Payment facilitator Softheon is an old hand at handling healthcare insurance matters, “dating back to the Romneycare days,” said Softheon CEO Eugene Sayan. But Softheon these days—contrary to the PF reputation of focusing only on small businesses—works with the biggest of the U.S. insurance companies, processing a healthy percentage of Obamacare health plans, along with quite a few state plans.
“Nearly 10 percent of all Americans who enrolled in federal- and state-based marketplaces in 2015 use Softheon MC2 platform for enrollment, premium billing, and member services,” according to the company’s site.
What makes Softheon’s move especially interesting is that it was able to position a new system for payments on top of a new system for insurance. “We took payment reform and piggybacked it onto healthcare reform,” Sayan said.
The twist is that when Softheon started with healthcare insurance, payments had almost universally been done by check, with a smattering of direct withdrawals. Using payment cards for insurance premiums was unheard of then. Thanks to Softheon and others, that’s no longer true.
“Some 60 percent (of Obamacare) customers like to pay with payment cards,” Sayan said.
In effect, Obamacare was the change agent that made people comforting with a new way to both get and to pay for medical insurance. “Individuals now have the means to make that kind of payment on the spot,” he said.
Now that the payment behavior has shifted, those same consumers are now getting comfortable using payment card mechanisms—including cards fueling mobile payments—in a wide range of new ways, many being funneled through PFs.
“The very same consumers who are purchasing these products, their impulse buys, their personal habits, they are now gaining a comfort level to use payment cards to do their daily transactions,” Sayan said. “They’re comfortable doing this the same way that they pay for their coffee at Starbucks.”
Sayan points to similar changes with travel, which were changed by e-commerce sites making people comfortable with online travel arrangements.
It’s not only consumers whose payments behavior has shifted. “The insurance companies are converting themselves into being, in the truest sense, a supplier. The traditional use of card acceptance, from a commercial view, has never been their foremost or top priority,” Sayan said. “This is a completely new market for the insurance companies.”
Another key element of this change is the almost-universal merchant revulsion to PCI. By working through vertical PFs, merchants have the ability to let their customers pay using payment cards, while the retailer avoids (well, outsources really) the PCI pain to the PF.
“Given that we’re a white label card processor, the consumer doesn’t know the difference,” Sayan said.
Processing payments in healthcare, though, can differ in life-critical ways from buying a cup of coffee or a shirt. If a payment card problem crops up at a coffee shop, the consumer can either use a different card, pay with cash or even forego the purchase.
But if the problem happens when the consumer is in a drugstore to pick up expensive and life-saving drugs—or to pay for an emergency hospital stay or to process medical insurance on the last day before it expires—it is a radically different situation.
“If that patient is about to be denied a cancer treatment, this takes the payment issue up to a new level in both cost and importance,” Sayan said. “The charge could be for tens of thousands of dollars and there is likely no alternative way for them to make that payment.”
A minor payment software glitch could quickly force “a consumer to call the department of insurance” and that would trigger an investigation of Softheon, Sayan said.
Insurance forms are also very precise. Consumers can complete the form and legitimately believe that they are now covered by insurance, but the computer subsequently rejects an answer, voids the form but no one contacts that consumer. Or a message goes to the consumer, but that consumer never receives it.
Sayan offered the example of someone naming a relative as next of kin, but the consumer selects her sister rather than a child. Some insurance companies would reject that answer and, therefore, the entire form.
“The consumer thinks they are insured. We’ve seen more than 20,000 incidents where the data wasn’t correct,” Sayan said. “What if one of those people had a complicated medical condition or procedure?”