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Business process services (BPS) was once the gold standard for healthcare payer operations. Its transaction-based pricing worked well to lower labor costs. Although BPS is still a viable option for cost savings, payers need more than just labor arbitrage to compete in today’s rapidly evolving healthcare market; they also need to adapt to value-based care models, improve membership outcomes and experiences, and find new sources of revenue. None of this is possible with outdated, rigid technologies.

Enter business process-as-a-service (BPaaS). BPaaS is a platform-based administrative solution that provides operational agility and efficiency by combining expert people, proven processes and cutting-edge technology to not only lower costs but also improve flexibility, efficiency and effectiveness. With BPaaS, the service provider not only takes full responsibility for the platform-based solution — including keeping the system current with updates, upgrades, maintenance and security — but also provides a long-term strategy to deliver business outcomes in the form of member benefits and revenue growth. The system can scale up or down according to payer needs, and costs are based on a per-member-per-month model.

BPaaS: The next generation

BPaaS is the next logical step in healthcare payers’ operational strategies. Consider the following benefits of the BPaaS approach:

  • Transparency and agility: BPaaS gives payers full visibility into transactions in near real time, enabling them to respond more quickly to daily events. For example, if enrollments are down, payers could incentivize their brokers; if enrollments are up, they could pull back on advertising to save money for future initiatives. Other real-time information could include run rates, revenue projections and provider trends.

  • BPS, meanwhile, delivers this same information in weekly or monthly reports, requiring health plan administrators to wait until the end of the reporting cycle to make needed corrections. 

    On the plan provider side, easy access to information, typically via the cloud, enables better control over compliance with rapidly changing regulatory requirements and faster response to market demands, both of which are critical to long-term success.

  • Risk reduction: With BPS, manual processes can lead to lengthy enrollment or claims processing timelines. Such errors and delays could be detrimental to meeting important timeline requirements, such as those imposed by the Centers for Medicare and Medicaid Services (CMS).
  • Because BPaaS automates processes, there’s less reliance on manual intervention, which significantly reduces potential risks caused by human error and delays. Because the system automatically adjudicates claims, there’s no need for a claims rep to process it, reducing human touch and potential error.

  • Scalability: BPaaS enables payers to scale their processes to meet fluctuating volumes in membership and business growth. The BPaaS environment can easily transition from managing a few processes for a couple of customers to supporting many customers and processes. BPS, on the other hand, requires more people and additional training to scale.

  • Talent optimization: Many payers use BPaaS to free staff from time-consuming tasks. For example, if the plan provider previously processed its own claims, it may have needed numerous claims representatives to achieve this. By shifting these processes to BPaaS, the plan can redeploy that talent into member-focused and revenue-generating activities, such as service quality improvements. Because BPaaS results in financial and operational improvements, healthcare payers can explore expansion into new markets without having to utilize in-house resources to build their own capabilities.

  • Cost savings: Plans are pressured to keep costs low to meet Medical Loss Ratio requirements, which limit the allowable percentage spent on administrative costs. BPaaS lowers administrative costs by providing experienced people and standardized processes and technology. The BPaaS model breaks down silos within the health plan and integrates technologies and processes to lower total cost of ownership, lessening the financial and administrative risk for the payer.

  • BPaaS also decreases TCO by reducing capital expenditures on digital technologies. The health plan gets access to new digital systems, accompanying upgrades and ongoing maintenance and pays only for what it uses.

  • Modern technology: BPaaS helps health plans address competitive threats by digital disrupters without having to purchase their own platform. By reducing the capital investment and accompanying resources needed, they’re free to invest in strategic development rather than digital infrastructure, maintenance and upgrades.

  • Access to experts. Health plans that implement BPaaS get immediate access to highly skilled experts who have experience in the industry and across business lines throughout the healthcare continuum. These experts have knowledge of many areas in healthcare, including Medicare and Medicaid. This allows the health plan to add more experts without taking on the costs of employing them directly.

BPaaS in action

We worked with a large health insurer with membership across Medicare Advantage, Medicaid and Medicare Supplement to provide a more scalable ecosystem to meet its significant membership growth projections. With over one million members, the insurer was facing a high level of technology debt and costly operations.

Within six months, we implemented BPaaS-driven industry-standard processes across the insurer’s lines of business, with functional operational capability guides to minimize customization. We conducted a readiness assessment to address mandates across six states and ensured compliance with CMS and state regulatory requirements. As a result, the plan was able to achieve its goals of scalability, increased efficiency and compliance without the capital expense of replacing its technology systems.

The reality is that payers need to do things better — for less cost. They need to improve the health outcomes of their members and meet members’ increasing demands. With a near real-time view of the business, agile systems, automated processes and the ability to act quickly on that information, health plans will find long-term success.

Venkatgiri Vandali is a Vice President at Cognizant and heads the company’s Healthcare Business Process-as-a-Service (BPaaS) practice. For more on how BPaaS benefits payers, please see the second installment in this series, “How BPaaS Grows Healthcare Payer Membership, Improves Revenue,” and visit the Digital Operations section of our website.