Maximizing Opportunity with 2024 Healthcare Payer Technology Trends

Jan 19, 2024

What is on the horizon for healthcare payer technology in 2024? Reviewing the industry’s top trending drivers, restraints, challenges and opportunities so health plans can innovate while minimizing risk.

Genrative A.I. Inflation. Cost pressures. Healthcare affordability. Workforce shifts. Growth projections. Last year brought a fresh set of curveballs for those of us looking forward to the industry finding its level. But those organizations that kept pace with healthcare payer technology trends and kept focus on mission and long-term strategy continued to weather the uncertainty and even thrive. In fact, 2023 made another strong case for health plans adapting with the help of technology.

If your health plan is like many others, you may have increased the intensity of your strategic planning efforts to ensure your organization can remain agile in the face of uncertainty. How can you scale back in areas that don’t support strategic growth initiatives while, at the same time, balancing smart investments that drive growth? To that end, let’s explore the industry drivers, restraints, challenges and opportunities impacting these strategies as we take the long view of 2024.

Drivers: Top Motivators for Health Plans in 2024

For four years, the novel coronavirus pandemic dominated healthcare headlines and responses. For good reason. It stands to have an outsized impact on the industry for years to come. And even as we shift to long-term endemic approaches, the need for innovative solutions continues to accelerate.

Because COVID-19 so efficiently highlighted digital shortcomings in the healthcare system, it serves as the tipping point of the primary drivers for healthcare payer technology. And last year, it was joined by the rise of generative A.I. Health plans must take care of these trends imminently or risk falling even further behind.

“There are two types of companies in the world — those who are great at A.I. and everyone else. And either you know how to use it to your advantage, or you’re in trouble. How we will deal with intellectual property protections is going to influence how A.I. is implemented within healthcare.” Fierce Healthcare

Calls for increased transparency

In the past, we predicted that “health organizations will need to make real upgrades in technology if they haven’t already, or face issues meeting government regulations.” Rules and laws, proposed and enacted, have brought this prediction to the forefront with a focus on transparency. Transparency into data, prices and now, A.I. algorithms. How are they playing out?

First, the rules against information blocking emphasize the need for greater healthcare data interoperability. CMS remains committed to this initiative and published several updates as health plans continue to push for increased data sharing. Improvements in care quality and decision-making and progress on value-based care programs should result.

Second, the price transparency rule enters its final phase of rollout this year. And the number of items, medications, procedures and services that must be clearly listed with prices expands year-by-year in the name of patient safety and quality care. However, the promised “shoppable” experience for consumers lags behind.

Third, the rule intended to streamline prior authorization takes effect this year. It applies to Medicare Advantage organizations, Medicaid and CHIP agencies, Medicaid and CHIP MCOs, and plans on the federal exchanges. Estimates peg its savings at more than $15 billion over a decade. It lays out data exchange standards, expands health data access parameters, and shortens response timeframes.

Finally, A.I. came under scrutiny by lawmakers with questions around privacy, security, safety and equity. Healthcare executives, too, cite accuracy and reliability as challenges for integrating generative A.I. applications. An executive order was issued to provide a pathway for addressing these concerns without limiting innovation.

The ultimate goal of technology is to break down barriers and allow information to empower a better healthcare system. Health plans have realized advanced technology is only as good as the data that fuels it. With interoperability, data accessibility and transparency as a focus, health plans will naturally evolve to start questioning any process within their organization that inhibits information sharing.

“The pace of change and technology in healthcare over the last couple of years has been faster than I’ve ever seen before. If we can maintain that pace — even without anything absolutely game-changing and revolutionary — that would be a huge win for the healthcare industry as a whole.” Healthcare Dive

Need to integrate new technologies

The signs of digital transformation in healthcare are accelerating rapidly, spurred by the rise of new technologies and the proof points around their benefits. Payers see that not investing in healthcare IT puts them at risk of falling behind on margins, efficiency and value to stakeholders. As a result, payers across the spectrum expect to increase investment by 3 to 5-percent in the next two years.

