Preparing for the Unknown: Analytics Are Key to Compliance With Healthcare Reform

With the final shape of healthcare reform still uncertain, insurance IT departments are focusing on improving data and analytics capabilities to prepare for developing rules.

Healthcare reform, in the form of the Patient Protection and Affordable Care Act, has been a reality for almost two years. And while all participants in the healthcare delivery chain have new mandates, the payer side -- that is, health insurers -- is responsible for implementing several of the most high-profile changes. But uncertainty about what the new healthcare system ultimately will look like has added to the challenges for insurers' IT departments.

For example, there still is little clarity around state-run health insurance exchanges. "There are state governments working with institutions to develop those exchanges, and they already have several pilots running," notes Aite Group (Boston) analyst Kunal Pandya. But, "Enrollment, how they will build the websites, how they will manage the underpinning money movement -- this is still not clear."

As a result, compliance efforts by IT organizations inside health insurance companies largely have been limited to doubling down on improvements in analytics and data management, Pandya says. "They're building risk management protocols in the systems, data management and containment capabilities, lots of work around business analytics," he relates. "Health insurers have been sitting on a lot of data but haven't been using it to their benefit. Reform is expediting some of the things that they're working on."

Joseph Smith, SVP of private programs and CIO at Little Rock, Ark.-based Arkansas Blue Cross Blue Shield ($1.2 billion in premium income) and a 2011 I&T Elite 8 honoree, acknowledges that carriers are beginning to view regulation as more than a compliance burden. "You think about all these cost pressures, the medical loss restrictions that are on payers today, consolidation of the healthcare business," he says. "You've got a lot of regulation you're having to cope with, but you have to keep moving the business forward and providing value."

In fact, data management and analytics capabilities can help carriers comply with those medical loss-ratio restrictions, Aite's Pandya notes. "If you improve the quality of your data, you improve your medical loss ratio and streamline your payments," he explains.

Driving ICD-10 Compliance

In addition to healthcare reform, the move from the ICD-9 coding protocol to ICD-10 also is challenging health insurers. According to Arkansas Blue Cross's Smith, it's incumbent on insurance companies to create the environment that will facilitate the switch, because there isn't much incentive elsewhere in the healthcare provider chain.

"The doctors, health plans and hospitals are going to see no productivity enhancement or ROI. Because we're at the end of the processing line for the money, we'd be forced to straddle two coding nomenclatures for a while," he explains, noting that regulators will look to insurers to drive adoption.

"We have many carriers informing providers on EOBs or other ways that they're not accepting ICD-9 and so they won't get paid. They're writing it into their policies as well," adds Michele Hibbert-Iacobacci, VP of information management and support for Mitchell International. "At the end of the day it's about the data -- stakeholders want to make sure people get the right care."

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio