The Impact of Health Care Legislation on Member Correspondence

Health care reform requires more responsive document systems

By Kevin Craine

Late in the evening of March 21, 2010, the U.S. House of Representatives passed the Patient Protection and Affordability Act (H.R. 3590), the Senate’s health care reform law. After months of fierce debate in Washington and around the country, and after an intense day of voting on Capitol Hill, the new reform bill finally found its way to President Obama’s desk. While pundits on the right and left continue to argue about the potential implications, the new legislation – over two thousand pages of it – has most people scratching their heads.

What does the bill actually mean for health insurance providers?  No one is exactly sure, but one thing is certain; it will mean an end to the current health care system as we know it. The elimination of pre-existing conditions, the expansion of Medicare into rural areas, and broader coverage for both young adults and early retirees are just a few of the immediate impacts.  Eventually the legislation will cover an additional 19 million uninsured people beginning in 2014, with a majority of uninsured covered by 2016 (30 million). Through it all, the demand for transparency in insurance companies and medical loss ratio requirements will transform the way the entire industry approaches how it does business.

Impact on Member Correspondence 

Whatever the implications of the new legislation, we can be sure that the process to create and produce member correspondence will be greatly impacted. The volume of communications will rise dramatically to respond to the many market changes. Member correspondence requirements will become increasingly demanding as plan structures evolve. Insurers will need to initiate new systems, products and processes to appropriately comply with the new law and the ability to efficiently manage member correspondence associated with legislative changes – and there will be many – will be vitally important. The pressure for cost containment will become intense as insurers react, often rapidly and without a great deal of clarity, to the new demands in the market place.

Companies can respond to these implications in two ways: with great efficiency or with great inefficiency.  Either way, the results could mean the difference between survival and failure. Indeed, how insurers manage their document processes will have a direct bearing on their ability to navigate the transition and how well they will fare in a post-reform market place.

Many health insurance organizations will struggle to respond to health care reform due in large part to the current state of their member correspondence systems. What is needed is greater “document agility.” Companies that continue to use legacy computing systems that are siloed within arcane IT departments will find it difficult, if not impossible, to appropriately respond to the new legislative requirements. Business units that are un-empowered, or who must rely on makeshift homegrown approaches, will quickly fall behind. Overly complex systems that fail to support the rapidly evolving needs to retool will be an Achilles heal for even the most sophisticated enterprise.

So the question becomes: How should organizations and professionals in the health insurance field prepare for the changes afoot? Now is the time to act and here are some of the most important aspects to consider:

Growth in Member Correspondence Volume and Content

One fundamental implication of health care reform is that millions of previously uninsured people will seek insurance. As a result, the number and volume of documents that need to be created, modified and produced will grow dramatically as new plans are written for this huge constituency of new members. In addition, a variety of market reform changes and disclosure obligations are scattered throughout the law and this too will result in significant growth in member correspondence volume and content.

One example under the new law is the requirement that all insurance carriers and sponsors of self insured plans distribute a uniform explanation of coverage document. This document must be distributed at least 50 days prior to the effective date of any modification to the elements of the plan. The law is very specific as to the requirements of the uniform explanation document. For example, it cannot exceed four pages, the font cannot be smaller than size 12, and it must be distributed at open enrollment to all new enrollees and at the time any policy is issued. The uniform explanation of coverage can be made available on paper or electronically, but it must include a “plain language” description of all the benefits and coverage levels including any cost sharing elements that are built into the plan. This is just one example of the type of “document template” that insurers will have to manage on a plan by plan basis; not only for plans that are sold through the state exchanges, but also for self insured plans sponsored outside of the exchange.

The implications of health care reform go beyond just the ability to assimilate rising document volumes; improved content management and personalization will be needed as well. Member correspondence will have to be tailored to accommodate coverage variations and nuances on a plan by plan basis. Most insurance industry professionals will confess that summarizing plan attributes and coverage parameters concisely and in plain language is already difficult, but under the new law the difficulties will increase. Personalized content, expanded language requirements, and demanding deadlines will mean that insurers will need to generate and modify documents quickly and with deftness that many organizations do not possess today. This “document agility” will be important not only in meeting compliance requirements, but also for acquiring new members and ensuring that providers remain competitive in the new market.

While paper continues to be the chief method of communication, health care reform continues to push the insurance industry toward an increasingly paperless environment. This will result in a rise in the number of digital documents that need to be issued, as well as the need for more robust and efficient systems to support the increased complexity and variation in content. Indeed, according to the bill, the goal for all financial and administrative transactions is that they “permit no constraints for electronic transactions and require minimal augmentation by paper transactions or clarification by further communications.” In many cases, health insurers will be compelled to maintain equivalent electronic and paper versions of the same document. The bill requires that paper versions of standardized transactions “comply with the same standards as to data content such that a fully compliant, equivalent electronic transaction can be populated from the data from a paper version.”

