White Paper TOP 6 REASONS TO IMPROVE THE INTEGRATION OF YOUR CLAIMS SYSTEMS

Transcription

1 White Paper TOP 6 REASONS TO IMPROVE THE INTEGRATION OF YOUR CLAIMS SYSTEMS

2 1 Introduction The recently-released National Council on Compensation Insurance, Inc. (NCCI) 2011 State of the Line report recorded several sobering trends for workers compensation carriers: The private carrier reserve position continues to deteriorate, with NCCI estimating an $11 billion deficiency as of year-end Loss costs have increased, with NCCI loss costs up 2.5% on average and countrywide bureau loss costs up 7.8%. When combining underwriting losses with investment gains, the industry is looking at a pretax operating loss of 1%. The ramifications of these statistics are driving one essential truth home to the workers compensation industry: action must be taken to reduce risk and manage cost. Organizations need to become more informed about their businesses by accessing and mining real-time data, be more efficient in their processes in order to stop monetary leaks, and be wiser and more considered in their use of human resources. Strategic business decisions are called for that will ensure business stability, resiliency, and increased market share.

3 2 The unfortunate reality, however, is that workers compensation processing systems are currently not optimized to accomplish these tasks. Data is not easily accessible. Processes are labor-intensive. Employees are spread too thin. Businesses are prevented from achieving the agility they need to compete effectively in the marketplace. What is needed is effective and improved claims system integration. Individual systems do not need to be changed: rather, a platform could be set in place that can unite currently disparate systems, automating manual processes and correlating data across the board. Here, we will look at the top six reasons you should be optimizing your claims systems integration to improve outcomes, reduce risks and manage workers compensation costs. While over 80 percent of the Front Line users were clear that there was no full integration between their claims systems and their bill and/or utilization review systems, almost 60 percent of the Execs said the systems were integrated. This identifies a large area of disconnection and an opportunity for the industry. Source: Joseph Paduda and Sandy Blunt, First Annual Survey of Workers Compensation Claims Systems, Winter 2011.

4 # 1 Elimination of Claims Leakage and Overpayment 3 A single workers compensation claim involves multiple systems and the input of many discrete people, departments, and vendors. Every point of intersection, therefore, becomes an opportunity for claims leakage or overpayment. Consider the following typical scenarios: A claim requires utilization review (UR) by a subject matter expert (SME). The SME approves certain procedures and denies others. Some of the denied services are performed, regardless. Because the bill review process cannot readily correlate which services were approved and which were denied based on the codes on the bill, the whole bill is paid. A claim is submitted for a valid injury. The provider who treats the injury also treats a non-work-related physical condition at the same time and submits all costs to the carrier. Because there is no way to easily identify which costs are associated with the claim and which are not, the whole bill is paid. A claim comes through for a worker s injury. Because the claim is valid, it is paid even though the medical spend to treat the injury is excessive due to unnecessary tests having been performed. In each case, claims leakage or overpayment happened because volumes of data housed in multiple locations could not be correlated efficiently and effectively. While manual examination and correlation is possible, it is time-consuming and subject to natural human error. As an alternative, spot-checking is not and can never be a satisfactory business solution.

5 4 With true claims system integration, however, claims leakage and overpayment can be prevented. Claims system integration allows for: The automation of many error-prone, labor-intensive tasks within the claims handling and bill review processes. The evaluation of a bill for relatedness in order to route it automatically to the correct bill review process, avoiding potential inconsistencies that can arise during manual routing. The verification of high-fidelity information, such as whether a service is appropriate to a claim and is therefore compensable. The identification of inappropriate coding relationships before reimbursement. The correlation of UR clinical data including approvals and denials with detailed billing codes. The elimination of non-compensable medical costs. Claims system integration, therefore, automatically stops carriers from paying out dollars for unauthorized or non-compensable services, reducing both loss and loss adjustment expenses (LAE) and improving overall profitability.

