Cost
Reimbursements for Medicare Advantage products are expected to grow by only 0.5% in 2010 and starting in 2011 they are expected to decrease over two years to align with traditional Medicare FFS rates. Simultaneously, States have been cutting Medicaid funding as they face budget shortfalls while Medicaid memberships increase. This makes managing the costs of your government health programs a top concern. TMG Health offers Health Plans a way to lower their administrative costs while increasing their predictability. Today, many Health Plans are turning to Business Process Outsourcing (BPO) as a more cost-effective strategy to administer government health products than attempting to use internal resources.
Health Plans are facing many challenges…lower reimbursements, increasing competition and new, more challenging CMS regulations. All these combine to make it far more difficult to profitably deliver products in the government health programs marketplace. TMG Health offers Health Plans a means to deliver high quality, differentiating government health products with predictable administrative costs. TMG also offers much lower and “fixed” capital cost relative to the volatile costs associated with internally administering these products.
Equally important, TMG Health allows a Health Plan a better, more strategic way to allocate both their staffing resources and capital. This allows the Health Plan to optimize their resources on other, more critical and competitively differentiating initiatives such as Care Management or Provider Contracting. Via BPO, Health Plans can also focus precious resources on their commercial products rather than have them engaged on more costly and volatile government health products. By optimizing their resources, Health Plans remain more competitive.
TMG Health and BPO services represent greater agility for a Health Plan to deal with the volatility (both CMS compliance and reimbursement) realities of the government health programs market. CMS issues nearly 800 Directives (Guidance and Transmittals) annually, many of which require quick turnaround with respect to systems configuration and operational processes and staffing. Not adhering to these Directives can directly result in audit and non-compliance CAPs.
As noted previously, Health Plans are seeing sweeping changes to reimbursement rates
for Medicare Advantage products. This creates a pressing need to limit sunk capital costs
and free up operating budgets to react to change. Given the total amount of cost (fixed,
variable, risk and lost opportunity cost, etc.) associated with administering government health programs, BPO represents a less costly capital and operational investment than attempting to use internal resources.