Data Analytics as an Ally to Conquer Price Transparency
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Data Analytics as an Ally to Conquer Price Transparency

Blanca Diaz, Vice President Claims, Risk Strategies Company
Blanca Diaz, Vice President Claims, Risk Strategies Company

Blanca Diaz, Vice President Claims, Risk Strategies Company

With the Covid-19 pandemic the world changed, and the insurance industry has evolved significantly. Organizations that move swiftly to meet customer needs will be able to thrive in a very competitive market. With all the changes in rules and regulations and the advances in specialized systems and software, insurance companies and plan administrators are putting their focus on their data to influence and improve their process and procedures in several areas, such as product development and pricing, population management, provider contract negotiation, and claims adjudication.We are talking about a huge amount of data that,with the right analytics,can help leaderswithin an organization better understand their product utilization and make changes in benefits more suitable to the needs of their insured population.

Adding Transparency to the equation: how it affects employer sponsor plans

Benefits improvement is not enough; in the health insurance sector,transparency is playing a bigger role and Americans are craving it. In January 2021 CMS launched the Hospital Price Transparency rule to help Americans know in advance what the hospitals charge for the services they provide by publishing their chargemasters or list prices. These transparency requirements were extended to health plans and administrators to empower their consumers to make more informed healthcare decisions by having available cost sharing information for covered items furnished by a particular provider,access to in-network provider negotiated rates, out of network allowed costs, and prescription drug prices.

These transparency rules bring competition to the health insurance market, especially to the employer-sponsored health insurance sector which accounts for around 49 percent of the insured population. With health insurance benefits beingat the top of the most valuable benefits for the workforce, providing a competitive benefits package to retain employees and attract new talent is a must,especially after thegreatresignation, employers will look for insurance plans or administrators that are willing to comply with these regulations. It is expected that with the availability of this information, employees and job candidates will compare health plans offered by potential employers and will use this information as a factor in their decision-making process aboutaccepting a job offer or staying with their current employers.

Employers have been demanding higher quality of care for the dollars they spend on health coverage because they know that quality healthcare can lead to increased worker productivity. Thenew transparency rules give employers more opportunity to reduce cost on health insurance benefits, but they have to execute their responsibility to improve the care, reduce cost, and increase satisfaction by educating their employees to be involved in their personal care, make more informed decisions, and work with their health plans and administrator to develop quality improvement programs that promote cost reduction.

Some big payers like UnitedHealthcare, Aetna that are offering fully insured plans already announced their intention to comply with the transparency rules. For the self-insured group plans with ASO model, it is the employers who will be accountable for not complying with these rules and not the third parties contracted to do the plan administration and carry out the transparency provisions.

Transparency and Value-Based Care: Data analytics behind key decisions.

Few hospitals arein line with the price transparency requirements, but with health insurance payers willing to comply with these regulations by providing employees with good faith estimates for their out-of-pocket expense and the option to compare cost sharing amounts between in-network providers, indirectly hospitals and medical providers will be incentivized to compete for market share based not onlyon the quality but also on price.

Price Transparency rules will promote the value-based care reimbursement model that seeks to provide better care for individuals and improve health management strategies – e.g., improve preventive care whilereducing healthcare costs.Since the value-based care model is driven by data, data collection coupled with the potential offered by machine learningare at the center of the decision-making process for insurance payers and their leaders.

Robustclaims data can illustrate the targeted market needs andprovide payers with key information and data driven facts to back up their efforts to review and recreate more competitive provider contracts.  In addition, it also provides the ability to identify the highest value providers, and those with the lowest cost for specific procedures and services.

Payers on both the medical and pharmaceutical sides of the industrywho have at their disposal large and historical data in addition to material market sharewill be able to better evaluate medical service metrics and cost, resulting inmore cost-effectivecontracts with higher discount and shape provider networks using sophisticated modeling.  In the case of the pharmaceutical industry, payers will be willing to cover high-priced drugs when evidence of better outcomes is presented.

With so many new regulations, the pandemic risks in the financial and operational sides,high-cost treatmentsfor the leading condition in claim cost (cancer) in the pipeline (especially on the pharma side), and the expected increase in treatment for the latterin the years to come, it will be crucial to work with experts that understand these risks and guide clients to create cost effective solutions and programs that address the market challenges.

At Risk Strategies, our Health Care practice has a dedicated team of experts that will help you develop insurance and reinsurance solutions, including data analytics, actuarial modeling,and act as an extension of your organization operations in the claim management arena. Whichever area of the industry our clients operate in, we will work with them to understand their needs and create better solutions to fit those needs.

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