Modernizing health care payments: Smarter systems, stronger outcomes
In today’s fast-paced healthcare environment, payers face constant pressure to reduce administrative costs, enhance cash flow and meet evolving regulations. Leadership teams are continuously searching for strategic ways to streamline processes and finds efficiencies, allowing their organizations to focus on their core missions — improving patient outcomes and creating more seamless provider and member experiences.
One potentially fruitful avenue to explore is the electronic payment process. Outsourcing electronic payment processing to an external vendor equipped with digital payment solutions and expertise could be the solution to administrative challenges.
According to a recent Council for Affordable Quality Healthcare, Inc. (CAQH) Index Report, the complexities of paper-based systems, combined with the growing need for compliance and fraud mitigation, have steered the healthcare industry toward digital transformation. This shift aims to reduce manual work and administrative burden and speed up reimbursement processes.
Electronic payment process outsourcing has become increasingly vital, as third-party partners can streamline payment and reconciliation workflows which enhance financial performance with secure, scalable solutions, according to Jason Koch, vice president of product commercial payments for Optum Financial.
“It’s definitely becoming a strategic focus for our client base,” Koch said. “It is increasingly difficult to support and justify the costs of in-house platforms and the subject matter expertise that can adequately satisfy the industry requirements can. It’s a complex area and many of our clients have chosen to de-risk this aspect of their business by utilizing a strategic payments partner that understands the industry processes end- to-end to meet all stakeholder needs.”
Optum Financial provides end-to-end commercial payment services that integrate advanced technology, data analytics and robust security measures. The outcome is a system that promotes administrative efficiency, reduces costs and strengthens the bottom line.
Electronic payment process outsourcing explained
Electronic payment outsourcing involves partnering with a specialized third-party vendor to handle various aspects of payment operations, such as issuing reimbursements and provider payments, managing claims and reconciling transactions.
A trusted partner deploys secure digital tools and industry expertise to reduce the burden on internal staff. As a result, payers benefit from a streamlined, automated approach that minimizes manual intervention and inefficiencies.
Outsourcing payment processes is a growing trend in health care and workers’ compensation, as well as the auto-industry. As payers grapple with the escalating costs of outdated systems and paper checks, many are finding that outsourcing to the right payment specialist can simplify workflows and optimize cash flow. Industry leaders recognize that offloading noncore payment functions allows payers to stay agile and focus on improving member experiences.
“When we’re working with our clients, we’re not just speaking with them about their specific payment distribution challenges, we review all aspects and recommend best practices based on our experience working with many insurance companies from an end- to-end perspective,” Koch said.
“How much are they investing in their in-house treasury processes? How much time are they spending manually reconciling transactions, provider call center and communication? In many cases, there are value added features that we can enable to automate those functions on behalf of their business. We offer the ability to maximize client efficiencies in multiple areas and provide both Payer and their providers with cost reductions across many of their core operational areas.”
How electronic payment process outsourcing can help your business
Working with a trusted vendor offers 3 overarching benefits:
Increase electronic payment adoption
Manual payment workflows often require extensive paperwork, staff oversight and time-consuming reconciliation. Outsourcing these tasks reduces payment cycle times and administrative burdens. Streamlining these operations also helps eliminate redundancies and integrates existing financial systems for more accurate record keeping. Advanced payment tools help improve cash flow by providing real-time tracking, analytics and detailed reporting, leading to faster turnaround times and better payment status visibility.
Lower cost of payments (printing checks, lower ACH fees)
Moving away from paper checks and manual reconciliation can significantly cut costs. Traditional check processing, printing and mailing are expensive — not to mention the added expense of resolving errors and lost checks. Outsourcing ACH to a vendor can further help lower costs by streamlining the payment process and reducing the need for internal resources.
According to the 2024 CAQH Index Report, the healthcare industry continues to face challenges with the adoption of electronic transactions.
