Though not necessarily a weakness, on the whole, property/casualty insurers do leave some room for improvement when it comes to the handling of medical claims. Insurance Networking News asked Michael Costonis, executive director of Dublin-based Accenture's Insurance practice for North America, about what carriers can do to improve their performance in this area.
INN: How adept is the P&C industry at processing medical claims?
MC: There is a great deal of variation within the industry when it comes to processing medical claims. We believe-and our survey of large U.S. insurers supports this-that carriers are a long way from optimal performance in processing and analyzing the $50 billion in medical claims paid out each year. And almost 80% of the insurers we talked to said that their medical records processing is not fully optimized and needs further improvement.
Survey respondents believe-and we agree-that optimizing medical records processing would have important to significant benefits to overall productivity and particularly to claim cycle time.
It is a challenge to actually receive needed medical records on claims, but even when records are received, as much as 25% of the time, they are not used in adjudicating injuries or medical conditions.
A central problem is that certain key skills are very scarce. It is also difficult to scale up processing operations that are already very complex. Carriers appear to be doing a quality job of getting work to the right resources, but those people are spending time deciphering and organizing information when that time could be spent more productively.
INN: What impedes better medical claims processing?
MC: The hurdles are both technological and organizational. Medical information is coming at insurers in all sorts of formats. Just sorting it out and figuring what it says is a challenge. Our survey indicated that something as basic as illegible handwriting was the biggest problem, with almost half of respondents calling it "important" or "very important." Another primary problem is the adjuster's own lack of medical expertise. Other challenges include the absence of medical context, missing or incomplete documentation, difficulty in accessing the necessary medical information and use of jargon and/or symbols.
We think insurers need to refocus and redirect their technology investments. Technologies related to document imaging and management, workflow, bill review and valuation, such as ImageWrite in document imaging and management and Colossus in valuation, have been solid investments in helping improve processing efficiency and accuracy, but what is really important is taking a comprehensive look at the way medical information is acquired and handled. A disciplined, structured format for the claims process-using data gathered and organized by medically trained professionals-can provide tremendous benefits. One of the most significant benefits is that adjusters can focus on accuracy of indemnity payout and finding fraudulent behavior versus data gathering or pre-processing.
Another area for investment is in developing and promoting industry standards for medical records. Closer collaboration between property/casualty insurers and health care providers can help reduce errors and repetitive contacts as insurers seek needed medical claims information.
INN: What role does analytics play in improving processing?
MC: There is a wealth of information in medical claims that carriers can access via analytics. However, typical analytics principles, which may already be in use in other areas of the organization, are slow to obtain widespread up-take in claims, even though insurers recognize the need for improvement in areas such as predictive modeling and data mining. Analytics can be used to help predict the complexity of medical claims, hastening the process through which claims are segmented, with claims that have a propensity to be simple moving on through the system and claims that have the propensity to be more complex routed immediately to more highly trained staff for review.
Fraud detection is another good example. Industry estimates state that 10% of property/casualty claims involve some sort of fraud. Use of predictive modeling on medical records to flag likely instances of fraud and misrepresentation can deliver significant savings in claims payouts and legal expenses.
The key to using analytics is to make sure the data is structured in a format with consistent fields that allow for data mining and other techniques.
INN: What other techniques can improve processing
MC: We think the most important technique is to step back and take a holistic, integrated approach to processing medical claims. If you try to focus on just one part of the problem, you often wind up with a new problem in another area.
Processing has important implications for business strategy, customer satisfaction and overall profitability, and it is essential to look at the big picture.
