It’s no secret that paying for healthcare in the United States is extremely difficult to do. Payment systems for healthcare across the country are highly fragmented; many payers and providers use multiple formats for remittance. This creates challenges and frustration for patients, providers, and insurance companies, particularly at a time when there is increased pressure to reduce costs. Other industries use B2B automation processes in standard languages like EDI to standardize and automate payment systems; B2B challenges abound for the healthcare industry.
The B2B challenge in healthcare remittances
Thanks to the Affordable Care Act, there are now in motion some new initiatives related to healthcare payment reform – chief among them, the transition from fee-for-service to value-based care. “The ramifications of this transition for payers are significant,” says John Tyler, Data Science Platform Manager at Premera Blue Cross. “Payers are going to have to get really good at providing value to their customers relative to the healthcare system and at managing risk more closely.”
As we noted in our Payer of the Future whitepaper about the future of health insurance, payment reform has also shifted the financial burden toward consumers. Health insurance premiums have far outpaced income growth in the past year, and there have been large increases in out-of-pocket expenses. Faced with increased financial responsibility for healthcare treatments, consumers have no choice but to shop for low-cost options for insurance coverage and health care. This creates an incentive for payers and providers to develop a competitive advantage by creating digital experiences that help members better manage healthcare costs.
But there is widespread consensus that the administrative cost of doing business for healthcare is still too high. According to the 2015 CAQH Index Report, “by some estimates, more than $31 billion each year is spent by healthcare providers alone conducting basic business transactions with health plans. A good portion of this expense can be attributed to resource-intensive manual processes, such as phone calls to verify patient coverage or mailing claims and paper checks.” It has been reported that reducing manual transactions in the healthcare industry could save as much as 8 billion dollars.
Despite the obvious advantages, the healthcare industry has been slow to adopt fully electronic B2B transactions, due to the fragmented and multifaceted payment system. But numerous market pressures and legislative mandates are causing a revolution in healthcare payments industry and creating an impetus to overcome the B2B challenges healthcare faces.
Overcoming healthcare industry B2B challenges with EDI
The good news, according to the CAQH report, is that the three-year (2012-2014) trend shows a steady, increase in the adoption of fully electronic transactions. However, the increases have been modest.
The report showed in 2014, the average increase in adoption across transactions was 4.5 percentage points, compared to 3 percentage points in 2013.
There have been efforts since the early 90s to simplify healthcare transactions through electronic B2B communication, and EDI (Electronic Data Interchange) was mooted in 1991 as a good way to do it. As one industry player put it, “EDI implementation has been proven to both save time and save money. An important element in EDI is that of standards. Each EDI document has a standardized format, which ensures that data can be quickly sent and interpreted on both sides. It is particularly important that providers and payers utilizing healthcare EDI transactions follow HIPAA regulations and ANSI standards. EDI formatting specifications are like blueprints for data, EDI guides that serve to make transitions between different data trading partners as smooth as possible.” But EDI has its own challenges for B2B communication in the healthcare industry. It is a famously unwieldy technology, and can sometimes impede agility. It can be difficult to create the innovative experiences that patients desire. As healthcare transitions from a fee model to a value-based model, again, creating competitive differentiators will be important; like in other industries, healthcare payers and providers will find themselves surrounded by competitors if their rate of innovation is too slow.
EDI doesn’t have to slow down B2B communication in healthcare
MuleSoft’s solution to solve B2B challenges in healthcare is an API-led strategy to B2B communication using EDI standards. The idea is to increase agility and decrease the time for partner onboarding while reducing cost and risk. Organizations can — and should — continue to use EDI as a standard for electronic business transactions while innovating on top of it to create new and better experiences for patients, providers, and other stakeholders.
Take a look at more healthcare resources about how digital transformation can help your healthcare organization.