3 methods for payers to curb growing medical loss ratios

As Health plans profit from continued enrollment progress in 2024, notably within the IT-matters/” rel=”noopener” goal=”_blank”>Medicare Benefit area, they’re additionally experiencing a convergence of a number of pressures which can be driving larger medical loss ratios (MLR). In essentially the most drastic eventualities, some payers have seen their inventory costs tumble as their MLRs have IT-misses-profit-revenue-q1″ rel=”noopener” goal=”_blank”>soared above 90%, which is nicely above the statutory requirement of 80–85%.  

In my direct conversations with Health plans, the pressures they most frequently cite embrace: 

• Inflation: Healthcare is not any exception to ongoing price will increase squeezing all the U.S. economic system, with private payers and Medicaid bearing the heaviest burden.
• Larger persistent care incidence: As seniors proceed to flock from conventional Medicare to Medicare Benefit, plans are actually caring for a inhabitants with a larger illness burden.
• Supplier consolidation: As particular person suppliers and hospitals proceed to Health-costs/issue-brief/ten-things-to-know-about-consolidation-in-Health-care-provider-markets/”>be part of massive Health programs to enhance their monetary sustainability, suppliers try to extend negotiating leverage over the Health plan community when IT involves pricing and different components resembling cost integrity measures.
• Reimbursement: Payers are seeing decrease reimbursement charges in Medicare Advantage and inadequate rates in Medicaid at the same time as they take care of bigger and better severity populations.
• Utilization: The sharp bounce-back from the COVID-19 pandemic that occurred in 2023 continues to persist as healthcare customers turn out to be more and more snug searching for preventive care and catching up on backlogs in elective procedures.

As they appear to keep away from drastic measures resembling layoffs or slicing advantages to enhance their sustainability and proceed to supply their members with high-quality care, listed here are three methods for Health plans throughout all traces of enterprise to think about within the second half of 2024 and past.

Make investments (or reinvest) in prepay integrity measures

You possible have already got some type of prepay declare modifying system in place to assist guarantee compliance along with your declare insurance policies—however what’s slipping by the cracks? Adopting a second-pass or final-filter declare modifying system has persistently confirmed to ship vital worth from avoiding cost of inappropriate claims. On high of this, adopting expert-driven coding validation for prepay assessment of complicated coding errors helps be sure that eventualities resembling abuse of Modifiers 25 or 59 don’t slip by your system.

For one massive Medicaid payer, this method Health-plan-protects-financial-integrity-prepay-review-solutions” rel=”noopener” goal=”_blank”>reduces inappropriate declare spend by $200 million per 12 months incremental—with zero upfront price because of Cotiviti’s shared financial savings mannequin. Notably, the shopper sees Cotiviti’s service mannequin as the first differentiator over different distributors, forming robust, collaborative relationships with shopper medical administrators and cost integrity executives to pick out cost coverage applicable for his or her plan.

Comprise rising pharmacy prices

Prescription drug prices Health-insurance-costs-average-per-worker-increase-2023-mercer/700365/” rel=”noopener” goal=”_blank”>rose greater than 8% in 2023—and drugmakers’ earnings continue to rise. Whereas prescription drug claims are sometimes paid by separate pharmacy advantages, specialty medication, that are among the many costliest, are usually paid by the Health plan’s medical profit. Ask your cost integrity vendor what insurance policies and options they’ve particularly focusing on rising pharmacy prices to make sure these more and more costly drugs are paid for appropriately and precisely. As well as, ask your vendor about utilizing paid pharmacy claims to tell medical drug declare modifying.

Pair AI with scientific experience

Synthetic intelligence (AI) is neither a catch-all resolution to each drawback nor one thing that needs to be feared. IT’s merely considered one of many superior instruments {that a} Health plan ought to look to deploy as a part of its toolbox for controlling inappropriate healthcare prices. For instance, IT can be utilized to assist payers reduce the number of medical record requests despatched to suppliers by narrowing the main target to solely charts which can be more likely to yield worth again to the Health plan. This advantages suppliers by lowering the variety of medical report requests they want to answer and advantages the Health plan by enabling its scientific sources for use rather more effectively and successfully.

By searching for out cost integrity options that ship not solely worth, but in addition innovation and a dedication to collaboration, payers can overcome the historic monetary pressures they’re at the moment dealing with to assist guarantee their long-term sustainability, in the end delivering higher advantages and a greater expertise for his or her members.