Health plans receive 98% of medical claims electronically. They pay only 78% of them by electronic funds transfer (EFT). The rest go out by virtual card or check and many carry manual work for the plan or the provider.
Payers are investing significantly to automate administrative work like this. Claims processing ranks as a top-three IT investment priority for 53% of payers, with spending aimed at people-heavy workflows.
Most health plans have built their payment infrastructure for volume. Whether that infrastructure scales is a separate question. The answer shows up as volume grows, in the day-to-day cost of running payments.
What throughput and uptime measure
Payment evaluations center on throughput and uptime because both are easy to benchmark. Payers choose technology on total cost of ownership and per-transaction pricing and service levels are easy to compare. None of those numbers says what happens to a plan’s operations after volume doubles.
What they leave out are the exceptions like a returned payment, or one rejected because a provider’s bank account changed. Resolving these exceptions incurs time and attention from the plan’s finance or operations team. This lands in internal budgets, spread across departments and rarely added up, which is why the true cost seldom shows up in a Total Cost of Ownership (TCO) comparison.
The workarounds are evidence
Exceptions are a share of payments. If a plan’s exception rate holds steady while volume grows, the number of exceptions grows in parallel and so does the staff time spent working exception queues and reissuing returns. A new provider contract can look fine in its first month, but the true cost shows up months later as headcount.
Adding staff to keep pace is the visible cost of buying capacity instead of architecture.
A system that needs more people every time volume grows had that problem at the design stage, long before the volume arrived.
Growth changes the payment mix. Plans add capitation arrangements and member reimbursements, each with its own settlement and remittance rules and many providers still want checks. On fragmented infrastructure, every new payment type or payee connection means custom IT work and that work competes with everything else on the IT agenda. Payers name limited internal resources and technical debt as their leading barriers to deploying technology. Among their most-cited pain points is the burden of maintaining separate, parallel systems across lines of business.
A test any plan can run
Track three numbers against payment volume over time.
Exception volume per 1,000 payments. It should fall as volume grows. If the rate holds flat, total exceptions climb with volume and staff time climbs with them.
Return rate. It should fall, or stay near zero, as the payee network expands. A steady or rising rate means returns are growing with every new connection.
Digital payment share. It should climb as new payees join. EFT accounts for 78% of medical claim payments industry-wide. A flat or falling share means new contracts are defaulting to paper.
There’s no public benchmark for exception or return rates, so the comparison that matters is a plan against its own trend. While digital share and return rate are isolated to payments operations, exception volume is spread across departments and pulling it all into one comprehensive view is the first step.
Architecture isn’t negotiable
When the architecture is right, adding a new payment type or connection is a configuration change, made without new code. Reconciliation and exception handling are part of the design from the start. The system expects variation, so a new payment type is handled the same way as the last one. Volume can triple without the exception count tripling with it.
Five questions to ask any payment partner
- What changes when we add a new payment type or payee? Is it a configuration change or an IT project?
- How have exceptions per 1,000 payments and return rates moved as their payment volume grew?
- Does the payment infrastructure integrate with our core system as is, or does it add another system our IT team has to maintain?
- Does remittance data travel with the payment? Electronic remittance advice sits at 87% industry-wide.
- What share of payments go out digitally and does the infrastructure honor each payee’s preferred payment method?
A per-transaction price tells a plan what a payment costs when it goes through cleanly. When tracked against payment volume, measuring exception volume, return rate and digital payment share show the cost that price leaves out and whether the plan bought capacity or architecture.
For nearly 30 years, ECHO has delivered the infrastructure healthcare depends on to securely power payments, built so volume can grow without exceptions, costs and complexity growing with it.
Look closer at https://www.echohealthinc.com/healthcare-payment-hub or run the test on your own operation with ECHO’s Healthcare Payment Simplification Scorecard.