The optimism around the potential for applications of A.I., in particular, has never been higher. Use cases to improve operational efficiency at payers include condensing medical record data, hypertargeting and assessing risk.

Tight labor market

Improving data accessibility extends to internal operations at payers as well. The modern work environment is here to stay. The technology that supports it must follow. Health plans have adapted to the “do more with less” credo that pervades most industries, but manual and labor-intensive processes only contribute to the administrative burden.

This gap proves even more costly in a tight labor market where skilled workers demand more seamless workflows and greater overall job satisfaction. This tracks with a recent PwC pulse survey that cites embedding technology and investing in the workforce as top transformation priorities of industry leaders.

By adopting integrative technology platforms, health plans can eliminate data silos and improve collaboration and oversight. As payers start to experience the big picture benefits of advanced technology, organizations will be able to work towards becoming more proactive and less reactive.

Changes in membership mix

Long- and short-term shifts in health plans’ lines of business will continue as the “silver tsunami” hits its nadir and the public health emergency ends. This era brought an influx of members into traditional Medicare, Medicare Advantage and Medicaid — now at 154M beneficiaries — and record enrollment in ACA plans, which now stands at 21.3M covered lives. While commercial, employer-sponsored plans remain the norm, how consumers think about healthcare coverage has changed for good.

Members are tasked with owning their own healthcare experience. They expect the relationship with their health payer to be as frictionless and intuitive as their other daily transactions. Not meeting consumer demand will open payers up to disruption. But if health plans make technology decisions with their eye firmly on the member, they also will find numerous opportunities to improve payment accuracy.

Changing competitive landscape

Increasing consolidation among health systems and payers also is motivating health plans to innovate. They understand that relying on legacy technology and paper-intensive processes minimizes the ability to scale. Health plans are taking steps now to upgrade their position.

And not a moment too soon. Top retailers have become major players in the industry. In this increasingly consumer-driven environment, demonstrating value to members and employers is key. Payers with a tech-first mindset – and the ecosystem to match – will have the strategic advantage in these situations.

At the same time, health plans will see more technology vendors looking to leverage experience with other industries into similar successes in the healthcare sector. Technology can help rapidly improve ROI on the claims overpayment prevention and recovery process. But health plans will need to shrewdly evaluate these solutions to ensure a good fit.

Restraints: Navigating the Roadblocks Health Plans Face

Health plans have long known the advantages of advanced healthcare payer technology. But the usual suspects continue to block progress. Slim margins, solution fragmentation, data security concerns and outsourcing costs could prevent health plans from making headway on their goals this year.

Uncertain medical loss ratios

The uncertainty around the recession probabilities and how healthcare costs would affect medical loss ratios had some health plans putting strategic technology investments on hold in recent years. But some analysts predict a recovery beginning this year, fueled by margin and cost optimization and reimbursement rate increases.

While that reality materializes, combined with the historic struggles to efficiently and effectively transition to digital processes, taking on new technology projects may continue to feel risky in the short-term. But the status quo may prove even more risky.

Health plans can overcome this perceived risk by seeking out solutions that surface quick wins and set them up for long-term advantages. Look for speed to value. Enterprise healthcare payer technology that emphasizes industry standards, streamlines data sources, builds empathy with stakeholders, improves efficiency and reduces team frustration will pay dividends.

Concerns about data security

Dealing with large amounts of patient data makes health plans a prime target for security breaches. And the entire industry trying to quickly integrate numerous data sources has the potential to create vulnerabilities in the system. As evidenced by the leap in ransomware attacks. But health plans moving too slowly with technology adoption can lead to irreparable harm as well.

Current manual approaches to PHI – locally stored data, desktop applications, paper faxes, etc. – are even more vulnerable than secure digital processes. A key benefit of modern technology is increased control. It allows you to be more granular when granting access to PHI, for one. It also creates a digital log of access.

