Modernizing Payments for Benefits and Health Plan Administrators

In the world of benefits administration, the complexity of managing disparate and legacy financial systems is often overwhelming and expensive and can increase operational overhead and financial risks. Complex payment systems weigh heavily on companies; many are looking for ways to simplify their payment operations.

We recently hosted a webinar featuring two Modern Treasury customers, Alegeus and Sana Benefits, who are leading the way when it comes to payments transformation. Moderated by our very own, Ally Gross, this discussion featured Sana Co-Founder Will Young, and Elizabeth Dobbs, VP of Financial Technologies at Alegeus. Together, we discussed their payments journey and predictions for the future.

Key Takeaways:

There are dozens of touchpoints along the healthcare payment process lifecycle, which contributes to the system’s complexity. Patient payments cross an entire digital landscape from providers to billing agencies to insurance providers and specialists before landing in their final account. It’s not clear when this process became so complex, but it is clear that it can’t easily continue on its current path.

• The overall healthcare administrative process is becoming more difficult for consumers and employers to navigate confidently. There are opportunities for solutions-focused businesses to remove roadblocks and improve access to care.
• The goal should be to remove complexity from the customer side and streamline processes on the backend. This means opening up channels between counterparties (e.g., vendors and re-insurers) to clear the path for funding to flow.
• Digital transformation will be a major player in the future of benefits and healthcare administration. Employers should take advantage of tools that allow them to provide diverse and robust benefits packages to attract and retain talent, and tech companies should focus on making that possible.

Innovative companies, like Sana and Alegeus, seek to simplify the healthcare administrative process. Employers that leverage technology to help improve the healthcare experience will see a positive impact across their business.

For business leaders, this may mean improving open enrollment, offering more diverse benefits, and increasing employee engagement. Employees are more likely to take advantage of their benefits when they understand how to best use them. This is particularly important when introducing FSAs, HSAs, and other employer-funded benefits.

The demand for diverse benefits is high, but that doesn’t mean they have to be complicated. By implementing the right technology, benefits administrators can confidently give employers options for competitive benefits that are within budget.

Challenges Facing Benefits and Health Plan Administrators

Question: Let’s look at the benefits administration space. What are some of the biggest challenges you see facing the industry?

Elizabeth: “If I put myself in the shoes of the members that actually have to use these benefits and understand and navigate what they have, it’s pretty confusing. And if you think about the consumer-direct health care space specifically, if we think about somebody that’s maybe on a weekend…they don’t feel well, so they’re walking into their urgent care. The urgent care isn’t going to see you without payment. I was recently at an urgent care, and they wouldn’t even talk to me…until I gave them payment. And there’s good reason for that, but even if you have insurance, you’re still expected to fund a lot of your healthcare. Navigating the complexities of insurance and CDH [consumer-directed healthcare] isn't easy, but it is especially not easy when you don't feel well, or maybe a loved one doesn’t feel well.”

In most cases, days and weeks will pass before you may see the residual bill from that appointment. Billing cycles and insurance are significant factors in that delay because they slow the flow of funds between systems. The billing and payment process isn’t exactly efficient, which adds friction to an already stressful situation, leaving consumers feeling defeated and often unsure if their benefits worked how they should have.

Health plan administrators are well-acquainted with how these siloed systems slow down the funding and reconciliation process. Often, they will have one platform for moving data and information, another for sending payments, and one that is running eligibility, all of which are tied into financial institutions that keep records of the balance. This is particularly pertinent for managing HSAs, FSAs, and other employer-funded healthcare plans. This is part of the solution that Alegeus wants to create.

The financial institution must be in sync with the other platforms to ensure that every dollar is accounted for. While it looks like simple debits and credits from the outside, the data quickly becomes overwhelming when you add the complexities of additional systems and the desire to scale.

Will: “You’ve just got a tremendous amount of complexity and things, like eligibility and reimbursements. You have schedules of benefits that apply, and things can get really hairy really quickly, especially on our side. We’re dealing with all these counterparties on the backend, like vendors and re-insurers we have to work with. There are these sorts of levels of financial abstraction that all these flows of funds have to go through. And everything has to be in the right account at the right time. You really want to abstract all that away from customers. [Simplify] for the customer and reduce the complexity.”

