Digital processing and payment of claims enables faster reimbursement and greater customer satisfaction. It is also becoming a competitive necessity.

For healthcare companies whose employees spend most of their time performing data entry and other repetitive tasks, the Council of Affordable Quality Healthcare (CAQH) Index Report may be a wake-up call. In the U.S. health industry, simply automating claims could save more than $11 billion each year in employee time, freeing workers to pursue other tasks such as patient care and fraud prevention.

Much of the healthcare industry relies on fax, phone, and mail communications to submit claims, request information, and issue checks. These communications require worker time, but streamlined electronic processes could handle most of these tasks automatically. A Commonwealth Fund study had estimated administrative costs in healthcare at $315 billion per year, more than the ten largest state Medicaid programs spent on caring for 46 million people in 2016.

The CAQH Index Report

The Council of Affordable Quality Healthcare is a non-profit alliance with a mission to promote efficiency in the industry. Each year, the organization indexes healthcare’s progress in streamlining claims and other electronic processes. According to the report, progress in 2017 remained slow. In fact, indications suggest the industry is becoming even less automated.

The regression seems to be caused by a 55 percent increase in portal use. Although the Index considers online portals a form of automation for health payors, they are manual work for providers who must log into and navigate a different platform for each plan.

Also, while coordination of medical benefits and claim status inquiries relied more on electronic transactions than the previous year, prior authorization and payment automation actually decreased.

Transaction Costs and Potential Savings

Lack of computerization can be costly, the report suggests. For each manual transaction, researchers calculated a cost of $4.40 more than an electronic transaction and five more minutes of the provider’s time. If a single medical claim requires all seven transactions, from eligibility verification through payment, it takes an average of 40 minutes, costing $15 more than the equivalent electronic transaction. For dental claims, which have even less electronic adoption than medical claims, this works out to almost 30 minutes and $11.75.

This extra processing time adds up to an estimated $11.1 billion per year, no small change for the health industry. Much of these savings, $9.5 billion, would benefit healthcare providers. Health plans can also save, devoting that recovered employee time to focusing on more complex cases, investigating fraud, and other important work.

The biggest potential savings for health plans are in automating eligibility and benefit verifications, at $4.29 direct labor cost per transaction, and claim status inquiries, at $4.35 per transaction. Both these transaction types have high volumes and often involve telephone interactions, requiring large call centers with their associated salary and overhead. Even if medical plans made only their eligibility and benefit verifications fully computerized, this could save $3.7 billion per year in the U.S.

Automation Benefits for Insurance

Not only can automation save health plans time and money, it can create a better customer experience. The quicker a claim is processed, the quicker the customer is reimbursed, and if it is a direct deposit as opposed to a check, even better. Quicker treatment verification also helps patients and their healthcare providers decide on a treatment sooner, completing the procedure so the patient can begin healing.

Fintechs like Dream Payments are tackling the challenge of faster insurance claims reimbursement. By partnering with Mastercard and others, Dream Payments technology allows the insurer to transfer funds to the customer using a mobile money transfer, an ACH transfer to their bank account or a push to their debit card, or a payment to a digital wallet or prepaid card. This not only saves the insurer cheque-processing time, it makes for a better customer experience as they receive the money from their claim faster.

Reducing waste is a benefit to the entire healthcare industry from the plan, to the provider, to the patient. Plans can focus their attention on fraud and other time-intensive tasks, providers can spend less time at a desk and more time helping patients, and patients could spend less money while enjoying a higher quality of care.

Most tasks requiring data entry and decisions based on rules have potential for artificial intelligence (AI) processing. For healthcare plans, there is even greater opportunity when automating accounting, membership, and other areas, and for providers, computerized patient scheduling can free resources.

The Index Report examined the situation for U.S. insurance, but it did not include state-operated Medicaid programs and Medicare fee-for-service, and it did not consider other costs such as vendor fees, so there is an even greater potential for cost savings across the industry. Most of the opportunities in the report hold true for health plans in other countries, such as Canada.

Robotic Processing of Paper Claims

One healthcare services provider faced a huge backlog as the number of claims they were processing increased. They turned to Kofax for help. Using optical character recognition (OCR), Kofax’s robotic process automation (RPA) transformed paper claims into a digital format, organizing the information appropriately. Their solution then evaluated the data for cleanness and accuracy before forwarding the claims for processing.

In addition to improving accuracy, the healthcare company estimates Kofax reduced their claims processing time by 30 to 50 percent compared to their previous manual data entry. Not only was the company catching up on its claims backlog, they estimated they would soon have the capacity to handle four or five times the number of claims, enabling their company’s growth.

Similarly, Accenture helped an auto insurer mechanize their claims processing. Using machine learning, the insurer was able to not only extract data from PDFs but also classify the information. The software extracted data from diverse formats, even layouts it had not encountered before.

More Reasons to Automate

The CAQH Index Report not only demonstrated the overall lack of automation in the healthcare industry, it highlighted the differences from company to company. The top performers overshadowed their peers by more than 30 percentage points in electronic claims submission and more than 70 percentage points for other transactions. Those lagging behind risk losing market share to their more streamlined competitors.

Healthcare IT is at least 10 years behind other industries in terms of philosophy, sophistication, and deployment of advanced technologies.” —   Gary Druckenmiller, Jr., Vice President, Customer Success at Evariant

Not adopting computerization also risks falling afoul of regulations. Since 1996, the healthcare industry has been expected to comply with the Health Insurance Portability and Accountability Act (HIPAA), which sets standards for electronic health records. Even decades after this law was first passed, there is still far to go.

Chatbots for Claims Automation

One insurtech hoping to improve the claims experience for customers, while reducing use of insurer resources, is Elafris. Customers can interact with a chatbot using their mobile phone or Amazon Alexa, not only checking the status of their claim but also submitting their claim. When the customer provides details to the chatbot, it asks follow-up questions to ensure it has all the relevant details.

Lemonade goes one step further, not only helping the customer submit the claim, but automatically processing it. The company illustrates this in action using the example of a customer named Brandon. He contacted their chatbot, AI Jim, about a stolen jacket.

“By ten seconds past the minute, AI Jim, Lemonade’s claims bot, had reviewed the claim, cross referenced it with the policy, ran 18 anti-fraud algorithms on it, approved the claim, sent wiring instructions to the bank, and informed Brandon the claim was closed,” the company related in a press release.

In the past, healthcare and insurance companies may have been hesitant to invest in automating processes. But with $11.1 billion of savings on the line, this just may be the wake-up call they need to make the switch.