How will they know if they are covering the right people in the right way?
Unanswered questions bring new risks to any infrastructure that is being updated or replaced. In order for insurers and providers to support the ACA successfully, their technology infrastructure must be flexible enough to adapt to changes in volume, regulations and compliance needs.
Reform always brings more questions than answers initially. The Affordable Care Act may be the catalyst that the healthcare industry needed to re-imagine how their processes can work more efficiently without adding costs. Healthcare providers and insurers need to seize this opportunity and drive initiatives that will foster revenue growth by using the next year to judiciously plan and implement efficient processes for quoting, onboarding, processing claims and providing quality customer service.
With every industry revolution, technology plays a significant role. In this case, technology will offer the healthcare industry a means to fast track the ACA by delivering customer-driven processes that leverage information capture and smart process technology, cloud access and mobility, making ACA compliance affordable to insurers. Enough waiting, the countdown to Obamacare has started. What action are you taking?
About the author: Martyn Christian is CMO for Kofax, a provider of "smart process" applications combining capture, process management, analytics and mobile capabilities.