In addition to the payout to the ransomware criminals, UnitedHealth Group paid out more than $3.3B to providers impacted by the Change Healthcare cyberattack (Reuters, 2024).
What may be more concerning is that bad actors are leveraging emerging technologies such as generative AI (genAI) to make cyberattacks harder to detect and predict. Additionally, cybersecurity risks posed by the widespread reach of genAI are due to a reported lack of governance and acceptable use policies, according to the 2023 HIMSS Healthcare Cybersecurity Survey.
Payers’ profits are seeing a decline due to a variety of factors. Citing a spike in healthcare utilization that they expect to continue in 2024, CVS Health, UnitedHealth Group, and Humana reported profit losses of 5.2%, 6.2%, and 14.2%, respectively, for Q4 2023.
Healthcare payers are already facing significant challenges due to rising drug prices. In 2023 alone, pharma companies raised the price of nearly 1,000 drugs (USA Today, 2023) and launched new drugs in the U.S. costing 35% more than in 2022 (Reuters, 2024).
MA earning margins declined from 4.9% to 3.4%, and earnings per member declined 28% from 2019 to 2022 (CMS, 2024).
In addition, Centers for Medicare & Medicaid Services (CMS) are planning to cut the average benchmark payment for MA plans by 0.2% (Healthcare Financial News, 2024), making it difficult for healthcare payers to make up for those losses elsewhere.
Arguably one of the most significant challenges in healthcare for patients, providers, and payers alike is prior authorization. Particularly, it has failed to control costs while ensuring appropriate care, as it was originally intended to do.
In fact, physicians reported that prior authorization requirements resulted in higher utilization, ineffective treatments, additional office visits, and delays in treatment resulting in urgent or emergency care (Medical Group Association, 2024). Healthcare payers will need to leverage technology to help them meet compliance with the Part D Final Rule.
Siloed IT systems, privacy concerns, and market competition are among the top reasons for the continued lack of interoperability among payers.
Indeed, 64% of acute-care hospitals disclosed that their exchange partners’ Health IT systems lack the ability to receive data, which includes that of payers (HealthIT, 2023).
The Office of the National Coordinator for Health Information Technology has acknowledged this deficiency, and its recommendations, embodied in the CMS Interoperability and Prior Authorization Final Rule, aim to establish health information exchange by 2027 (CMS, 2024).
This initiative led by the Final Rule is designed to enable interoperability by streamlining prior authorization processes and moving the industry toward electronic prior authorization to reduce patient, provider, and payer burden.
