Health insurance plans receive premium dollars from buyers who may be employers, groups, or individuals on a prepaid basis in return for a promise to provide payment for covered healthcare services when needed. Payments for those services are typically made directly to the provider. Health plans must make a profit to remain in business. To earn positive profits, health plans must receive payments from subscribers greater than payments for healthcare providers. They must also cover their own internal administrative costs. There are primarily four functions that health plans perform to justify their position in the healthcare marketplace: underwriting of risk, utilization review, claims administration, and marketing.
You have received a consulting contract with a health insurance company to help identify ways to reduce payments to healthcare providers for healthcare benefits of the plan members.
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