By J. Christopher Walsh, Principal at Arlington Associates, Inc.
Twenty years ago, if you were talking about workers’ compensation “system automation”, you were very possibly thinking about the word “oxymoron” as much as any dramatic industry innovation.
Through the 1980s and well into the 90s, most claim handling and technology was local or regionally based. Automated business rules had limited functionality and were difficult to maintain. Still extremely paper intensive, there were few tools to manage the paper intensive claim process. Adjuster workstations had, by today’s standards, very primitive electronic notes, estimators, evaluators, word processing and templates. Interfaces with external data sources and vendors were manual. Claim data was too often incomplete, inaccurate, and out of date.
In the early 2000s, the workstations gave way to networked PCs, the Internet, and mobile devices. Claim data was centralized and, perhaps for the first time, carriers and TPAs could review it for their entire business. This new capability allowed business rules to drive the claim process like never before. With more uniform rules came more consistent outcomes, better fraud detection and subrogation recoveries, and increased compliance with company policies, best practices, and regulatory requirements.
At the same time, new software enabled widespread EDI and on-line vendor connectivity. As a result, payors electronically accessed external data and could outsource specialized claim activities such as bill and utilization review.
The economics of a soft comp market increased pressure on operating expenses. With claim frequency declining and severity increasing, the emphasis shifted to the more complex task of medical management. Once again, claim groups were asked to do more with less.
Today, most payors are on a single system, processing multiple lines of business. Increased integration with outside information systems, email, phone, and mobile devices has led to increased efficiency and improved process times. Determination of benefits and payments is far more accurate and the employer and claimants have better access to their claims.
So what does the future hold for claim technology? Companies desperately need to spend more time managing claims and less time simply managing the process. Faster benefit determination and claim payment, continued expansion of real time data, and accurate, consistent, and timely claim reserving will all be minimum requirements.
Given these generalizations, what system enhancements should management focus on to insure future success? Most lists should include these critical areas:
Expert Systems: From claim staff to the finance, actuarial, customer service, and regulatory departments, payors have tremendous institutional knowledge. Much of that knowledge can now be encoded in a claim system to promote more efficient and consistent application and better outcomes. For payors needing help developing business rules, several new companies offer engines and logic to manage everything from image routing, to jurisdictional processing, to regulatory change. A systematic ability to administer increasingly complex business rules is particularly helpful as payors face an unprecedented wave of retirements and expertise loss. On the hiring side, a “smarter” more “efficient” system is needed to appeal to tech savvy Millennials.
Vendor Management: Litigation support, case management, subrogation, medical bill review, and SUI are outsourced by many payors. In addition to sending referrals and receiving work product digitally, payors need to share relevant claim information with these groups so they can perform at a higher level. A payor should know how many cases, bills, surveillance requests, etc. are in progress or have been completed in a given period. While the system alone can’t make all qualitative vendor evaluations, it should track and report turn around times, exceptions, outcomes by type of referral and jurisdiction. This latter information can be used to assign work to the strongest vendor in a particular region or state based on objective performance criteria. Vendor competition doesn’t have to stop at the RFP award… it can now be ongoing.
Imaging: It’s crucial not to bury claim staff with images they way they were once buried with paper. Payors need to take full advantage of their scanning vendor’s OCR and routing logic to return incomplete forms, medical bills, etc. at the point of entry rather than let them linger in the system consuming valuable time and resources. In addition, payors should use scanning reports to track changes in bill, legal and client correspondence volumes. Seeing trends at the point of entry is far preferable to hearing about them from the actuarial department months or years later.
Provider Networks: While provider networks are in every medical management program, many payors are totally dependent on external bill review vendors for even the most basic information. Payor systems need real time access to a wide range of provider data for customer service, payment issues, directories, verifying certifications, licensure, practice specialties, hours, languages, locations, etc.
Scalability: Size matters. If you’re processing multiple lines, you need a sizable system with unique capabilities for each line of insurance. The more claim history, provider, employer, and claimant information, the better. It’s no coincidence that many RIMS systems previously used exclusively for advanced data analyses are now seen as the next generation of claim processing systems. They have the capacity to store, track and interpret a tremendous amount of data and that is very appealing to more and more buyers.
Customer Service: Other insurance lines have substantially improved their customer service, leaving comp payors facing considerably higher standards. Group health plans now offer employers, providers, and subscribers real time online access to their transactions. Providers can track bills and payments and subscribers can access their entire claim history. Employers have access to aggregate information to track their losses, savings, and stop loss levels. For those having trouble figuring out an online screen, instant chat help is available as are live service agents via a toll free number.
Workers’ compensation claim organizations and their processing environments are not static. They typically vary from one period and jurisdiction to another, often drastically. Increasing, payor success and survival will depend on their ability to collect, process, share, and ultimately interpret data.
About Chris Walsh
Chris Walsh has over 20 years experience successfully designing, selling, and implementing managed health care programs. Prior to re-joining Arlington Associates, Inc. in April 2009, he spent 15 years as a Sales VP at Coventry Workers’ Comp Services and CorVel Corporation. His clients included three of the country’s top five largest casualty insurance carriers, large self insured employers, state funds, state, county, and city governments, software vendors, and a number of national managed care companies. In the early 1990’s Walsh founded AAI, during which time AAI clients included HMOs, PPOs, health care software vendors, and managed care service providers. Prior to AAI, he held sales and client management positions with HCX, Inc., American International Healthcare, Inc./JBI, and General Health, Inc. Walsh has a Health Management MS from American University and a BA from Georgetown University.
About Arlington Associates, Inc.
Arlington Associates, Inc. (AAI) is a brokerage and consulting company specializing in premium managed health care software and services. AAI clients receive dynamic strategic and sales support across a broad array of group health, workers’ compensation, and auto insurance areas.
For more information, please visit: www.arlingtonassoc.com