6 5 # 2 Increased Network Penetration There is another type of leakage inherent in disparate claims systems, and that is the leakage that occurs when a bill is not applied appropriately to a managed care contract. Currently, achieving a network penetration of greater than 40-50% and discounts of more than 10-15% below the fee schedule or benchmarked medical cost levels has been all but impossible. The reason for this is found in the variety of managed care contracts the carrier has, and in the multiplicity of Common Procedure Terminology or CPT codes, jurisdictions, individual and group providers, and TAX ID carve outs that appear on medical bills. Only after all the data on the medical bills has been addressed can a bill be submitted to the managed care vendor, verified, and the best rate applied. But, as with comparing claims information to the provider bills, this is a monumental task if it must be done manually. Additionally, if the data cannot be correlated down to the granular level (low level fidelity), leakage can still occur. By integrating the data at the platform level, the comparison process becomes fully automated. Network penetration can thereby be maximized, lowering billing rates, improving savings levels, and reducing out-of-network exposure as well as claims re-work. Penetration levels can easily exceed 75%, with incremental savings of 4-5% on total workers compensation spend.

7 6 # 3 Improved Vendor Management If all things were equal, all vendors would deliver equal value, equal service, and equal savings. That, however, is not reality. Vendor performance is variable: vendor to vendor, state to state, and even over time for a single vendor. But how does a carrier know if a vendor is performing well? Today, because claims systems do not track or aggregate data, carriers are dependent upon each vendor s self-reporting as far as savings and timeliness are concerned: hardly a non-biased or verifiable view. However, with claims system integration, the selection and alignment of highperforming vendors can be confidently achieved. High-fidelity data integration can confirm compliance with service level agreements (SLAs) (e.g., turnaround times, prices, cost savings, quality). Comparisons can be made of different vendors methods, processes, and practices. Decisions about vendors can therefore be made based on need, metrics, and qualitative data.

8 7 # 4 4 Streamlined Direction of Care Because workers compensation is a federated system governed by each state, there are many state-ordered regulations that carriers must abide by. One of these is direction of care. In certain state jurisdictions, direction allows a carrier to send a claimant to one provider over another. Such redirection permits the carrier to pay a lower medical cost on the claim. Taking advantage of direction of care is, therefore, an important aspect to cost management. To complicate matters further, third party administrators (TPAs) may also have client-based rules regarding direction of care. Relying on manual implementation of jurisdictionally-based and client-based rules is problematic, as personnel require significant training and may still end up applying rules inconsistently. However, by utilizing claims system integration that incorporates these rules automatically on an enterprise-wide level, directional care can improve: lowering costs and increasing quality of care. Additionally, by making the process paperless, automation can save adjusters up to 45% of their time, enabling them to focus their energy and skills on actual claim processing.

9 8 # 5 Comprehensive State Reporting and Compliance States may also require extensive reporting from workers compensation firms, including how fast providers get paid, how accurate those payments are, etc. Through claims system integration, data from all systems are tracked and available for full reporting. This provides carriers with the transparency needed to demonstrate clearly and conclusively that they are in compliance with any statemandated regulations. Additionally, the automation of reporting and compliance matters increases carriers flexibility in the marketplace, allowing ease of expansion of new books of business within states, as well as expansion into new jurisdictions or states.

10 9 # 6 Enhanced Flexibility, Efficiency, and Consistency In any system, the human factor represents the greatest asset and the greatest risk. Wise resource management using people s skills, knowledge, and time well is foundational to business success. In contrast, failing to leverage those same human resources creates a slow and steady drain that can ultimately cripple or kill a company. Today s siloed, manual-intensive systems are weighing down workers compensation organizations to a dangerous degree. But the simple addition of a platform that integrates and automates these systems can completely transform that picture, providing carriers with the efficiency, consistency, and flexibility they need to compete effectively in the marketplace. Efficiency. Automation of a carrier s systems: Increases the volume of work that can be handled by the same resources. Reduces the amount of reprocessing necessary due to human error. Speeds up processing time, making it unnecessary for providers to resubmit bills. Extracts duplicate bills so that they do not have to be manually identified and deleted. Creates straight-through processing where exceptions are flagged for immediate attention. Increases worker productivity and lowers labor costs.

