New health models drive payer outsourcing boom
Health insurers treading in legacy business processes are turning to contractors for help ply the new waters of reform, fueling an $8 billion market of its own.
If somewhat later than expected, with 30 million Americans gaining health insurance, a new payer business processing outsourcing market is emerging, according to Black Book Market Research.
The Clearwater, Florida-based research firm's annual survey found new "urgencies" for accountable care, claims processing modernization, data aggregation and information security driving a 22 percent year-over-year increase in outsourcing services--the BPO market.
"BPO vendors are helping public and private payers achieve great efficiency and cost savings, improve transparency and member services, and enhance the health plans' ability to participate in the reforming healthcare business models," said Doug Brown, managing partner of Black Book.
The company surveyed 5,400 health plan BPO users between the third quarter of 2014 and early this year.
The poll found that health insurance BPO is in the midst of its own sort of evolution, adapting beyond the services of the 2000s to what the industry needs for the next decade.
Over the last year, the traditional BPO services rose only 13 percent, even as 7.2 million new members enrolled in ACA plans and millions more gained coverage through Medicaid managed care. "The routine BPO functions of claims adjudication, call centers, and member processing produced only modest gains for outsourcing vendors compared to projections," said Brown.
At the same time, contracting has nearly doubled for what Black Book calls "inventive and unchartered administrative services"--analytics, new plan design, claims modernization and alternative payment services.
This kind of spending by commercial insurers, government payers, ACOs and provider-sponsored plans is increasing the payer BPO market from estimated $5 billion in 2014 to an expected $8 billion in 2016, according to Black Book.
Among the survey findings, 87 percent of health plan managers listed priorities that include software-as-a-service, accountable care and chronic care management assistance, data aggregation, health information exchange and data security,
Almost 75 percent said they're likely to outsource the development and management of new value-based payment models, whether because of inadequate technology IT, staffing shortages, or competing tech projects.
For the ongoing and far-reaching project of claims modernization, almost 70 percent of the payer managers told Black Book said they are considering outsourcing as among the best solutions. More than 60 percent, meanwhile, are considering contemplating outsourcing of utilization management, although a little less than 30 percent are considering outsourcing care coordination and case management.
A fair amount of the growth is due to smaller plans catching up with the majors. According to Black Book, almost 40 percent of small- to medium-sized plans are contracting for some processes, up from 20 percent in 2012. Eight of the 10 largest health insurers are already outsourcing "significant portions of their operations," and relying on lower-cost locals like India and the Philippines for some of the low-complexity work.
Payer managers in Black Book's survey also lauded a number of vendors for their work in nine different areas. HCCA, IBM Global and Lumeris garnered mentions in population health, Xerox in claims modernization, Hexaware in member services, Trizetto in network management, IMS Health in marketing, DST in revenue cycle and Dell in insurance exchange support.