Digital Transformation for Healthcare Payments

There’s space for old and new benefits administrators to evaluate the implementation of healthcare technology in their processes. Healthcare technology currently takes up 15% of the world market share and is expected to more than double in the next six years. From data to open enrollment, new technology is constantly emerging to support improvements. The key is finding the right tools that open up cost and time savings opportunities and balancing those tools with what you prefer to build or manage in-house.

Question: Why and how are you thinking about digital transformation?

Will: “We were Modern Treasury’s first customer. We were starting our company about the same time that Modern Treasury was starting seven years ago at this point. So, we were digital native, especially relative to a lot of the incumbent health plans.

We had an opinion early on that a lot of these systems needed to be digitized, and the business logic needs to live at a digital layer where it’s governed by a web application instead of paper or on individuals’ computers with spreadsheets. So we tried to build things from the beginning in a way that we thought was future-proofed to the extent it could be. We’ve invested in trying to have everything powered by modern software.

We’ve debated internally: how much do we build ourselves? How much of that infrastructure do we actually want to own? And how much of the digital side of things should we make versus using a partner to build? I think that’s been a more interesting debate because you want all your business logic to be happening in the cloud in an automated way using software, but do you really want to be the one that writes all of that software and then maintains it and then is accountable if there are issues later?

We’ve been more thoughtful over time [about] how much we’ve partnered with third parties versus focusing on what really makes us special. We’ve become increasingly focused on taking our product engineering resources and focusing on the things that really make us different from what else is out there. Then, find great partners to power a lot of the core parts of the business.”

Elizabeth: “I think that there are foundational elements that are just critical as you get ready for the future. Maybe faster payment, different payment rules that are coming down, and there are some basic accounting reconciliations that just have to be right. Whether you transform or not, you have to get those right.

Modern Treasury is…automating the information flow between those two systems so that all of that data and matching is automatic. Our team can show up and do work, with some exceptions, but then focus on these higher-value add things that are going on. Innovation, for example, you know, not looking back to what’s happened, but knowing that we’ve reconciled every dollar, we’ve worked in the exceptions, and they can kind of look towards where we are going.”

Question: “What does the future hold in your space, and what are you excited about?”

Will: “The thing I’m most excited about…is bringing more care in-house, making a more integrated and simpler solution for customers. Payments are a part of that. Abstracting away all sorts of insurance difficulties from patients as much as possible and just allowing patients to return to a more human relationship with a provider without this overhang of having to pay upfront. I’d really like to sort of keep making investments on the backend, so we can keep making the frontend as simple as possible so people just live happier, healthier lives.”

Question: “Elizabeth, can you tell us a bit about some of the key benefits that you’ve seen from your partnership with Modern Treasury so far?”

Elizabeth: “One example is definitely the time savings for the team. When we’ve had one of our business lines on Modern Treasury for about a year now, and the connectivity with the financial institutions and our internal platform has just saved a ton of time, instead of having to do all of that manually or with other electronic means that weren’t quite as smooth or quick. Then, as we’ve been implementing some more complex business lines, helping us design and think how to build something that will really be able to scale across the rest of the business lines, and as we scale as a company and really setting us up for success there.”

"When we’ve had one of our business lines on Modern Treasury for about a year now, and the connectivity with the financial institutions and our internal platform has just saved a ton of time, instead of having to do all of that manually or with other electronic means that weren’t quite as smooth or quick."
- Elizabeth Dobbs, VP of Financial Technologies at Alegeus

Both partners with Modern Treasury are also now enabled with real-time data that can help drive business decisions. With that knowledge, they are able to plan for future implementations, products, services, and solutions to improve the customer experience.

The Future of Healthcare Plans and Payments

Question: “What does the future hold for the health and benefits space in terms of innovation?”

Elizabeth: “I’m excited about the new generation coming into the workforce. The younger generation is going to challenge us to think about and get creative as we extend to a more whole lifestyle approach to benefit offerings, and really looking to their employer to kind of bring more to the table. I’m excited to see what we get challenged with there. Then, even the use of cards to really help drive more specific utilization of dollars. Really, having a more tailored benefit offering to employees.”

Next Steps

Watch the full webinar here.

Get in touch to learn more about how Modern Treasury’s platform can help your business reliably manage healthcare and benefits payment operations at scale.

Quotes have been edited and arranged for concision and clarity.