With the onset of the Patient Protection and Affordable Care Act, a whole new world of required technology has become necessary for carriers. Because the law has a plethora of unknowns, the role benefits advisors played in the last few years is going to dramatically change in 2014 and beyond.
Decades of knowledge that went into creating the health care product we know today, along with its delivery process and support services, are about to be transformed. And in their place will be a more complex health care delivery and insurance model that requires more technology, new and flexible roles for the benefits advisor and adaption to constant change.
Prior to the initial roll-out of PPACA, it became quite apparent that carriers were going to have to change most of their business processes. Chief among those processes is post sale customer engagement and service and billing. Many companies are anticipating a large influx of service calls from both members and providers in their network. Additionally, most consumers are now going to move from a group to an individual policy complete with subsidies, member payments, late payments, inaccurate payments and non-payment cancellations along with reinstatements.
Because of the advent of PPACA and its resulting complexities, acquiring technology at the benefit broker level and the carrier level will be extremely important. Here are five tech trends that are now more essential than ever.
The need for cybersecurity reared its ugly head with Target’s recent massive security breach. Although health care has made security of patient information a top of mind issue, handling millions of individual financial transactions everyday with the onset of the Patient Protection and Affordable Care Act will push the limits of the industry’s current financial and accounting processes. Most non-health insurance companies are familiar with cybersecurity issues and have decades of experience in managing the security of customer information on a very large scale. But, health insurance companies simply don’t have that proven experience and will need to acquire it quickly.
While insurance companies have developed robust customer service software and platforms, the vast amount of customer service will now fall on the benefits advisor. Most benefits advisory firms are relatively small operations with less than 150 employees, have little in the way of technology and really are not at the front line of customer service as is.
The typical benefits firm might handle 1,000 different clients’ plans and the service issues were usually between the client’s human resources department and the benefits advisor. If that benefits advisory firm has 1,000 plans and 50 people insured per plan, they are now the frontline service provider for 50,000 people. Benefits advisors need to start thinking about how they will handle service calls, what system will perform best for them and who is going to be taking those calls.
Compensation management software
A common concern of benefits advisors and their firms is how and when they will be paid. PPACA puts agent commissions and compensation in the medical loss ratio formula. Depending on the plan, the MLR will either be 80 or 85 percent. If a MLR is set at 85 percent, then all of the allowable administrative expenses of the carrier, including agent commission, is 15 percent.
The advisor compensation from a small group with 100 employees is going to go from roughly $6,000 to less than $1,000 per year. Accounting for all of those small commissions that will show up on the monthly account is going to be more than the typical Excel user in the accounting department will be able to manage. Software that can reconcile and accurately forecast commission revenue is going to be essential for a benefits advisory firm.
Customer service via handheld devices will be important and cost effective if the security issue is resolved and the information that can be accessed by the member is accurate. Carriers have the budget and the resources to enable, via customer portals, access to information for self service.
Larger advisory firms will also find that their customers will prefer to self-serve when it is feasible. However, the advisory firm will not be able to provide claims or other information that is the purview of the carrier. Customers will expect to be able to call, text and/or email their advisor to get questions answered in a timely manner.
Voluntary benefits systems
A byproduct of PPACA is the expected increase in voluntary benefits that a person can purchase. Many life insurance companies are viewing disability insurance, dental insurance, critical care and supplementary insurance analogous to Medicare Advantage. Because these products are different from their main products, carriers are looking to invest in technology that will assist with the management of these products.
Correspondingly, benefits advisors and their firms need to look again at CRM systems, mobility and Internet sales as a way to provide new products to new clients who want to purchase in non-traditional ways.
The implementation of PPACA will undoubtedly bring along a myriad of changes for the insurance industry that will disrupt previous processes for benefits providers. But, by taking advantage of the above technology trends, many of the resulting problems and complexities will be remedied and simplified, making the jobs of both carriers and brokers easier and more effective.