Payers drive the Healthcare Providers!

Arun Joseph VargheseArun Joseph Varghese on April 18, 2014

Those who foot the bill define the rules of the game and the payers seem to be doing exactly that in the world of healthcare, pushing the providers to be accountable for their quality and effectiveness in their treatment of patients. It’s not surprising then that the payers are driving the providers up the wall considering the growing healthcare burden around the world, be it the ageing population or the growing lifestyle/non-communicable diseases conundrum.

The Payers in different parts of the world may be the Government, Insurance Companies, TPAs, corporate organizations, NGOs or out of pocket paying patients, but each are placing measures with the providers to ensure there are no fraudulent claims, overuse of services and optimal treatment at the right cost.

It is due to this pressure from the Medicare program in the US, that a group of coordinated providers formed a group called the Accountable Care Organizations (ACOs), to ensure accountability to the patients and the third party payer for the quality and appropriateness of treatment. ACOs can choose from 2 payment models when participating in the Medicare Shared Savings Plan. ACOs are also responsible for improving care management, limiting unnecessary expenditures while continuing to provide patients freedom to select their medical services.

In the US and Western European countries we see the preferred use of the DRG (Diagnosis Related Groups) system that the insurance companies prefer for more predictability of costs and pushing for shorter hospital stays. The DRG mode of payment is a fixed lump some that the payer pays to the provider per case. The fixed lump some is the average cost per DRG code. The average cost is fixed but the variable factor called the cost weight is determined for each procedure based on its complexity.

In the UAE we see the introduction of Pharmacy Business Management, E-based authorization and prescription based solutions by the health authorities to a) minimize medical mistakes in prescribing and dispensing, b) reduce fraud, abuse and waste, c) monitor drug utilization, d) reduce patient’s waiting time at provider/pharmacy, e) inform patients about insurance coverage real time, f) paperless transactions and g) minimize risk of claim rejections and improve overall claims processing.

Providers are even more urged to make use of Clinical Decision Support Systems (CDSS) to monitor drug-drug, drug-diagnosis, drug-age, drug-gender, drug-allergy and diagnosis to treatment alerts.

In India, co-insurance and use of packages have come to the fore. Corporates negotiate tooth and nail and sign MoUs with providers to ensure their employees get affordable treatment via customizable packaged plans (bundled services) for ambulatory, health-checks and operative procedures.

In parts of Africa where the National Health Insurance covers treatment for patients in certain facilities have introduced co-payments to reduce misutilization of funds and treatment.

As the healthcare burden increases world wide it remains to be seen what other innovative ideas will rear its head as the magic triangle continues to push the payer, provider and the patient.

Arun Joseph Varghese

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Arun Varghese
Passionately solving healthcare problems with IT solutions for over a decade is the Product Owner for Insta HMS by Practo.

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