The report highlights that despite the availability of digital tools, a significant portion of medical claims payments are still processed manually. Specifically, the industry could save $18.3 billion by transitioning to fully electronic transactions, yet many providers still rely on paper checks for payments.
A 2021 report from McKinsey & Company suggests that interventions in the administrative process can save the healthcare system up to $265 billion annually, with streamlining claims processing and related support functions representing two-thirds of that amount, or $175 billion.
By shifting to digital claim payments, insurers can significantly reduce day-to-day operational expenses. Providing self-service mobile apps allows payees to manage their own preferences, reducing call volumes and internal support demands. Digital transactions also mitigate the vulnerabilities of paper checks, reducing fraudulent activity and sparing insurers the cost and complexity of post-fraud remediation. Additionally, electronic claim payments can speed the overall claims cycle, thereby reducing “lost costs” associated with delayed settlements.
Higher provider satisfaction
When payers outsource their payment processes, they free up valuable time, staff and resources to concentrate on their core mission — delivering quality healthcare services and improving member experiences. Instead of managing a-complex payment infrastructure, executives can invest those resources in innovative clinical programs, population health initiatives or improving regulatory compliance.
By placing payment functions in the hands of experts who stay current with industry regulations and emerging technologies, payers can ensure that their payment processes remain secure, efficient and future proof. This strategic move allows healthcare organizations to navigate market demands more effectively and pivot as new challenges arise.
How outsourcing works
The outsourcing process typically begins with an assessment of a payer’s existing payment structure and financial workflows. The partner then tailors a strategy that integrates with the payer’s claims systems and back-office operations. Once implemented, the partner handles the entire payment process, from initiation to reconciliation.
Advanced digital dashboards provide real-time visibility into payment status, enhancing transparency and control. Adjustments or updates to the system happen behind the scenes, with minimal disruption to the payer’s daily operations.
Seamless technology integration is crucial. Many payers have existing claims processing systems, electronic health record platforms or data warehousing solutions. An outsourced partner will typically provide secure application programming interfaces (APIs) and data connectors that allow for rapid deployment and minimal disruption.
In the health care sector, integrating financial systems must also align with complex regulatory frameworks, such as the U.S. Health Insurance Portability and Accountability Act (HIPAA). Leveraging modern technologies accelerates transaction times and assists security efforts for sensitive health and financial data.
Conclusion
Outsourcing offers payers an opportunity to cut costs, reduce administrative complexity, mitigate fraud risk and refine the provider experience. By leveraging digital tools and specialized expertise from a partner like Optum Financial, payers can streamline payment workflows, improve cash flow and better position themselves to navigate industry challenges.
Picking the right partner is crucial.
“Optum Financial stands out because we pay more payees than just about anyone in the industry,” Koch said. “Our vast digital payment network and ability to onboard plans quickly are unique strengths.”
From decreasing time and costs associated with paper-based transactions to enhancing compliance standards, the benefits of outsourcing stretch across the organization. This approach not only supports bottom lines but also empowers executives to focus on improving health outcomes and member experiences. Optum Financial can significantly boost your cost savings across various payment methods, including electronic adoption, which averages 90% overall. By partnering with Optum Financial, you can request a TIN analysis tailored to your organization to help determine your specific cost savings.
The next step for payer executives is to thoroughly evaluate potential outsource partners, asking the right questions and examining case studies that demonstrate tangible value. By doing so, payers can establish a relationship that provides the highest- quality digital payment services at a predictable and justifiable cost — helping you achieve your company’s goals towards driving efficiency and revenue growth.”
Payment speed and simplicity are often overlooked levers for improving care delivery. When providers spend less time navigating payment delays and paperwork, they have more capacity to focus on patient care. Streamlining financial workflows is a critical step toward a more responsive, people-centered health system.
I'm interested
With the ongoing tightening of reimbursements, payers need to find ways to eliminate administrative burden while identifying additional revenue streams. Payers place a high value on provider relations and are looking for ways to improve provider satisfaction. Digital payments provide a solution that benefits both payers and providers.
Truly making a difference