For payer-to-provider commercial medical payments, the payer—either health plans or third-party administrators—is entering an important era in digital payments. Digital payments, such as electronic funds transfers (EFT) and virtual card payments, have been the cornerstones of claim payers’ strategies for the past eight years. But as the market fast-forwards, these factors point to a second wave of digital payments that rivals the onset of mass-market digital payments in 2012:

  • First, payers remain short of their digital goals, as 80% surveyed in a recent Aite Group report identified converting paper checks to electronic payments as a top payments priority.
  • While some payers are still coming up short, others are experiencing diminishing returns in pursuit of their targets. To illustrate this, 70% of payers point to low digital payment enrollment tied to their provider outreach programs as a barrier to achieving their goals. Payers are frustrated by these low enrollment numbers despite extensive outreach.
  • Finally, the ongoing COVID-19 pandemic offers a rare window of opportunity to replace manual payment operations with electronic ones. 

However, all is not lost; in fact, a second wave of digital payments is likely to see its way into the market as a blueprint has emerged. This blueprint requires payers to alter their strategy, invest in capabilities, and rethink tactics such as provider outreach. The major alterations center around rethinking the experience for the payee, or healthcare provider, through expanded choice, a better end-to-end payment journey, and self-servicing.

  • Choice: Expand digital payment options for providers beyond EFT and virtual card. The path to digitizing medical claim payments is littered with false starts and fizzled-out experiments due to a lack of provider enthusiasm and engagement. It can be summed up with “if it isn’t broken, why fix it?” For payers, intent and interest have not ventured far beyond EFT and virtual cards, though there is budding interest to add other digital payment options, such as electronic check conversion and, potentially, Same Day ACH.
  • Payment journey: Offer a seamless enrollment experience for payment options across payers that does not require multiple enrollments or cost the provider. When thinking about pain points to their organization, 10% of payers cite low enrollment numbers as a source of considerable or major pain. The fact that another 60% acknowledge that they are a source of minor pain underscores the prevalence of this problem. This specific point may well be the root cause behind providers’ unwillingness to explore and adopt new payment options. In addition, the second-highest pain point ties back to enrollment, as 10% of payers indicate system constraints for validating enrollment data as a considerable pain point, and another 30% indicate it as a minor pain point.
  • Self-service: Enable an environment that allows payees to dynamically manage payment options and pick a payment option for each reimbursement.

On aggregate, payers need to reduce check payments by 40% to get to their goals. Breaking through the stalemate to reduce check payments is not always easy, but it is doable and reenergizes payers’ priorities in converting more check payments to digital. It also piques the interest of providers on the other end of the provider outreach programs. Inaction, on the other hand, means payers risk being stranded at square one with digital alternatives remaining limited to EFT or virtual card.

To see more, check out this report on how healthcare payers are advancing digital payment strategies and better aligning with provider needs and expectations. You will also find it provides an overview of payments priorities, reveals insights into transaction and check-related cost metrics, and highlights which digital payments are likely set to see greater adoption.  

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