How Do Healthcare Insurance Companies Assess Patient Risk?
Several factors determine how much you pay for health insurance. One of these is your perceived risk. Insurance companies assess how likely and how much they will have to pay against your policy when you need a payout. The higher the likelihood, the higher your perceived risk, and thus the higher your premiums. But, how do insurance companies assess this risk, and how has technology changed how they do so?
Individual Vs. Collective Risk
There is a lot of discussion surrounding whether insurance companies assess risk individually or collectively. In most cases, they do both.
They must assess the level of risk in the pool of people they cover. An insurance company does not want to only cover high-risk individuals because that would mean they would make significant payouts over a given period. They also do not want to be known as a company that only covers low-risk individuals.
Insurance companies must also assess risk at an individual level to balance their pools. These days, there is significant use of sophisticated technology that is helping these companies provide insurance premiums that align best with a person’s circumstances.
The Role of Big Data
Insurance companies have always assessed risk the same way. The difference between the past and now is that they have access to much better technology that allows them to analyze patient information better and more accurately. The access to granular data, in particular, has changed the insurance industry in ways that nothing else has.
As they learn to use this data and technologies like machine learning and artificial intelligence, their risk assessment will get better, and they will be able to provide much better pricing that is fair and affordable for everyone who signs up with them.
Risk Adjustments
Insurance companies must assess patient risk to see if it is worth authorized treatments or procedures. They sometimes do this in real-time since they have access to data and tools that help them do it, with these companies using chart auditors and coders to assess medical records and determine whether to approve treatments.
In the past, they had to use various tools for this exercise, but technology has come so far that they can use a single risk adjustment tool to understand the financial impact of approving a diagnosis. Such a tool can also help them understand how their risk pool funding will change.
The assessed risk also factors into your insurance premium calculations. For example, a chart auditor company may approve numerous medical procedures because they are necessary. Since your risk has increased, you are likely to see an increase in your health insurance premiums.
Risk Assessment in the Future
When you sign up for health insurance, you have to let them know about your habits. For example, you must tell them whether you smoke or drink. However, they also ask about your family history. In the future, we can expect them to use our health assessment, genetics, and screenings to determine risk.
With full body scans and tests already helping us understand what our health will look like in the future, you can expect insurance companies to start using the same tools to make the same predictions.
Risk is a crucial factor in how much you pay for insurance, and how frequently you make claims. Insurance companies use various tools to assess it and adjust for it. Technology is changing how they do this, with patients having more accurate premiums and insurance companies having more data to work with.
