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Claims and Coding


How agile is your claims adjudication system?


Business process management technology can ultimately replace core systems at reduced risk.


By Elizabeth Hart T


oday, every healthcare in- surer needs high-performing claims operations. With strict medical loss ratios, growing rigidity around pricing, prior exist- ing conditions elimination and other underwriting changes, there is greater diffi culty in covering operating costs. Claims processing, where the bulk of healthcare payer transactions occur, must get more cost effective. Traditional claims improvement ac- tivities fall into three main approaches: replacement, targeted augmentation and business process outsourcing (BPO). While past approaches have had varying degrees of success, they all fall short of today’s reform-driven needs. It’s no wonder that there are so many strategic conversations about claims modernization going on right now for payers, pharmacy benefit managers (PBMs) and other forward-thinking healthcare organizations. Replacement strategies have per- haps the worst track record. To date, companies have had very few claims platform options. Most of the tradi- tional claims adjudication platforms are monolithic and dated; they don’t necessarily support specialty lines of business and have not kept up with growing healthcare complexity. Far too often, a health plan spends several years and millions of dollars on getting to a new platform, holding other criti- cal business and IT projects at bay, only to experience horrible degradation in their fi rst-pass rates and other claims


22 July 2011


performance metrics once the system fi nally is implemented. Many payers become stuck trying to reclaim previous performance levels instead of applying focus on current market opportunities. The increased rate of change in U.S. healthcare necessitates much greater agility going forward, and healthcare companies will no longer be able to waste time and money just getting back operationally to where they were.


BPM to the rescue Targeted claims processing aug- mentation, on the other hand, has provided major advancement for several organizations – even those that have migrated to or built fairly new adjudication platforms. Using business process management (BPM) technol- ogy to strategically wrap around and throughout their existing technical infrastructure, healthcare payers have addressed numerous challenges in the claims life cycle including pre-adjudica- tion processing, member and provider verifi cation, and eligibility automation. Many health plans also use the tool to apply key business edits to claims, taking the logic out of the adjudication system itself where it has traditionally been hard to modify. Because advanced BPM is rules based and far easier to change than traditional legacy systems, the plans can safeguard straight-through processing by continuously fi ne-tuning their BPM claims edits and adding more edits over time in response to changing market needs and regulations.


HEALTH MANAGEMENT TECHNOLOGY


Health plans have realized staggering productivity improvements and cost effi ciencies through use of BPM auto- mation to orchestrate claims processing across people, systems, data and proto- cols. Industry-leading fi rst-pass rates, dramatic reductions in claims inven- tory and reduced manual errors have been reported by payers using BPM to address operational challenges in both pre- and post-adjudication claims pro- cessing. One plan reported saving $20 million from reducing manual claims intervention after deploying BPM, for example. Robust managerial tools and reports provide greater managerial oversight and operator throughput. Consistency and quality have improved due to advanced BPM’s intent-driven guidance, which steers processors down the right path to fi nalize pended claims. BPM claims solutions can be deployed strategically to specifi c functions and lines of business in a modular fashion at fast rates, with improvement often starting in just 90 days.


Outsourcing certain claim activi- ties through BPO initiatives has also brought measurable cost savings to health insurers, especially when con- tracts between the BPO organization and the healthcare payer are fi nancially aligned to take waste out of the system overall. These activities tend to make sense in commoditized functions – the front and back ends of the claims pro- cess – for improved claims data entry, pended claims processing, fi nancials and EOBs.


www.healthmgttech.com


Elizabeth Hart is principal, healthcare industry solutions, with Pegasystems. For more information on Pegasystems solutions:


www.rsleads.com/107ht-201


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