Administrative Overhead

Health care is a huge and growing sector of the U.S. economy. The United States spends $2.1 trillion on health care, roughly 16 percent of the gross domestic product. Additionally, government is responsible for approximately 50 cents out of every dollar spent on health care because of the huge and rapidly growing government health care programs: Medicare, Medicaid, SCHIP, and state and public health care programs.

As a result, a major thrust of health care reform legislation is to “reduce health care costs for all Americans and the health care system.” Law makers aim to do that in a number of ways, but perhaps most pointedly by requiring insurance providers to disclose the amount of money spent on clinical services versus administrative costs with 80-85% needing to be spent on the former.

Adhering to the constraints and managing the visibility of medical loss ratios will be a huge concern for all insurance carriers. And depending on how the Department of Health and Human Services defines which expenses belong on which side of the line, carriers will need to adjust their operations very quickly to satisfy the requirements or be subject to providing rebates back to their members. Concerns over medical loss ratio will be especially high in the individual coverage market where many carriers are already struggling.

How will insurance companies maintain medical loss ratios in the face of increased member correspondence volumes and more complex content management requirements? The results remain to be seen, but companies that continue to rely on time-consuming customer communications management systems, complex and isolated information technology infrastructures, or homegrown systems and rudimentary tools like MS Word will find that they quickly fall behind the cost containment curve.

The impact of inefficient document systems to medical loss ratios will be especially challenging with respect to the state insurance exchanges that will be available under the new legislation. In this competitive arena where members will compare essentially identical services, cost containment will be a key factor driving success in the new market place. Having the ability to reduce administrative expense through more efficient and agile document systems will give an insurer a competitive edge. Those providers that are successful in automating member correspondence systems will benefit from lower administrative costs, increase productivity and accelerated time-to-market.

Most health care reform experts agree that the cost of coverage will go up – at least initially – because of the expanded access coverage requirements under the new law. As a result, activities to reduce the expense and improve the efficiency of document systems will become critically important; rate increases will be more difficult to justify to state exchanges and there will be a tremendous pressure to keep prices as competitive as possible.

Compliance

New health care regulations will not only affect policy generation but insurance claims as well, and maintaining and disseminating compliant language in a timely manner will be extremely important. Organizations will need the practical ability to add, update and change existing language in a wide variety of supporting documents in a short period of time. Additionally, the ability to have compliant information locked, saved and available to all member-facing representatives will be important not only to save time and reduce errors, but also to eliminate unnecessary risks associated with penalties for non-compliance.

The new legislation includes the enforcement of a variety of compliance and reporting standards. The commissioner will conduct random audits of plan compliance as well as targeted audits in response to complaints or other suspected non-compliant practices. In addition, the commissioner is authorized to recoup the costs of such examinations and audits.

Health plans will need to review their information technology and document management infrastructure to determine the risks as it pertains to universal coverage, guaranteed issue and the elimination of limitations to pre-existing condition benefits. All member correspondence systems should be included in this review.

Moving Forward

Compliance with health care legislation and survival in the new market place will require that insurance providers have increased agility and competency when it comes to their document systems. So the question becomes: What pieces must be considered moving forward in a post-reform environment?  Here are a few to take into account.

Legacy processes

Most member communications management systems depend heavily on IT resources and lack the ease of use needed to adequately respond to the demands of health care reform. Organizations will need more intuitive customer communications management capabilities that will enable more straightforward and cost effective design, deployment, delivery and management of high volume member communications. Even with extensive technology infrastructures, providers that continue to rely on “legacy” systems and manual processes will find that they suffer extended production times, increase operating costs and uncertain document accuracy.

The good news is that there are software solutions available today that can address these constraints and will integrate with existing systems and processes. Some leverage the features and capabilities of familiar desktop tools like Microsoft Word to enable organizations to move document design and generation out of the IT department to non-technical, line-of-business professionals. This can result in more cost-effective, timely, and accurate member communications.

By reducing dependency on legacy IT resources, organizations can streamline the creation of member documents and more quickly modify and deploy correspondence to respond to the many changes that will be required under the new law. More rapid time-to-market and a more agile ability to change the content and appearance of member correspondence will make insurers more competitive in the new market place. Perhaps most importantly, by reducing the administrative and technical efforts associated with their documents, insurers will be in a much better position to maintain and improve their medical loss ratios.

