What steps should your health plan take to ensure you get the most value from your services vendors and payment integrity efforts in the face of vendor consolidation?
Will services vendor consolidation impact the success of your health plan’s payment integrity efforts? Health plans have long relied on third-party suppliers to supplement their own claims payment efforts, fill staff and expertise gaps, and push innovation forward. But the current trend of consolidation may necessitate a change to this strategy:
- Cotiviti acquisition by Veritas Capital
- Equian’s growth under New Mountain Capital ownership and eventual sale to United Healthcare
- HMS acquisition by Veritas Capital
- Change Healthcare acquisition by United Healthcare
- Discovery Health Partners acquisition by Multiplan
What Vendor Consolidation Means for Your Health Plan
Vendor consolidation can streamline your health plan’s options. But it also may pose a significant threat. Will payment integrity leaders be able to continue relying on services suppliers as a source of innovation in the form of niche analytics? Will procurement and vendor management have the leverage they need to get the value they are accustomed to?
Let’s look at the different ways this trend could impact your organization.
Because the vendors merging are major players, many health plans include one or more of these in their supplier mix. In fact, you may find that the vendors you used in different pass positions and/or types of audits are now one and the same. As such, these vendors should be cognizant of the potential impact on your business. Expect them to provide communication around updated value propositions, cost and cost driver comparisons, technology and service roadmaps, and market strategy.
However, if you have questioned the different entities’ quality and value in the past, the new arrangement may not offer needed improvements – or the increased transparency required for you to make that data-driven judgment call.
Watch for potential downsides to these vendors consolidating:
- Limited choices and differentiation of those choices could stifle the level of innovation you have come to expect because vendors are not incentivized to aggressively compete for your business.
- With fewer options available to you, you may experience reduced rate negotiation capabilities.
- You may have to rely more heavily on payment integrity services vendors that have traditionally served as competitors to your health plan.
If you have already targeted your vendor mix (or lack thereof) as an area of opportunity, the vendor consolidation trend may provide just the opening you need. Smaller or less established vendors offer a real challenge to larger players as they can be nimbler and more responsive, while also providing niche analytics that fill more gaps and drive higher-dollar value. Strategic sourcing combined with good supplier management is proven to reduce and control costs, particularly around cost avoidance.
However, onboarding new vendors can be costly. And evaluating supplier quality and effectiveness can pose its own challenges. To ensure you can take full advantage of opportunities this disruption may yield, now is your moment to take control of your payment integrity strategy. To that end, look to technology as an enabler of innovation.
Winning Strategies to Minimize Your Risk and Jumpstart Innovation
We have witnessed health plans respond to the risk and uncertainty vendor consolidation can bring in a variety of ways. These responses vary based on differing cost containment goals and where the health plan resides on the payment integrity continuum. While some plans will consider changing their vendor mix or tightly integrating all payment accuracy functions, others seek to internalize key payment integrity efforts.
But to realize the potential innovation, cost savings and effectiveness to the fullest, these strategies depend on enabling technology. Let’s explore the requirements and potential outcomes of each approach.
Changing your vendor mix
If the trend of vendor consolidation affects your current outsourcing strategy, the first option you consider might be changing your vendor mix. And rightfully so, especially if your health plan has set forth any of the following goals:
- Extend payment integrity coverage over all lines of business and all types of audits
- Move from few or no vendors to a multitude of vendors
- Implement sophisticated vendor layering in single audit programs capable of accommodating multi-pass positions
Even in the current environment, strategic outsourcing will offer the quickest path to value – provided you possess the tools that reduce your administrative burden and support data-driven decision making.
An integrated technology platform – like that offered by Pareo Supplier Optimization – will allow you to more easily onboard and manage new vendors without a significant outlay of internal resources. Benefits like streamlined two-way data feeds, integrated workflows, overlap prevention, and automated invoicing and reconciliation create greater efficiencies and reduce manual workload. With a vendor management workforce able to focus on more strategic (and profitable) revenue drivers, your organization can confidently try out new and emerging niche vendors incentivized to bring greater innovation.
Then, all along the way, you can see real-time information on vendor performance, based on metrics that go beyond the basic dollars recovered. Including: How often are they delivering new concepts? How many overpayments are they identifying and recovering relative to the numbers of medical records requests? Are they stacked correctly based on pass order and relative effectiveness?
With these insights in hand, you also can identify the highest opportunity overpayments to potentially insource. And continuously drive ongoing identification of areas to move to avoidance.