11 10 Consistency. Not only does automation increase efficiency, but it ensures consistency across individuals, offices, departments, and locations through: The uniform application of adjudication rules, reducing litigation exposure. The enterprise-wide execution of best practices through streamlined workflows, dashboard alerts, decision support, and compliance initiatives. The systematic collection of data to guarantee comprehensive reporting and metrics. The immediate implementation of system changes without the need to retrain the workforce. Flexibility. Finally, automation provides carriers with unparalleled flexibility. Because integration permits processes to be built around data rather than around people, carriers can: Handle various types of claims differently, without the need to employ specialists. Modify policies and procedures on an employer-by-employer basis. Reduce the training burden across the organization. Maintain intellectual capital and corporate assets within the company, despite employee turnover. Leverage human resources to enhance the company s core business functions. This improved efficiency, consistency, and flexibility enables carriers to introduce change into their organizations much more quickly. Instituting change manually requires extensive retraining, which is not an overnight process. With integration of systems, enterprises suddenly become extremely agile.

12 11 Confidence for the Future Workers compensation firms are not helpless to withstand the multiple financial challenges confronting them. They have made significant investments in their claims systems, UR reviews, bill processes, and managed care relationships investments that can be leveraged to proactively reduce risk and manage cost. By setting in place a platform that enables claims system integration and automation, carriers can reduce claims leakage and overpayment, achieve unparalleled efficiency and accuracy, and improve the quality of service for all stakeholders. Consistent and accessible data will enable decisions to be made strategically and implemented immediately. Human resources can be concentrated where they will have the greatest organizational impact. Improvements can be identified, leveraged, and refined over the years to create a culture of continuous improvement. The need is present. The technology is available. The outcomes are assured. Through improved claims systems integration, workers compensation organizations can achieve business agility, ensure cost-effective operations, and increase overall business profitability.

13 ABOUT ACROMETIS Acrometis offers the most complete and automated claim processing platform on the market designed specifically for the workers compensation industry including insurance carriers, brokers, Third Party Administrator s (TPAs), self-insureds, and claims administrators. Acrometis CLAIMExpert is a claim processing platform that provides a high-fidelity view of claims data, coupled with a robust set of rules and workflows to deterministically route claims documents and bills. CLAIMExpert is further complemented by deep analytics capabilities that allow for meaningful changes to the claims processing environment that in turn lead to maximized cost savings, efficiency, and productivity gains over the lifecycle of a claim. For more information about Acrometis and our CLAIMExpert platform, please visit our website at ABOUT THE AUTHOR Jerry Poole, President and Chief Operating Officer Jerry Poole is the President and Chief Operating Officer of Acrometis and is responsible for the management of all internal operations within the company. Prior to joining Acrometis, Jerry was the CIO and COO of MedRisk; he remains an active member of the MedRisk executive staff. With more than 25 years of engineering and technology experience, Jerry s background forms the cornerstone for the progressive development, implementation, and expansion of Acrometis innovative software systems. Jerry is the original architect of Acrometis comprehensive Expert Claim Processing Platform, which he first developed in 2002 to eliminate inefficiencies within the workers compensation industry. Jerry has led the product development and operational growth of this software, as well as the recruitment and development of the exceptional team that is at the heart of Acrometis highly-regarded technology and operations. Jerry received a Masters of Business Administration in finance from the Wharton School of Business at the University of Pennsylvania, and a Bachelor of Science in electrical engineering from Kansas State University. He is the author of notable contributions within the workers compensation industry, focusing on the technology needs and requirements for optimal efficiency to improve operating outcomes. 400 Chesterfield Parkway, Suite 100 Malvern, PA Tel: Fax: info@acrometis.com Website: