Question

Create a detailed diagram, PowerPoint presentation, or other creative endeavor that analyzes and describes each of the following elements associated with internal operations of payer organizations:

Information technology

Marketing and sales

Underwriting

Eligibility, enrollment, and billing

Claims and benefits administration

Member services

Financial management

Reflect on how you can apply this information in your program of study, as well as how the information analyzed relates to the study of managed care organizations.

Properly cite all references used, including your textbook.

Answer 1

Payer Organization: First of all, let us understand what a payer organization is. It is the organization which takes care of the financial and operational aspect of a particular service. It is found very commonly in the healthcare industry. For example, health insurance.

People insure for unexpected accident or health issues at these organizations by paying a premier mostly every month. When the insured person undergoes any health issues, the insurance company takes care of the expenses by coordinating with the particular hospital the person is being treated. Sometimes the payer also recommends specific hospitals.

Now that we have understood what a payer organization is, let us look into how this organization runs and makes a profit. To understand that we need to know the major elements which drive the payer organizations.

Below is a chart which helps to understand those elements better.

To understand the financial management of a payer organization, we need to understand the business model of the company. As shown in the diagram, an insurance company generates revenue by charging premiums. With the premiums making a huge sum of money, the company invests in investments which give huge returns like treasury bonds, corporate bonds, and other cash equivalents. So, when a policy is claimed, they pay from the returns and yet stand at a profit. They also reinsurance to avoid defaulting in case of natural disasters.

Earlier, we have mentioned about charging premiums, but it also important how we charge a particular premium for a particular policy. Here is when underwriting comes into play. Underwriting assumes the price for the risk and decides the premium.

Marketing and sales team ensures that the customer is convinced with the price he is paying for his risk reduction. They also ensure that they suggest the right policy for the right customer. It all happens in personal selling only. The agent also ensures to talk about the good things that the policy brings to the family.

With every day increasing technological developments, it surely improves the operational processes of payer organizations also. Managing huge customer data and getting insights about them through analysis is a big perk for payer companies. The accurate estimation of claims helps in reducing loss. Most importantly, the use of IT to reach the whole world with the help of digital marketing.

Checking with the claims, and checking eligibility, releasing funds and all operational tasks regarding claims accordingly is the job of the claim department.

Before a policy is sold to a customer, the eligibility needs to be checked explaining the customer with terms and conditions. The important aspect of eligibility is evidence of insurability. In the case of health insurance, the customer gives in writing about his/her health condition. Necessary medical examinations are run to make sure of the health of the customer. Some diseases are not insured by the payer which comes under the column of exclusions.

So, this is how a payer company works and the important elements in it explained.

Some of the sources to gain more insights as requested:

• https://www.ehealthinsurance.com/health-insurance-glossary/terms-e/
• https://www.thebalance.com/what-is-insurance-underwriting-2645778
• http://www.legalservicesindia.com/article/2544/Impacts-of-information-technology-in-insurance-industry.html