MMA Means Modernization

To provide prescription drug benefits and additional healthcare choices to people who rely on Medicare in accordance with the Medicare Prescription Drug, Improvement and Modernization Act of 2003, insurers will need to make additional technology investments. "Providers will be doing the same type of policy management as now, only more of it [and] at a higher level of complexity," says Craig Weber, senior analyst, Celent (New York).

"So the policy management systems will need to be updated to house Medicare reform provisions," Weber continues. "It will be interesting to see whether most companies migrate to new systems or update the ones they have in place."

The technology industry is moving quickly to accommodate carriers' needs. In March, MphasiS BFL Group (New York), a provider of IT and BPO solutions, acquired Phoenix, Ariz.-based Eldorado Computing, a software provider that specializes in claims processing and benefit management for the health insurance industry. Jerry Rao, chairman and CEO of MphasiS, explained in a statement that the acquisition is part of MphasiS' business strategy to enter the healthcare and insurance payment market and target carriers that may need help managing new and more involved Medicare offerings.

According to DSS Research (Fort Worth), a research firm that offers marketing support to health insurers, its clients fall into one of two categories: companies that currently have Medicare Supplements only and are looking to add to their plan designs to minimize the impact of Medicare PPOs entering the market, and companies that want to offer PPOs that minimally cannibalize their HMO business, yet will attract a new pool of customers.

DSS uses market simulation technology - a tool it calls Dominator 2020 that is written in Microsoft (Redmond, Wash.) VisualBasic and is delivered over a secure Internet platform - to help carriers determine the best distribution strategy. "Companies need to know the trade-offs beneficiaries will make between current and prospective product offerings," says Roger Gates, CEO of DSS.