For many insurance companies, the challenges involved in processing claims are ongoing. Because claims often involve multiple decisions, data from various sources, and task handoffs, it's clear why carriers see the potential for improved customer service and financial results from streamlining manual claims processing.After recognizing many opportunities to automate its manual processing decisions, Blue Cross and Blue Shield of North Carolina (BCBSNC), headquartered in Durham, decided to dive right in. "We process more than 30 million claims annually, and about 12% have to be manually handled in some fashion," explains Sherman Owens, BCBSNC vice president, quality and compliance. "As you can imagine, there's a lot of costs associated with that."
As BCBSNC execs began looking at various options to relieve some of the manual work, they first examined their claims process. The company decided to try to automate evaluation of associated claims information to determine if it should pay claims that were suspended through an existing adjudication system.
Image Process Design Inc. (IPD), a processing software provider based in Bloomfield Hills, Mich., became the partner BCBSNC chose for this undertaking. "We looked at other options, but we came down on the side of IPD," says Owens. "One of the main reasons-aside from the fact that the particular proposal they made to us was very cost-effective and low risk-was that we already work with them as a vendor for our process flow control software."
AUTOMATING THE PROCESS
BCBSNC uses IPD's Automation Suite to suspend claims. "Since they're already handing the claims off to us in a manual fashion, it made sense to ask them to provide that service in an automated fashion," says Owens. The two began working together to automate BCBSNC's claims using a pilot version of what is now called "automation engine."
Automation engine is a feature of IPD's Automation Suite and will soon be available as part of Ultera version 6.5 document and process management application, which is IPD's flagship product.
While the automation engine is capable of using many rules customized to meet specific needs of insurers to process information, BCBSNC is moving forward one step at a time.
"Our highest volume of 'suspends' are possible duplicate claims, so we decided to select that particular category to automatically adjudicate," says Owens.
BCBSNC developed a set of automated decision rules that mimicked the rules used by employees who were manually processing claims to arrive at the conclusion: Is it a duplicate or not?
"We coded those business rules in IPD's automation engine software, implemented it and ran all of our possible duplicate hospital claims through that process," he explains.
Previously, roughly 500 claims per day "suspended out" for manual processing. After implementing the business rules coded into the automation engine, almost 85% of those 500 clams were correctly processed using automation. This means that in 85% of the cases processed each day, the computer correctly processed the claims as either actual duplicates or not. "Only 15% of the 500 claims per day ended up being routed through the manual process," explains Owens.
A new computer interface was implemented that routes suspended claims to the automation engine, instead of routing them to a manual claims examiner. The interface also pulls and routes other data needed to determine if a claim is a duplicate. For example, it the history of a previously processed claim to determine if the one in question duplicates that past claim.
In the case of duplicates, there are three possible decisions: definitively a duplicate claim, not a duplicate or I can't decide, says Owens.
Depending on which of the three decisions applied to the claim, the automation engine automatically adds data, such as a status indicator and denial codes, to the claim record, just as an employee would have done manually to complete the processing of the claims. In the case of the decision, "I can't decide," the interface routes the claim to a claims examiner for manual review.
Owens found that before implementing the automation engine, processing those 500 claims required five or six people. "So the actual cost of this project-the upfront cost-was really paid for in less than a 12-month period. We're going to be realizing annualized savings of at least $250,000 just for the pilot," says Owens.
In the future, the software will also facilitate enrollment verification. For example, if a question arises about whether a member is enrolled on the date of claim service, and the case needs to be reviewed further, instead of suspending and referring the claim to an examiner, BCBSNC can reroute it to the automation engine to adjudicate the claim.
"To make this possible, we will have coded the business rules in the automation engine, which mimic the same rules that the claims examiner uses to resolve such a claim," says Owens.
After experiencing success with the initial automation engine implementation, BCBSNC plans to upgrade to IPD's Ultera version 6.5. BCBSNC is also working to expand the automation engine now in production to add professional (HCFA) claims to the institutional (UB92) claims it already processes. Completion target for that project is set for the third quarter of this year, according to Owens.
"That'll more than double the number of claims we're automatically adjudicating this year using this system," he says. "Then, immediately on the heels of that, we'll expand the business rules that we have in the automation engine product to include our other high-volume suspends [such as questionable coverage at the time of claim]."
