Insurance & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


11:45 AM
Connect Directly

Legislative Reform Remains a Long-Term Issue for Health Insurance IT

The death of proposed reform legislation in Washington could mean more rather than less regulation for the insurance industry but is unlikely to change the course of IT investment influenced by longer-term reform considerations.

Sweeping federal healthcare reform efforts are unlikely to prevail in the wake of the Massachusetts special senatorial race, which put a Republican in the seat left vacant by Democratic stalwart Ted Kennedy's death. Government healthcare reform measures may yet prove challenging for the insurance industry, but insurers' technology spending now is likely to be targeted at more general improvement in the flow of health information and building the kind of agility necessary to respond to ongoing regulatory change rather than to any particular mandate.

"As a result of the special election in Massachusetts, we may end up with health insurance reform rather than healthcare reform more broadly," comments Howard Mills, chief adviser, National Insurance Group, Deloitte (New York). "The industry should brace for significant changes."

According to Mills, the insurance industry is likely to be held to greater scrutiny with respect to consumer protection issues, and that issues of public concern, such as coverage of preexisting medical conditions, could be the focus of new regulation. "It's politically feasible, it's popular and it addresses the perception that something needs to be done about healthcare," Mills says.

Whatever shape healthcare reform may take, IT will play a critical role, insists William Yasnoff, chairman and CEO of Arlington, Va.-based Health Record Banking Alliance. "Improving healthcare in the U.S., whether through the current healthcare reform efforts or some other approach, requires the use of health information technology to ensure the availability of comprehensive electronic patient information when and where needed," he asserts. "To be effective, healthcare reform will need to accelerate efforts to achieve this goal."

The prospect of healthcare reform legislation has indeed accelerated insurers' efforts to improve the flow of patient information despite a chronic misalignment of incentives, according to Paul Roma, a principal in Deloitte's health plans practice. "The people consuming information at the point of care are not necessarily the ones storing and maintaining it," he says. "There's a struggle in aligning the usage with the incentive to pay for it."

Control of Information

Nevertheless, insurers are motivated to take on more responsibility for information availability in light of the way reform could alter the existing market, Roma suggests. "There's no mistaking that their motivation has increased along with sensitivity to the potential for new entrants in the market, whether those entrants be public plans or other intermediaries, such as banks," he says. "Health plans see control of information as a competitive advantage."

Roma predicts increased investment in cloud and virtualization technologies in the interest of lowering total cost of ownership, as well as investment in more-sophisticated business rules engines and more traditional e-commerce integration and business exchange engines. "Health plans are realizing that it is a critical-path strategy to be not merely efficient with information but also effective, because tomorrow the landscape will change, and that cannot mean that they need to rewrite their major platforms," Roma says.

The need for agility in the face of potential legislation, on both the federal and state levels, has informed technology investment at Regence Group ($8.9 billion in annual revenue), according to Samantha Meese, a spokesperson for the Portland, Ore.-based carrier. Last year Oregon implemented a law requiring health insurers to give members Web access to out-of-pocket cost estimates for providers and facilities, she explains. "We had already introduced our cost estimator tool on, where we also provide various transparency-related tools to our members," Meese relates. "To meet the requirements of the law, we enhanced the cost estimator tool to include more robust and detailed information."

Meese sees increased industry regulation and oversight driving Regence's investment in governance, risk and compliance solutions -- for example, with regard to requirements for greater oversight of HIPAA laws within the American Recovery and Reinvestment Act of 2009 (ARRA). "We will be investing in technology to ensure that we meet those requirements," she says.

Indianapolis-based WellPoint (more than $61 billion in annual revenue) has watched the healthcare reform debate very closely with regard to the IT implications, according to Carl Dumont, WellPoint CTO. "Last year WellPoint's IT organization worked very closely with our corporate strategy and public policy teams to understand and handicap the multiple alternatives being proposed," he recalls.

In response to the $38 billion commitment within ARRA for health information technology, WellPoint has consolidated its strategic view of "provider connectivity," which previously resided in multiple disparate initiatives, including personal health records and integrated health records, clinical data initiatives, and billing and payment automation, according to Dumont. "Maintaining a vigilant eye on the allocation of those dollars will help us understand where we should focus our integration efforts," he says.

With regard to the legislative fallout of the Massachusetts election, Dumont says, WellPoint has not been affected. "Our in-flight initiatives are based on current requirements, not the proposed ones," he comments. "We are still actively improving the strategic visions, capabilities and road maps required to support the legislation. Whether and when they get converted into funded initiatives is yet to be determined."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

Register for Insurance & Technology Newsletters