Business process management technology can ultimately replace core systems at reduced risk.
Today, every healthcare insurer needs high-performing claims operations. With strict medical loss ratios, growing rigidity around pricing, prior existing conditions elimination and other underwriting changes, there is greater difficulty in covering operating costs. Claims processing, where the bulk of healthcare payer transactions occur, must get more cost effective.
Traditional claims improvement activities 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 perhaps the worst track record. To date, companies have had very few claims platform options. Most of the traditional 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 critical business and IT projects at bay, only to experience horrible degradation in their first-pass rates and other claims performance metrics once the system finally 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 augmentation, 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) technology to strategically wrap around and throughout their existing technical infrastructure, healthcare payers have addressed numerous challenges in the claims life cycle including pre-adjudication processing, member and provider verification, 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 fine-tuning their BPM claims edits and adding more edits over time in response to changing market needs and regulations.
Health plans have realized staggering productivity improvements and cost efficiencies through use of BPM automation to orchestrate claims processing across people, systems, data and protocols. Industry-leading first-pass rates, dramatic reductions in claims inventory and reduced manual errors have been reported by payers using BPM to address operational challenges in both pre- and post-adjudication claims processing. 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 finalize pended claims. BPM claims solutions can be deployed strategically to specific functions and lines of business in a modular fashion at fast rates, with improvement often starting in just 90 days.
Outsourcing certain claim activities through BPO initiatives has also brought measurable cost savings to health insurers, especially when contracts between the BPO organization and the healthcare payer are financially 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 process — for improved claims data entry, pended claims processing, financials and EOBs.
Benefits and pricing are keys
The current business drivers in healthcare are creating new areas of differentiation within claims processing that influence the approach organizations should take towards today's claims modernization efforts. Healthcare legislation is driving substantial and urgent change, compliance is becoming pervasive and market growth is focused in high-touch, high-customization segments, including increased competition for national business. There is growing support for new delivery and provider payment models, such as patient-centered medical homes, accountable care organizations, pay for performance and other outcomes-based reimbursement vehicles. Product complexity is growing, with value-added and service-focused benefits built for retail markets, just as price and traditional benefits become increasingly standardized. As a result, the greatest areas for change and differentiation going forward will be in benefits, pricing and patient responsibility — core claims processing components that have yet to be optimized by any modernization efforts.
The quintessential claims adjudication platform, one that is quick to install and easy to modify, has yet to materialize. Outsourcing is fine for commodity-type activities, but not for differentiating areas where companies must have the control to try new things and innovate in attempts to create market advantage. The best bet for claims transformation today is targeted BPM augmentation applied to the benefits and pricing components of claims adjudication, as well as the product and provider contracting processes that support them.
The advantage to payers of modularly applied claims technology in leveraging legacy investments and providing speed to value in this era of changing and competing business and technology priorities has been noticed by leading industry analysts. One healthcare analyst lists common workflow, business rules and data models, integration services and security as key elements to the emerging technology best suited to enabling healthcare payers to respond to the demands of the reforming market. BPM technology, which fits these criteria and has proved itself across numerous claims challenges, now must be applied to the new and most complex components of the claims process of benefits, patient responsibility and pricing. BPM technology, applied strategically to re-invigorate sluggish claims adjudication platforms, can ultimately replace core systems at reduced risk while also facilitating innovation and streamlining inefficiencies.
Elizabeth Hart is principal, healthcare industry solutions,
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