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Outsourcing Options
This issue of the Healthcare Savings Chronicle features articles from a few of the companies in the forefront of the healthcare marketplace. We hope you find these articles informative and instructive.
DISCLAIMER: Statements or opinions expressed in the articles of this publication are those of the author and do not necessarily represent the views or positions of Coalition America,Inc., The Healthcare Savings Chronicle, its officers, directors, or staff.
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Making an Outsourcing Strategy Work
www.mphasis.com
by Hossein Abdollahi
Senior vice president, professional services
MphasiS Healthcare Solutions/Eldorado
As the pressure to hold down health costs grows and as margins become leaner, an increasing number of third-party administrators (TPAs) and health plans are outsourcing some of their work to business process outsourcers (BPOs). They’re doing this mainly to reduce claims processing costs and to cope with staffing problems. But smart administrators are also looking for BPO partners that offer innovative solutions, can help them reengineer internal processes, have a strong onshore presence, and have the flexibility to meet all of their outsourcing needs.
Among the capabilities that TPAs should look for in a BPO are these:
• Dedicated customer relationship management and operational teams
• Proven transition methodology
• Flexibility to meet each customer’s needs
• Ongoing collaboration with customers
• Continuous quality improvement
Dedicated Team Support
The BPO should give each TPA a dedicated team that always handles that administrator’s claims. This enables the BPO’s staff to develop a deeper understanding of the administrator’s processes and to continuously improve their performance. On the other hand, the BPO should also cross-train its employees so they can work in multiple customers’ operations as a backup.
In addition, an administrator should expect its BPO to provide dedicated customer relationship management. That means that the BPO has operations managers and that larger customers receive the undivided attention of one of these representatives.
A BPO can offer a range of value-added services. For example, when the TPA hires a BPO, the outsourcing firm should perform a detailed business process assessment that addresses not only the administrator’s outsourcing needs but also internal issues that may be obstructing the claims processing flow. The BPO should work with the client to fix those problems prior to the transition to outsourcing.
The BPO must have a proven transition methodology and a deep pool of expertise that enables the TPA to move to outsourcing with a minimum of internal stress and disruption. Besides helping the client analyze its current processes, the BPO and the administrator should draw up a roadmap showing where the TPA wants to go.
Flexible Approach
To get optimal performance from a BPO, an administrator should look for one that will collaborate with the TPA from the outset. One size does not fit all and the BPO must be able to work with the TPA to achieve its business goals as they evolve.
Second, the BPO should be able to work on a variety of technology platforms. Using a BPO’s own proprietary software has some advantages in terms of productivity. But the BPO must be flexible enough to use whatever application its customer is using and feels comfortable with.
Third, the BPO should offer a broad menu of service options, allowing the administrator to choose whichever services it needs to have done by the BPO at a particular time. The transition process should be scalable, so that a TPA can reduce the pressure on its staff by outsourcing its business functions in phases.
Finally, the BPO must have a continuous quality improvement process in place so that it can gear up for the transition, fine-tune its approach as its staff learns the client’s business rules, and make the process even more efficient over time.
Higher-level functionality
Assuming that a BPO has the right technology and has trained its staff properly, it should be able to offer a wide range of capabilities. These might include scrubbing claims to industry standards, high-level claims adjudication, determination of benefits, and plan building.
Many BPOs attest that they can do claims adjudication, but most of them are just scrubbing claims. A TPA should be able to count on a BPO to handle pended claims, exceptions, and non-standard claims and make benefit determinations. The examiners should also understand plan benefit design so that they can detect errors in auto-adjudication processes. And they should know when they need more information and how to get it. Overall, they need the same level of knowledge that a TPA’s own claims examiners have.
Plan building can be very complex, especially for TPAs that customize large numbers of different benefit designs for smaller employers. This is one reason why it’s important for a BPO to have employees who can help TPAs fill in the gaps and define the gray areas in their plans.
A first-rate BPO should provide a very tight service-level agreement governing such performance metrics as accuracy (at least 99 percent for critical functions) and turnaround time (24 hours in most cases). The BPO should also audit a certain percentage of claims—and, preferably, 100 percent of them in the first few months of working with a new customer.
Evaluating BPO Operations
When comparing BPOs, a TPA should look closely at how they conduct their operations. Besides checking their references, the administrator should ask these questions:
• How do the BPOs assign teams to particular clients—are their employees working out of a pool, or will the client have dedicated resources?
• If they say that they do claims adjudication, what exactly does that mean?
• Do they scale charges to the volume of claims (they should), or to different kinds of forms (they shouldn’t)?
• Can they handle non-standard forms, and how do they input faxed claims?
• What is their change management process to accommodate changes in business rules?
• What is their training process?
• Do they have reliable IT connectivity with the necessary redundancies?
• Do they have a robust business continuity plan to prevent downtime during disasters such as fires or floods?
• What is their level of employee retention?
• What does their service-level agreement look like?
If the answers to these questions are all positive, the TPA has found an excellent BPO partner. But that’s only the beginning. To maximize the TPA’s savings and streamline its workflow, the two organizations must form a solid partnership. So be sure that you’re comfortable with the leadership of the BPO. If you are, your prospects for a successful relationship are bright.
Hossein Abdollahi is senior vice president, professional services, for MphasiS Healthcare Solutions/Eldorado. MphasiS specializes in health insurance application development, business process outsourcing services, IT engineering and operational consulting. He can be reached at habdolahi@mhs.mphasis.com or 602.604.3100.
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