“For state-mandated benefits,
we used to have to pend all
those claims and address them
manually—now it’s automated.”
— Jeffrey Bond, Cox HealthPlans
and pays its claims it receives within 12
days.
“In health insurance, it’s about blocking and tackling,” notes Bond. “For
state-mandated benefits, we used to
have to pend all those claims and address them manually—now it’s automated. The technology is far-reaching
into our organization, because when
we gain efficiencies in claims, we can
better compete. We take the time saved
and use it to implement new benefit
plans.”
—Pat Speer
cessful claims transaction is one that
must rely on robust, reliable systems.”
With $100M in revenue, Cox Health-
Plans is considered a regional player,
with 85 employees serving its 45,000
members, yet the organization shares
much in common with the larger net-
work of health insurers trying to outfit
their organizations with technology
that enables accurate, streamlined pay-
er/provider transactions. And like
Bond’s competitors, the “getting it done
is job one” ambition has been, at times,
a challenging prospect.
The industry’s overall claims process-
ing is improving, say experts, as paper
gives way to electronic claims process-
ing (See below) and automatic adjudi-
cation (verification and validation pro-
cesses that do not require manual
intervention) increases among provid-
ers. But high claims volume, backlogs
and provider and member expectations
make progress slow for all stakeholders.
According to America’s Health Insur-
ance Plan’s Center for Policy and Re-
search, Washington, D.C., there is still a
notable lag before health insurance
plans receive claims from health care
providers, adding even more pres-
sure—and cost—to the payer’s ability
to process quickly.
1FSDFOU;PG;DMBJNT;àMFE;FMFDUSPOJDBMMZ;
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2002
2006
2009
Electronic
Paper
Source: AHIP
Between 2002 and 2009, the percent of claims filed electronically
jumped from 44% to 82%.
chief strategy and marketing officer,
EVP, Enterprise Strategy & Communications, at Trizetto Technologies, Greenwood Village, Colo. “It has no parallel
with any other industry in terms of inefficiency,” he says.
From the provider’s viewpoint, an
even darker picture emerges. The National Health Insurer Report Card,
which issued annually by the Chicago-based American Medical Association,
examined 2 million claims submitted
to seven top insurers and asserts that
one in five claims is processed inaccurately by the carrier. This leads to $15.5
billion in wasted administrative costs
annually, notes the report.
Spirek points to a post-reform era in
which health insurers are suffering
from margin compression caused by
reform mandates. “Insurers act as a financial intermediary, so as technology
is adopted we see the savings as being
important…but more important is financial accuracy. It’s a golden nugget.”
When Cox HealthPlans made the
commitment to upgrade its claims system, it did so with the goal of processing and paying all claims without the
help of a third-party administrator.
Post-implementation, the 26-member-
strong claims organization used its
technology platform to increase electronic processing from 60% to 94%,
streamlining the $400K in claims paid
last year. Today, notes Bond, Cox HealthPlans maintains a 5-day claim backlog,
COMPLEX LIFE CLAIMS
Life insurers get one chance to process a
claim correctly. That’s a lot of pressure.
And, life insurers tend to perform well
under that pressure when paying claims
on term life policies. However, life insurers’ business model is changing from
focusing mostly on term and whole life
policies to increasingly offering newer,
secondary products. Sales of universal
life policies soared 21% in 2010 primarily because of the introduction of term
universal life products, according to
LIMRA research. The association attributes this growth to many factors, including increased marketing, training
and product introductions.
With the emergence of more complicated variable life contracts or whole
life contracts, insurers face the complexity of properly administering the
claim and accurately calculating the
payout, says Don Desiderato, a principal
in Boston-based Novarica’s insurance
practice. “Now that they’re starting to
design these variable or combo product
offerings—such as a variable contract
with a long-term care rider—they’re
creating more complexity for the product’s time-to-market,” he says.
There is not a lot of activity in the
market for technology to address the
challenge, Desiderato says. Thus, insurers are forced to take steps—externalize
their administrator platform, custom-build it, make sure that the product
