I have been focusing on electronic medical records from the point of view of physicians and hospitals. The impact on insurance companies may be even greater. An article in McKinsey Quarterly: The new IT landscape for health insurers, August 2010 ends with the conclusion: “… CIOs will need to transform more than 90 percent of a typical payer’s IT architecture and help other executives make the corresponding changes in their business processes.”
The article provides a comprehensive analysis supported by two exhibits that define and illustrate the issues. Excerpts:
Periodically, a dramatic change in an industry enables CIOs to step up and play a decisive role in corporate affairs. We see such a seismic shift in the US health insurance industry, which faces the most sweeping changes in its half-century history. The ranks of the health care payers comprise more than 350 companies, with combined revenues of $500 billion and combined IT spending of $13 billion annually. Three principal regulatory currents are producing the impending change:
Health care reform: The legislation anticipates 30 million new individuals will join insurance rolls, while an additional 100 million will be shifting policies. The law will usher in a fundamental change to the industry’s business model. Today: 90 percent of all private policies are paid for by employers that negotiate prices and terms of coverage. The recent legislation mandates new insurance exchanges, subsidies, and tax credits that will lead millions of consumers to contract directly with the health insurance payers.
US stimulus funding: In 2009, the US Congress passed the American Recovery and Reinvestment Act (ARRA), which contains special provisions for health care IT. These reforms will first affect providers, as over the next decade health care will become rooted in readily available, comprehensive medical records and IT-based clinical decisions. … payers’ will need to build substantial new systems that can readily interface with health information exchanges and analyze electronic health records.
ICD-10: The modern data format documenting diagnosis and procedure codes—ICD-10—was released by the UN World Health Organization in 1994. But it is overdue in the United States, where it will replace ICD-9 and expand the available number of medical codes by a factor of eight [in some cases by a factor of 144.] This change will enable a much more detailed description of diagnoses and treatments. While ICD-10 promises to improve the accuracy of medical management and claims, its adoption will force payers to undertake an effort likely to exceed that of the Y2K campaign. Yet while the costs of adopting ICD-10 are significant, the potential regulatory penalties for failing to adopt will make it a necessity.
There are concerns being expressed in the medical community about the availability of resources to provide the infrastructure required for electronic medical records. Add the demands for resources required by insurance companies and the outlook is even more grim, unless of course, you are one of those needed resources.
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