As the U.S. moves into its second year under the Affordable Care Act, healthcare payers are turning more and more to business process outsourcing (BPO) providers for claims processing and other services, according to a new report from the Everest Group

Everest analysts say the healthcare payer BPO market grew 14 percent in 2013, reaching a size of $4 billion. And growth will continue at a breakneck pace–the researchers estimate a 14 percent compound annual growth rate of 14 percent in the market for several more years.

Business Process Outsourcing

“The Affordable Care Act is having a tremendous impact on the healthcare payer BPO market, but other factors are shaping the market as well,” said Rajesh Ranjan, an Everest Group partner. “Federal and state-level regulations are playing an increased role in healthcare payer BPO, as are measures to control fraud, waste and abuse. The result is wide windows of opportunity for BPO service providers to help payers who want to streamline operations, reduce costs, speed their time to market with new service plans, and use data analytics to reduce risks.”

In its report, Everest notes that new, smaller buyers are a driving force behind the growth of the healthcare BPO market. In addition to claims processing, which makes up the bulk of outsourced services, companies are seeking provider management and member management services.

Other characteristics of the healthcare payer BPO market include:

  • A global presence: Services are provided primarily from India, the Philippines and North America.
  • Technology-driven: Buyers seek platform-based technology solutions for healthcare payer business processes.
  • Changing pricing models: Mature outsourcing arrangements will often involve complex pricing structures.