Homegrown systems

As a result of the perennial constraints associated with legacy computing systems many line-of-business users have developed “homegrown” systems to side step inefficiencies in the process. While these work-a-rounds may have been beneficial in the past, the future health care environment will demand much more integrated and “smart” member correspondence systems.

Again, new member correspondence software solutions have already been designed to address these constraints. Now is the time to consider how they can cushion the impact of health care legislation. The ability to create document templates using familiar tools like MS Word for content and graphical, “drag-and-drop” views for formatting will be a boon for health insurers struggling to meet the member correspondence demands of the new legislation. Many allow the use of a single template to create multiple outputs via multiple channels (e.g., paper and electronic) as well as the ability to easily create multiple versions of a single document template based on plan, effective date, language, etc. Sophisticated data-driven logic within the document templates can include regulatory language, coverage calculations and marketing messages that go well beyond simple compliance with the law and may provide a competitive edge in what will certainly be a very competitive health care environment in the future.

Centralized Document Repository

In most health insurance organizations member-facing documents are found in a variety of systems, applications and departments across the enterprise. Even mainstay documents like EOB’s, plan summaries and coverage letters are often spread amongst various databases and applications. A centralized document repository that houses approved and compliant document templates and content components will be an essential piece of the puzzle for insurers looking to weather the storm of health care reform. Version control, audit trails, and managed data integration all will be essential components of a system that will reduce the effort, expense and administrative over head associated with member correspondence.

A centralized repository should provide non-technical users (e.g., claims representatives) with “point-and-click” access to document templates with pre-approved content components, data-driven logic and pre-configured workflows that easily guide the assembly and generation of member documents. This will not only assist with essential compliance to the law and cost containment goals, but also speed time-to-market and provide an edge on market place competition.

The Cost of Doing Nothing

Clearly, health care reform will have a number of major impacts in the health insurance industry, not least of which will be the impacts to member correspondence systems used to support the day-to-day operations of health insurers. The cost of doing nothing could be great, and now is the time to react in order to be prepared for the many changes on the horizon. Organizations will no longer be able to sustain the status quo with arcane IT systems, homegrown work-a-rounds and unsophisticated tools and applications. Without thoughtful document strategies and well-planned systems and applications, organizations may find that they quickly fall behind.

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Kevin Craine is the author of the popular book “Designing a Document Strategy” and a respected authority in document management and business process improvement. His books have sold in over 30 countries and are required text at universities in the U.S., Canada, England and Australia. He is the host of the Document Strategy Podcast heard world wide. Kevin spent 15 years as a document systems director for BlueCross Blue Shield. He holds an MBA in the Management of Science and Technology and a BA in Organizational Communications. For more information visit www.Document-Strategy.com.

Organizations that have a document strategy will have an advantage over their competition.  But designing a document strategy is not easy and as yet there has been no clear or available road map to guide our efforts.  One way to demystify the process is to focus on three specific areas:  Documents, Technology and People.   These three elements are the “what, how and who” of your strategy: what documents are important, how they are produced and who cares about how they perform.

Documents are, naturally, the subject of your strategy.  To improve your document system, you should first determine which ones are most important. Which “vital few” documents have the most influence on the performance of your organization?  Which relate directly to core functions, important initiatives and troublesome problems?  If you could pick only a handful of target documents, which would you choose?  You don’t have to reengineer every document, only the most essential.

Technology enables the document process.  Trouble is, document systems combine into a confounding mix of hardware and software.  What technology is used to produce your documents? What are your current capabilities?  What trends in technology might influence or improve your process in the future?  This information provides a technical basis for your strategy and directs your recommendations.

In the end, people are the reason why documents are produced.  Therefore the people who populate the document process are the best people to describe the process.  Who are your “document constituency?” From authors to readers, to production personnel and executive stakeholders, each have specific, varied, and often unstated, interest in your strategy.

Documents are created with technology to be used by people, so it makes sense that these three factors surface as guiding beacons for a document strategy.  In my book, “Designing a Document Strategy,” (www.document-strategy.com) I provide a 5-phase model to map the course of your plans and ensure that your document strategy is comprehensive yet manageable.

Forget the hype, consider the real world benefits

There has been a lot of buzz about “Transpromo” – the concept of customizing common transactional documents like bills and statements with personalized messaging aimed at wooing existing customers. Vendors and pundits extol the value of transactional documents that capitalize on knowledge collected about customers. But for many users, the jury is still out. Is it time to adopt a Transpromo strategy? Consider the following.

Why Transpromo?

Transpromo represents a unique marketing opportunity because transactional documents are the life blood of every organization. No matter the market or the industry, bills and statements drive the business functions that make any company run. Indeed, transactional documents often represent the only touch point an organization really has with a customer. By including relevant and personalized marketing content, monthly statements can rise above the din of competitive messages and transform into a beneficial marketing edge.

Rise Above the Competition

Consumers are bombarded with thousands of advertising messages every day. Experts estimate that over the course of a year we are exposed to over a million messages from television, radio, the Internet, newspapers, magazines and direct mail. As a result, customers actively block out the great majority of these marketing messages.

Nowhere is the competition for customer attention as tight as in the mailbox. The Postal Service estimates that U.S. households receive over 150 billion pieces of mail each year. With all this clutter, it’s no wonder that most people tend to open their mail over the waste basket.

The unique advantage of transpromo is found in the fact that monthly bills and statements rarely find their way into the trash. Analysts estimate that 95 percent of transactional documents are opened and read. And since they require an action, bills and statements command and hold our undivided attention. That attention span – about 42 seconds – is over twice as long that given to a television advertisement or an e-mail solicitation. This is a unique opportunity to expand each monthly “appointment” in new and more profitable ways.

Customers Prefer Transpromo

Despite the surge in online communications, research indicates that customers prefer to receive marketing messages via transactional documents as opposed to e-mail and direct mail. As a result, companies can benefit by regarding bills and statements as a vehicle to bolster revenue through a channel that customers have come to trust and expect.

As most marketers will tell you, e-mail and direct mail marketing commonly perform at rather disappointing response rates. According to the Rochester Institute of Technology, the response rate for bulk mail is typically under 2 percent. When targeted personalization is added, customer response jumps to nearly 14 percent.

Transpromo technology provides the ability to produce transactional documents that perform well beyond generic “junk” mail. With selective data mining, thoughtful document composition, and digital printing technology, it is possible to produce documents that command dramatically improved customer response.

Moving Forward with Transpromo

There is a quantifiable profit advantage for companies who use transpromo documents as a direct marketing tool, especially as the level of personalization increases. If you have looked at transpromo in the past and found the approach to be too costly and complex to consider, now may be the time to think again. The technology has matured, applications are more realistically designed, and price points for solutions have been right-sized to fit almost any budget. As the potential for additional revenue generation increases, reevaluating the available technologies and options becomes more vital to company performance. After all, you are already paying for the creation, production and delivery of your monthly transactional documents, why not take more full advantage of this existing investment?

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copyright Kevin Craine 2010

Printers and copiers are an environment that is ripe for greater efficiency and cost savings. Pick any department or any business process and you can bet that printers and copiers are essential tools to get the job done. But despite their importance to company performance, printers and copiers are rarely managed as a corporate asset. Often budgeting and planning is decentralized across various departments. This inevitably results in increased operating costs and lost opportunity for process improvement.

What is Managed Print Services?

Organizations of all sizes and types are starting to realize the bottom line benefit to getting their output under control. They are doing this through Managed Print Services (MPS) – a strategy designed to analyze and manage document output devices throughout the organization and minimize the costs associated with workgroup printing and copying. The long-term results of a successful MPS strategy includes enhanced productivity, increased savings and improved environmental sustainability, to name a few.

Managed Print Services is a centralized, strategic approach; one that is based upon a well-thought assessment of the costs, volumes, support needs, and employee effort associated with the workflow. With such an assessment, companies often find that they can reduce the number of printers and copiers hanging on their network, cut support and supply costs, and optimize their equipment leases and maintenance contracts.

The Cost of Mis-Management

The fact is that most organizations have not effectively grappled with workgroup printing and copying. As a result, there are tremendous opportunities to save money and build system efficiencies. Analysts like the Gartner Group and others calculate that that most firms can reduce expenditures by as much as 30% through balanced device deployment and lease/contract reassessment. In addition, capital expenditures can be cut, consumable costs can come down, and workflow changes can make organizations more efficient.

Beyond initial analysis and design, ongoing fleet management is essential to ensure that the environment continues to perform as it should and that the return on investments uncovered are, in fact, realized. This is a challenge for most organizations since internal resources are rarely applied to manage workgroup printers and copiers.

Moving Forward with Thoughtful Benchmarks

If you are considering Managed Print Services as a way to reduce your copier/printer costs and bolster workflow efficiencies it is essential to establish a number of metrics and standards to use in your strategy design. Here are a few important benchmarks that will help guide your success.