Vet prospective solutions carefully as you move to secure your cyber environment quickly. For even greater peace of mind, seek out HIPAA-compliant technology vendors that pursue HITRUST CSF and SOC 2 certifications.

Unexpected costs of outsourcing

Consolidation abounds in the payment integrity services vendor industry as well. For some services, this trend means payers may have only one or two vendor choices available to them. Reduced innovation and rate negotiation capabilities may result. However, health plans already had identified internalization strategies as an area of opportunity to counter unpredictable costs associated with outsourcing. And technology advances make it more practical to conduct complex audits — including IBR, DRG, E/M reviews and more — internally without adding additional skilled staff or reducing effectiveness.

Whether or not your are positioned to fully internalize claims audit programs in the short-term, a strategic combination of insourcing and outsourcing activity based on health plan core competencies will optimize spend. A partner and technology that allows you the flexibility to decide – service by service – whether to outsource or insource based on your cost-benefit analysis will better poise your health plan to scale effectively.

Challenges: Factors for 2024

Internal restraints aren’t the only barrier to success with healthcare payer technology. What are the broader industry factors that could challenge health plans in 2024?

Provider turbulence

With workforce burnout, ongoing staffing issues, and precarious financial situations, the stress on providers has never been greater. While providers shoulder the bulk of performance transformation measures, healthcare payer technology strategies, too, can support this valuable group. Without a broad network of providers, health plans will find it difficult to advance on engaging members and lowering healthcare costs. Health plans that use technology to focus on this relationship can overcome this challenge. Consider solutions that ease providers’ claims payment administrative burden and support real-time communication.

Barriers to adoption of risk-based models

Those providers participating in alternative payment models navigate industry disruption better than their fee-for-service counterparts. They also are more likely to pursue population health improvements that stand to keep their patients healthier. In today’s environment of increased financial pressures and instances of costly chronic disease, that health systems are increasingly open to risk-based arrangements.

In fact, estimates project 90 million lives will be in VBC models by 2027, more than double the number from 2022. Largely fueled by Medicare Advantage, the Medicare Shared Savings Program and specialities. But significant partnership, data integrity, reporting and technology barriers persist.

Health plans can support providers in this transition with healthcare payer technology that overcomes trust and abrasion issues. Increase data transparency so both sides of the relationship are working from the same playbook. Come to agreement on interpretations of value and quality. And measure everything: clinical quality, consumer experience, return on investment, and more. Then share those data insights and work together on continuous improvements and innovations.

“Increasing healthcare costs, difficulty accessing and navigating care, and a growing need for convenience drive people to demand more value, and employers to demand more value too, and people needing and wanting care that meets their needs or preferences. And at the same time, data and technology are creaing a lot of bright spots for even more potential power for healthcare system transformation in order to drive access, engagement and innovation.” Health Payer Intelligence

Changing political landscape

Recent legislation is expected to affect trends in health insurance enrollment and healthcare spending over the next decade. Last year’s finalization of HHS policies to streamline ACA plan selection, simplify marketplace enrollment, and increase access to care is now in effect. And the Inflation Reduction Act of 2022 is expected to minorly influence Medicare spending trends while reducing cost sharing for Medicare beneficiaries. At the same time, scrutiny of Medicare Advantage practices could continue.

Momentum to do something about the cost of healthcare is expected to be a hot issue on both sides of the campaign trail. Though the passing of significant legislation in an election year is unlikely. Agile, tech-forward health plans will be positioned to succeed no matter what happens on this front.

Opportunities: Chances to Excel with Healthcare Payer Technology

While challenges abound in an uncertain healthcare environment, so does opportunity. Changing member behavior, motivated employer clients, technology advancements and broader industry shifts offer health plans the chance to succeed with their digital transformation goals.

Members open to engagement

The past three years have opened up new and unexpected avenues for member engagement. People want to hear more from those responsible for their care. They have embraced home health and telehealth. And they have welcomed technology overall into their healthcare unlike ever before.

