Health Plan Administration: How to Get a Handle on Costs Without Unraveling Your Organization

By Mike Takach
Wed, Apr, 19, 2017

Health plan administration is no easy task. As health plans increasingly come under financial and regulatory pressures, executives are being challenged to find ways to do more with less. Whether that means cutting staff, outsourcing, or re-negotiating vendor contracts – it can feel like a constant battle to ensure that precious premium dollars are not being eaten up by overhead.

Leveraging technology to its full potential, including automating manual tasks that are time consuming, is one way to manage overhead costs more effectively.

Let’s assume your health plan manages its own coverage determinations for prescription drugs. This means your organization has a whole process in place internally for conducting prior authorizations and formulary reviews. If this process is still being performed and tracked manually, with one-off PA requests being sent back and forth to physician offices before being approved by the plan -- there is an easier and more efficient way to do this.

One of these would be to use a software system that enables electronic prior authorizations. This allows the prescribing physician to simply enter the information needed regarding medical necessity via computer so the system automatically approves the request if all the clinical criteria is met. This means no more faxes and phone calls going back and forth -- and no more manual data entry being done at the health plan’s end. In addition, it directs prescribers to complete the PA request with all the necessary information, thereby eliminating the need to request for additional information.

Evaluating your health plan’s also critical for reducing unnecessary overhead and creating new efficiencies.

You need to look at your various departments and teams to determine whether they are operating effectively. If they are not, then adding more staff may only compound, rather than reduce, an already existing problem. A better approach might be to identify and implement workflow improvements. Re-evaluate the current job descriptions of everyone on the team. Make sure that job duties and responsibilities outlined in the position tie directly to key organizational objectives. Consider re-assigning staff to other areas, or providing new on-the-job-training, to maximize effectiveness.

Just as hiring more staff is not always the best solution – neither is downsizing and eliminating staff. We’ve seen health plans reorganize their pharmacy services by distributing responsibilities throughout other areas of the organization, leaving a gap in centralized oversight of the Medicare Part D program. This gap could potentially lead to significant findings during the next CMS audit. Furthermore, failure to have centralized oversight of the Medicare Part D program could leave plans scrambling to add resources if CMS audits required them to implement corrective actions.

Additionally, without centralized oversight of the plan’s relationship with its PBM, all of the identified problems and issues may not be captured within a single place or tool. This could lead to significant issues being overlooked, pushed down on the priority list, or not addressed in a timely manner.

There are companies and consulting firms that help health plans analyze and assess their operations and staff structure and make recommendations for improving internal efficiencies. Make sure you hire a firm that can offer you a complete, 360 degree view of your health plan operations across all areas, including those related to pharmacy and compliance, so you can get a truly holistic view.

When it comes to health plan administration, reducing costs is critical for your organization’s success in the current market place. Leveraging technology and improving internal processes and operations are the most effective ways to achieve long-term, lasting improvements that will help your bottom line.