Usage – Device usage is a fundamental measurement needed to understand whether your machines are over or under-utilized. Many organizations struggle to understand just how many pages are printed each month and the cost of each sheet of paper that passes through their fleet. Usage data is essential in order to come to grips with your environment – telling you not only what devices you have deployed, but how often and to what degree they are utilized.

Category – What kinds of machines are deployed in your environment today? While this may seem obvious, the fact is that many organizations do not have a clear picture of the number of devices they own or lease, whether they are analog or digital, connected or unconnected, and whether they print in black and white or in color. By examining these categories and gathering this benchmark data about each machine you are in a much better position to design a system that will save you money and better meet the needs of your end users.

Service and Uptime – Once you understand exactly which machines are in use, and how much volume is being produced by each, another important benchmark to consider is service and uptime. Do you have machines that are constantly in need of service? What does that service cost you and what are the implications of the corresponding downtime? Do some machines perform solidly under pressure while others struggle to keep up with the demand? How responsive is your service provider when a service call is placed? Answering these questions provides you with important information that can lead you to valuable system improvements.

Supplies and Paper – While device usage is an important benchmark, it can be difficult to gather the data without an automated tool or dedicated and independent analysis. Supplies and paper, however, can often be more easily tracked through the purchasing process and by examining the habits of end user departments. High volume machines and peak demand periods can be uncovered by looking at paper and supplies as well, and under-utilized equipment becomes evident by examining the rated duty cycle against the actual rate of consumption.

Type of Output – Monitoring the type of output being printed is an often overlooked benchmark that can provide an important perspective that will help you optimize your fleet. Do you have color machines that print a majority of their output in black and white? Do you have additional features like folding, stitching, etc, loaded on to a machine that rarely produces output needing these binding options? Could feature-rich machines be moved or swapped with another device more appropriate to the application? Understanding the type of output being created, and why, can point you to adjustments that can save you money and improve the experience of end users.

Peak Demand – One factor that cannot be uncovered by looking at benchmarks like monthly volumes or paper usage is peak demand. Business units often have slow periods mixed with times of high demand. End-of-month, quarterly close or special projects can drive up demand and skew the overall numbers in ways that can be misleading. Does a machine sit idle for weeks only to be challenged to keep up during peak demand? Would volume requirements during this time be better served by redirecting the output a centralized reprographics department – saving you money and more adequately meeting turnaround requirements? Are high volume machines placed in what would be regarded as low volume environments without these peak periods? This type of thoughtful benchmarking is a must-have in order to make meaningful decisions and beneficial system design.

Voice of the Customer – Statistics are essential, but valuable perspective and information can be gained by listening to end users. What is their experience using your printer / copier fleet? Are they comfortable using all the features, or would additional training be a benefit? Do things like machine warm up time, work-a-rounds or troublesome service issues hinder their efficiency? Listening to your “customer” is essential to make meaningful adjustments and improvements.

Managed Print Services follows this famous adage: Good data equals good decisions. By thoughtfully examining these benchmarks – measurements that you observe purposefully – you will gain a better understanding and be in better position to optimize your environment.

Adjust to Fit Changing Needs

One Managed Print Services success factor is the willingness and ability to adjust your environment to compensate for inefficiencies in the system and to fit the changing needs of end users. Too often, once a machine is placed on the floor, organizations leave it to live a life of its own; rarely considering the ongoing performance until it is time to renew the lease or replace the machine.

By contrast, Managed Print Services purposefully monitors and examines the environment with an eye to constantly adjust machines, features and placements as needed to ensure optimal performance and cost-effectiveness. It is important, therefore, to have the proper reporting structure in place that identifies gaps in system performance. From there, you can create a “hit list” of machines to adjust or redeploy to better meet the needs of your organization.

Things to Look For in an MPS Consultant

Adopting a Managed Print Services approach requires a fairly high degree of dedication and expertise and may require a change in the habitual “this is the way we’ve always done it” mindset. As a result, organizations often benefit from an independent and non-bias analysis.

What are the qualities and attributes you must look for in selecting a consultant to build a meaningful MPS program? There are a variety of MPS consultants available, including those from your current vendor, but many tend to focus on cost reduction alone. Look for a resource that can also improve workflow, bolster efficiency and help with the adoption of new technology. An independent consultant with experience with RFPs, who understands printer and copier technology, and has proven ability to negotiate a deal on your behalf can be a valuable asset. Finally, getting value out of MPS requires a great deal of attention to detail and the ability to construct a practical strategy. Be sure to select a consultant with the proven ability to collect, analyze and gain “knowledge” from the various benchmark data and metrics, and then design systems and strategies to take full advantage of a Managed Print Services approach.

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Copyright Kevin Craine 2010