At the same time, the consumer healthcare cost burden is a top financial worry for individuals; half of U.S. adults say it’s difficult to afford healthcare. And a concern to the broader economy as well with the total set to hit over $491 billion and maintain an annual growth rate of 10% per year for the next five years. How can health plans proactively maneuver through this dynamic?

Payers have caught on to the fact that providing improved member services is a differentiator in a consumer-driven market. In fact, consumers see their health plan as key to positive healthcare experiences. By offering convenience and addressing social determinants of health, plans can offer broader benefits with perceived higher values while lowering costs. CMS has made it easier for health plans to offer supplemental benefits, another incentive for offering them. With health plans expanding coverage in this area, digital health adoption will continue to grow.

“Artificial intelligence, genomics, precision medicine and other emerging technologies are pushing the industry toward medical breakthroughs that felt like science fiction only a few years ago. Yet there are so many pressing questions. Will these innovations make healthcare even more expensive? Will they make care inaccessible and widen already unconscionable inequities? Will they health the mind as well as the body?” Source

Employer clients embrace payment integrity

It’s estimated that self-insured employer groups make up 70-80% of commercial health plan business. And these clients are anticipating healthcare spending to increase 5 to 8.5-percent in 2024, in part due to pharma costs. Still hesitating to pass on these increases to employees, their strategies will center on lowering costs and making good partnership decisions. In this environment, payers have a significant opportunity to excel.

These customers are increasingly focused on savings opportunities, including payment accuracy programs. They also have more motivation than ever to demand greater insights to ensure their workers get the best coverage for the best price. Payers that can provide greater visibility into payment integrity value are better positioned to offer uniquely competitive products and programs to this highly desirable client base.

Pursuit of industry-standard enterprise technology

Technology advancements continue, as API standards are enacted and artificial intelligence capabilities improve. Plans can leverage the mountains of data they collect through improved data analytics technology, reducing time to reports and empowering real-time decision making. And these advances have arrived just in time. Through secure integrations, data sharing could be a hurdle that health plans finally surpass.

Health plans will have to overcome learning curves, fear of change and other internal challenges as they select solutions and look for increased returns. And A.I. applications bring additional hurdles including explainability and still-developing proof points around use cases for specific payer business functions.

The vast majority will look to outside vendors to cover these gaps. But more strategically, moving away from the vast array of point solutions that has led to fragmented technology stacks. Savvy organizations are increasingly pursuing industry-standard enterprise technology platforms that reflect best practices. With predictable, subscription-based costs, configurable off-the-shelf solutions will prove more cost-effective than custom-built technology.

Strategic shift to payment accuracy

The desire to move most payment integrity operations to overpayment prevention can hardly be called a trend. It’s a perennial goal at most health plans, and one perceived as largely out of reach for average organizations. But there are signs that the balance is shifting to favor strategic payment accuracy.

Payment accuracy is about more than recovering overpayments. It’s a broader strategic relationship between payers and providers to ensure claims are paid accurately in the first place. And it starts with end-to-end payment integrity technology that puts all the data that powers the program in one place. With real-time KPIs at hand, the payers succeeding in this model are engaging key stakeholders, identifying prevention opportunities and realizing impressive ROI in the process.

These collaboration capabilities are available to all health plans if they utilize the right technology solutions. Empowering users to break down barriers within — and without — their organization will drive efficiencies and advancements along the payment integrity continuum.

Partner to Make 2024 the Best Year Yet

Health plans can stay ahead of the curve by making strategic investments in change, particularly surrounding transparency. Enterprise technology and shifts in payment accuracy strategies will allow payers to continue to gain ground and focus on proactive efforts, particularly when it comes to claims recovery and payment integrity.

Extending your competitive advantage transcends trends. Fortunately, a comprehensive technology platform like Pareo allows health plans to scale and improve processes, harness the power of A.I., increase medical savings, and accelerate ROI. Talk to ClarisHealth about how Pareo can keep you a step ahead of healthcare payer technology trends – no matter what the future brings.

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