Claims Management Software Smoothes Workflow, Saves Money
While automated claims processing systems potentially cost insurers millions of dollars, vendors in the field promise a swift payback through reduced personnel requirements in claims-processing centers, along with fewer errors, less paperwork, speedier workflow processes, and less time spent trying to mollify exasperated beneficiaries.
Some of the key players in claims-processing technology include the following:
IBM, Armonk, N.Y., entered the field in June after inking an agreement with deNovis Inc., a software firm in Lexington, Mass., to run its claims-handling program on IBMs e-business platform.
Its first and, so far, only customer for the IBM-deNovis system is Empire BlueCross BlueShield in New York (currently seeking to reincarnate itself as a public company under the name WellChoice). IBM is also deeply into talks with other health care carriers about using its system, says company spokesman Michael Shore.
Shore declined to cite specific costs. He says his company estimates the IBM-deNovis system potentially could save the health care industry $50 billion to $100 billion a year if it comes into widespread use.
The software is designed to achieve a first-pass ratio well over 90%, says Shore. That ratio refers to the percentage of claims that make it through the system on the first try, without the need for human intervention.
DeNovis software is able to read policy statements and rules and apply them to payment requests automatically, Shore says.
The system is best run on IBM mainframes but could also work under a client-server system, he adds.
A key feature of the IBM-de Novis system is that it simplifies health care administration to the point where the insurer can offer customized policies if it wishes.
“So if you are married with two kids, they could customize your policies for each family members different health care needs,” says Shore. “For instance, you can exclude dental care for a baby, or an employer could customize its policies to give added emphasis to wellness programs.”
Empires system will take about a year to implement, Shore estimates.
FileNET Corporation, Costa Mesa, Calif., which provides business-process automation for a variety of industries, offers a health-insurance platform that it says delivers increased efficiency and improved process management.
John Sarich, FileNETs insurance industry marketing manager, says its Acenza system can be used to process health care, disability and long-term care claims.
The company outsources much of its system to outside vendors, such as optical character recognition technology firms, that can use its software as part of a system built to an insurance companys specifications, Sarich explains.
Claims are a complex process involving the application of numerous company rules for qualification and payment, he notes, and a single claim can involve several providers whose bills arrive piecemeal.
“Our system manages all that information and collects it into an electronic file that the carrier can use for payments, reporting and customer service,” Sarich says.
The typical FileNET system runs in a client server environment and often handles 5,000 to 6,000 users, the company says.
“Weve seen productivity increases in the 200% range in some cases, with an ROI in 18 months or less for total system costs,” says Sarich. “In terms of overpayments eliminated, companies have saved 10 times what the system costs.”
That cost can vary widely, depending on how many users an insurer has, but typically runs from $1 million to $5 million, Sarich says. The system may take 10 months or more to implement.
Captiva Software Corporation, San Diego, works with other vendors, including FileNET, which use its optical character recognition system and other information-capture technology to help their clients manage information.
Captivas ClaimPack software allows insurers claim-handling personnel to use scanners to capture claim information from various documents, then automatically enters the data into the insurers claims-processing system, says Captiva spokesman Rob Jensen. The system can also scan faxed documents and incorporate information handled by company call centers or other sources.
Jensen says the system is able to handle the vast majority of claims automatically, without human intervention.
Once adopting this system, an insurer can typically redeploy half of its claims-handling force, and the return on investment for the companys software is often “under a year,” he adds.
Jensen declined to cite the cost of the system, noting that Captiva charges a licensing fee that varies according to number of forms, volume, computer system and how much training the user needs.
TriZetto Inc., Newport Beach, Calif., notes in a recent press release that over $1.2 trillion is spent on health care in the United States each year, and an estimated $55 billion to $65 billion of that is spent on administrative information technology.
TriZetto licenses software or serves as application service provider for more than 500 health insurance industry customers with more than 90 million enrollees, the company says.
TriZettos application service provider unit for claims management hosts applications from more than 40 vendors for a monthly fee.
Company spokeswoman Audrey Mautner says TriZettos Facets software is used by more than 50 health plans, including a third of the nations BlueCross BlueShield companies.
Although she declined to be specific on price, she noted terms are based on many variables, including whether TriZetto hosts or licenses the software to the customer, the size of the customer, and how many individuals are served on the software.
HealthWare, Trizettos software engineering unit, develops and licenses applications for payers and benefits administrators, she notes.
One customer, BlueCross BlueShield of Tennessee in Chattanooga, achieved $5 million in annual savings from efficiencies realized by its Facet system, Mautner reports.
TriZetto says its HealthWeb product allows health plans to exchange information and conduct business over the Internet with members, providers employer and brokers.
Reproduced from National Underwriter Life & Health/Financial Services Edition, November 4, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.