ITIC Americas: Evolving credit standards for cross-border care
Scott J Rosen, President & CEO at MDabroad shares how the pandemic has impacted the travel and IPMI policy service industry in many fundamental and some unexpected ways whilst speaking at ITIC Americas 2022
As the near cessation of cross-border travel caused a sharp drop in revenue followed by drastic cost reduction measures, the spectre of a prolonged depression in the industry has forced companies to look introspectively to examine the efficiency (or inefficiencies) of our organisations and to challenge the prevailing models of how business is done – ie, the credit standard – the agreements between hospitals and insurers that care will be paid for. “We are now forced to rethink the long-held paradigms, business models, practices and workflows that have existed virtually unadulterated for decades, such as the unsecured payment guarantee that has been the tool for payers to access credit,” said Scott. Essentially, the problem is that insurers and TPAs want instant cashless access to care for its members, but they cannot pay claims immediately, especially with high frequency, high cost claims. There is an inherent distrust and the relationship between provider and payer is being constantly broken.
In Scott’s view, the prolonged Covid crisis will result in the slow death of provider credit for small claims and hardening of credit criteria by medical providers. Today, the industry is seeing hospital groups take measures to underwrite international risk more carefully, such as demanding audited financial statements and guarantee deposits, which should probably have been the case even prior to the pandemic. The death of credit, or the credit standard, as it can be called, impacts the ability of assistance companies to service policies and challenges the ability of indemnity payers to execute contractual obligations, which means a new standard shall be introduced: payment at time of service, instant settlement, or a cash standard.
“Our industry is laggard in terms of how we apply technology to our interaction with clients and other stakeholders,” said Scott. While superficially, it may seem as if some payers benefit by the lag time and cash flow associated with the credit standard, everyone ultimately pays a premium for inefficiency.
Customers and network providers are demanding change to more sophisticated means of accessing service and settling claims, while at the same time, diminished industry margins demand that we evolve to a more savvy and tech-oriented method of operation. “In order for cashless access continue, the industry must evolve from the credit standard to a cash standard,” concluded Scott. “Payments need to be made prior to, or at the time of, service,” he told attendees. Moving onto how this could be facilitated, he explained that there could be a claims balance account between payer and provider. Platforms could require good performance and good behaviour, and networks could be built on clinics and hospitals that work on a cash standard basis – prompt payment and transparent billing processes. “Other industries have automated and improved experiences and boosted margins through the adoption of technological systems and solutions – why can’t we?” Asked Scott. There will be consequences if the industry doesn’t fix this problem of working on a credit extension basis, and payers are the ones that will lose – and so will there customers. It’s an inefficient way of running a business and costs will continue to rise – paying for network managers, guerrilla negotiation tactics, non-preferential rates.
Discussions afterwards centred on concerns about the industry protecting itself against the potential for abuse by providers.