The dawn of a new era is rising for the payer sector – it’s called consumer-directed health plans. And based on what observers see as an awakening level of interest in the concept, commercial insurers need to emulate the early bird with regards to adopting an IT strategy that ensures they get the proverbial worm.

The consumer-driven dynamic – standard procedure in other insurance sectors like life, property and casualty – is a foreign concept to health insurers. Spurred by Medicare Part D though, payers are quickly finding out that in order to compete for business under this new model, they need to upgrade their information systems so that they can readily connect with their new beneficiary customer base.

In a recently issued report, New York-based Datamonitor found that payers are increasingly making portals a key component in their IT strategy. They are moving away from using portals solely for administrative purposes and incorporating more disease and medical management, said research director Jocelyn Young. In coming years, portals will incorporate enhanced levels of personalization, interactivity and functionality.

“Health plans are no longer just insurers,” she said. “They are now collecting and disseminating information to various stakeholders – that’s where portals come in. Whether it’s employees, customers or physicians, they are now the hub of a lot of interactions.”

Portals essential

The Datamonitor report, Portals In The Healthcare Industry: Shifting To Meet The Demands Of The Consumer-Driven Marketplace, concluded that portals are essential avenues for connecting with consumers, who are taking a more active role in their healthcare decisions.

“One of the revelations of this report is that portals are a ‘must have’ rather than a ‘nice to have’ feature for payers,” Young said. “They are part of the cost of doing business; a way to build a more personalized health management experience for consumers.”

Bruce Oliver, vice president of marketing and business development for Phoenix-based QCSI, agreed that payers are enduring “a big shift” in their method of operation, stemming from various regulatory and market pressures. In fact, the past few years have been an arduous period for payers, he said, as they have endured the Y2K transition, HIPAA compliance, changes to transaction code sets and national provider ID. Now they have to face a whole new string of challenges with Medicare Part D.

“Consumer-directed health plans and medical savings accounts are a nice idea, but how do payers handle it?” he said. “Consumers have become adjudicators of health claims until they hit the deductible threshold. But how do they know when they reach that level?”

Competition from banks

Besides contemplating how they will meet this new demand, insurers also have to keep a wary eye out for new competitors entering the field, Oliver said.

“Banks are looking at medical savings accounts because they contend it’s a banking function,” he said. “Mutual fund companies and benefits administrators are also coming into the business in a specialized fashion. That puts additional pressure on payers to widen their scope in order to compete with these new players.”

Information – and access to it – is at the heart of the consumer-directed revolution, Oliver said.

“That’s where the portals come in,” he said. “Consumers are using credit cards, debit cards, mobile technology, PDAs … there’s a whole new business cropping up around that.”

QCSI automates many payer processes that have traditionally been done manually, using Web-based, real-time software, Oliver said.

“With our system, payers can provide information as needed, where needed, anytime and anyplace in the world as long as someone has the need and right to know,” he said. “Consumers who are paying the first thousand or two of their health expenses want information and want the transaction completed ASAP.”

Likewise, Hauppauge, NY-based Softheon is addressing payers’ concerns – not just about data accessibility, but also about how they can simultaneously take control of content through process automation. Executive vice president Chuck Strahlendorff said the objective is to give the payer a “360-degree view of information by breaking down silos so that claims, configuration and member services work together.”

For instance, if a claim is filed, rejected and subsequently appealed, the Softheon system automates the information so it is seen digitally. Through a series of point and clicks, the reviewer can see how many appeals and grievances that patient has filed.

“It will show whether a patient is high maintenance – that every time they go to the provider, they say they are being overcharged,” he said. “The reviewer can then check the provider data to see if the provider is indeed overcharging on a habitual basis. It could also identify whether the fee rate is an error on the payer’s part.”

Though now an antiquated business initiative, the principles of Total Quality Management (TQM) actually apply to Softheon’s approach in dissolving bureaucratic partitions, Strahlendorff said.

“We help create an organization that doesn’t focus on departments, but focuses on the business,” he said.