HIT Perspectives

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HIT Perspectives – November 2021

Interoperability: 10 Reasons Why Payer Top Executives Must Be Involved


Kendra ObristKendra Obrist, Senior Consultant Teresa_Younkin_400px  Teresa Younkin, Senior Consultant

Quick Summary

  • Payer executives are critical to the success of an organization's interoperability roadmap
  • Interoperability is not just a technology opportunity
  • Adoption of APIs and the data unlocked as a consequence present myriad business opportunities if well planned for. 
  • Updating processes, analytics and leveraging data to improve patient experiences can create a huge competitive advantage

The buzz in health care today is all about interoperability. Federal mandates, advances in data standards, technology, payment reform (including the move toward value-based care) and employer/consumer demand have propelled interest in interoperability all the way to the top of nearly all payer organizations.

While executives understand interoperability is the biggest “thing” in health care, many do not understand its implications across the organization. Here are 10 reasons why top payer executives should focus on interoperability.




  1. healthcare tech_business suit_circle croppedIt’s not just for the IT department. Many payers think they’ve “checked the box” by placing organizational responsibility for interoperability squarely in the hands of the information technology (IT) department. While the IT department has a role in developing and implementing interoperability policies and technologies, there’s far more and it’s far reaching. The need for interoperability directly affects nearly all aspects of a business: finance, marketing, organizational strategy, care management and legal. That’s why executives across an organization must be involved.
  2. It creates value across the organization. For example, it can increase revenue through increased risk adjustment and improved quality metrics, such as the Healthcare Effectiveness Data and Information Set and the Medicare Star Rating System. Interoperability can drive member retention and satisfaction. At the same time, interoperability can decrease operating costs. It reduces administrative overhead by minimizing chart-chasing operational load/costs as well as manual inbound data file processing. Improving the timeliness and quality of data helps close gaps in care, improve outcomes and prevent costly follow-up. Taken individually, these savings may seem small; in aggregate, they can result in big dollars by creating a positive return on investment over a relatively short time frame. This value will only increase over time as the organization enables interoperable solutions across the enterprise and develops health data as a strategic asset.
  3. It creates competitive advantage. Competition will shift the industry rapidly toward payers who have placed strategic energy into deploying interoperable solutions and away from those remaining in a legacy insurance world with siloed data. Working with payers in proprietary ways is becoming more and more untenable to providers. There is an expectation that payers will continue to invest in interoperability and adopt APIs to make data exchange more seamless. Providers will give preference to payer partners who are making these technology and business process investments.  The opportunity is now to be a leader in creating this change. However, payers that don’t enter the race sooner rather than later run the risk of being left behind as competitors gobble up market share.
  4. It is a cornerstone of value-based care (VBC). The need for timely and accurate health data gets vastly more complex when advanced value-based care payment models enter the marketplace. Interoperability then becomes a business imperative. A host of capabilities cannot work without interoperability. They include price transparency, integrated billing, mobile/home/digital health services and monitoring and, most importantly, care coordination. Patient engagement also is affected because members can opt out of these programs or choose not to participate. Payers and providers cannot attain VBC success without access to timely, accurate and actionable data. Interoperability requirements must have a seat at the VBC design table. Otherwise, payers risk designing a VBC product that is clinically and financially sound but cannot be operationalized efficiently.
  5. It requires Infrastructure to Enable Industry Standard APIs. Without question, the health care industry is technologically moving wholesale into the world of APIs and this shift will, over time, enable the types of transformation that we have seen in travel, financial services and online shopping. Fueled by the standards organizations and the advent of HL7 FHIR accelerators, such as Da Vinci and CARIN, “Fast Healthcare Interoperability Resources - Application Programming Interfaces” or FHIR® APIs have emerged as the standard of choice. This is a generational technology change for health care, akin to the introduction of the X12 eligibility, claims and payment transactions in the 1980s. Payers must have major initiatives under way to build and operationalize this infrastructure. This shift is fueled by significant legislative and regulatory initiatives by the Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC). FHIR APIs are now locked in as the next major technology turn for health care. This technology is being rapidly adopted and will be universally deployed over the next few years. Smart payers will get on the train or be left at the station.
  6. It is a strategic imperative. Because of its impacts on their organizations and stakeholders, payers need an interoperability strategy that is tied to the overall enterprise strategy. Business processes, technologies, financial goals, product design, marketing and corporate culture must be aligned with interoperable data exchange and a transformation to “digital first.” Payers cannot expand membership and improve topline revenue and margins without an enterprise strategy that puts interoperability front and center.
  7. It spurs innovation. Payer organizations must look beyond just meeting compliance with federal mandates for interoperability and embrace the opportunities for innovation presented with interoperability. The growing availability of FHIR APIs — and strong industry participation driving adoption and deployment — create an environment for innovation with more rapid development and lower risk. Payers, providers and other health care stakeholders are finding new ways to increase efficiency, support continuous self- and autonomous care, and reduce the pain and expense of “friction” between supporting stakeholders. On the horizon, there will be innovation in health equity, social determinants of health and chronic disease, as well as advances in security, electronic consents and privacy.
  8. It improves the member experience. Interoperability is key to improving the way members experience health care, driven by seamless access to — and sharing of — better-quality health data. It can empower patients and put them firmly in the driver’s seat, allowing them to select providers based on quality and cost and to understand the costs of different procedures and care settings. Members actively involved in their health and health care have been shown to have better outcomes — and, some evidence suggests, lower costs. The member experience is central to satisfaction and stickiness. Dissatisfied patients  and employers  will find another health plan and take their dollars and data with them. 
  9. It reduces provider administrative burden. Providers are burdened by complex, manual business processes that disrupt care and are hindered by the lack of interoperability. These include prior authorization (PA), responding to chart requests, meeting quality-of-care guidelines and care coordination. The cost of this administrative burden is hefty. For example, processing PAs cost providers an estimated $528 million in administrative expense in 2019. Reducing physicians’ administrative overhead will provide welcome relief to practices operating on thin margins, as most do, and promote satisfaction. In addition, automating administrative processes with interoperable technologies will allow clinicians to focus on quality and care management, which in turn will lower the costs of care and improve patient outcomes.
  10. It is key to future public health initiatives and mandates. The COVID-19 pandemic shined a bright light on the need for interoperable data collection and exchange for public health purposes. It also highlighted the need for data on social determinants of health (SDOH) to improve patient diagnosis and care in underserved areas and populations as well as promote health equity. Going forward, interoperable SDOH data will be needed for adjusting quality payment models and performance measurement assessments to reflect the increased risk associated with caring for disadvantaged patient populations. Increased collection of SDOH data will aid in health impact assessments and support evidence-driven decision making. This will be a focus of the federal government in the near term and likely be part of future mandates. Payers that begin working on collecting and sharing SDOH data will have a big competitive advantage as this issue rapidly evolves.

Looking ahead. Interoperability continues to challenge the entire health care system to think differently about how to manage health data and improve patient care. Point-of-Care Partners (POCP) has extensive experience in interoperability strategy development and is at the forefront of the work happening today related to government mandates, health information technology and the stakeholder community. We’d be happy to help you learn more. Reach out to us at kendra.obrist@pocp.com and teresa.younkin@pocp.com.