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From the June 2003 Issue |
Lights, Camera—and West Coast health plan uses information technology to increase its claims volume, reduce labor expenses and become a provider of outsourced services where it used to be a consumer. By Anwar Abbas Some people believe good things come to those who wait; others believe good things come to those who make them happen. We support the latter premise. Motion Picture Industry Pension & Health Plans (MPI) of Studio City, Calif., is a Taft-Hartley trust fund exclusive to employees in the motion picture industry. With 120,000 covered lives, the organization processes approximately 850,000 physician visit claims annually (not hospital claims). Just three years ago, we set in motion a plan to dramatically alter the future direction of our business and to become a small health plan that exercises the IT savvy of a giant health plan. It didn’t happen overnight—but it did happen. Stop the Bleeding Back in 2000, MPI was battling skyrocketing labor costs, ineffective claims software and antiquated hardware, and these problems were rooted in the same area: claims processing. Since MPI’s existing software system could not electronically adjudicate claims, the 850,000 annual claims load had to be adjudicated by claims adjusters, resulting in an excessive number of full-time employees (FTEs) and overtime pay expenses of about $60,000 per year. At the time, we had 35 claims processors—and a three- to four-week backlog of claims, totaling between 30,000 to 45,000 claims. It did not seem reasonable to hire additional processors and pay the associated salaries and benefits to eliminate the backlog—yet we knew that reducing the backlog was essential for providing better service and quicker payments to providers and members. Concurrently, MPI received notification that its hardware vendor would no longer support the hardware platform we relied upon, leaving us to either implement a costly upgrade or be unsupported by the vendor. We hired an outside consultant to analyze our claims business processes and to make recommendations. The consultant’s findings amazed us: 68 percent of our claims paid $100 or less, and 88 percent had three lines or fewer. In short, MPI was well-positioned for transition to the realm of electronic claims processing. Our initial selection criteria for new claims administration software included:
Going to Bat We submitted requests for proposals to six companies, and from this group we narrowed the field to two: QCSI’s QMACS claims payer system and a Unix-based claims system. From a strict ROI perspective, QMACS was the pricier of the two systems, requiring a full year to realize ROI, as opposed to eight months with the Unix-based system. This was a major point of contention with our administrative committee, and we had to prove to them that QCSI was the better long-term choice for our organization. We presented several key points to the committee. First, QMACS is Microsoft-based, and implementing it into our existing, homogenous Microsoft infrastructure would be a smoother transition. Secondly, the training costs associated with training our IT, operations, benefits and claims staff on a Unix system made its purchase cost-prohibitive. Third, MPI had future business plans to process its own hospital claims, so the new system had to be flexible enough to handle processing of those institutional claims. Finally, we presented to the committee MPI’s grander vision for servicing Taft-Hartley plans in the entertainment industry. To undertake this venture, our new claims system had to have incredible scalability. The committee agreed with our reasoning and supported the QMACS purchase. All Together Now Implementation began in late 2000 and took place over 18 months. Prior to implementation, the operations staff, headed by Director of Operations Judy Taylor, and my IT staff had no interaction. I realized that the cornerstone of a successful implementation would rest solely on the teamwork between these two groups. To facilitate this teamwork, I physically moved my IT implementation staff right into the middle of the operations staff location. While there was some initial concern from both teams, this relocation was crucial to creating a cohesive unit for the implementation. We set our go-live date for Jan. 1, 2002, and forged ahead. Since QMACS had never been implemented in a Taft-Hartley plan prior to MPI, there was a learning curve that included the specific differences in Taft-Hartley benefits, accumulators and coordination of benefits processes, compared to a typical health plan. Taylor set up a “war room” to address these differences with QCSI. In instances where the system needed to be configured to process specific Taft-Hartley logic, Taylor and her staff discussed the business logic with QCSI, which developed the technical logic to satisfy MPI’s needs. For the next nine months, Taylor and the implementation team worked to understand the new system, configure the setup and integrate the new claims system with MPI’s in-house eligibility system. Throughout this period, the IT and operations staff underwent extensive three- and four-week training and cross-training sessions in client/server architecture, Microsoft SQL, claims processing, as well as QMACS training. QCSI provided product-specific training, and MPI provided the technical training using its own IT team. Reaping the Rewards In the past, MPI processed every claim manually, which presented numerous opportunities for errors and delayed or denied payments. However, within the first year of implementing QMACS, MPI auto-adjudicated 225,000 claims annually, more than 25 percent of its total claims. More significant, though, is the fact with within this new, auto-adjudication environment, through attrition and reassignment, we simultaneously were able to reduce our claims staff by 50 percent, saving MPI $1 million dollars in claims processor costs. How? Productivity from the remaining claims processors more than doubled. Prior to the new system, each staff member processed 115 claims a day, but after implementation, the rate jumped to 250 claims per processor per day. The increase was partly attributable to the system’s graphical user interface, which is significantly more conducive to heads-down data entry than our earlier green-screen system. Lack of downtime is another critical productivity factor. In the year since go-live, QMACS has maintained 100 percent uptime. Our prior system experienced system failures at least every other day, with detrimental consequences to the efficiency rate of claims processors. Each hour of downtime calculated for a 40-member work force represents the productivity loss of a full-time employee solely to system failure. In 2003, we are preparing to process hospital claims, further decreasing our claims processing costs. Currently, MPI outsources its hospital claims to an ASP, costing us nearly $2 million annually for about 200,000 claims. When this function comes in-house, our projected annual savings will total $3 million in the subsequent year. Furthermore, we can finally begin to realize our strategic plans of providing ASP services to other Taft-Hartley plans in the entertainment industry. In effect, instead of using an outsourcing service, we will become an outsourcing service for other health plans. Since migrating to auto-adjudication, we also have reduced the volume of backlogged claims by 50 percent. Simultaneously, we have increased accuracy in claims processing by 30 percent, resulting in far fewer pended or denied claims and necessary resubmissions. We have even saved an additional $100,000 per year by “bulking” checks to providers. Instead of sending multiple checks to one provider, the amounts are now combined into one check. We save on printing, processing and postage. Our utilization of QMACS has helped put MPI exactly where it wants to be. We have recaptured $3 million per year in labor and outsourcing expenses we no longer have to spend, and we will soon be able to accept outsourced work from other Taft-Hartley plans.
Anwar Abbas is the CIO of Motion Picture Industry Pension & Health Plans, Studio City, Calif. © 2003 Nelson Publishing, Inc |
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