How to Increase Claims Processing Automation – 5 Questions to Ask

The healthcare industry is at the crossroads of digital transformation, where innovative technology, such as artificial intelligence (AI) and machine learning (ML), intersects with traditional claims management practices. The roles of technology and human resources within this evolving landscape are pivotal, creating a delicate balance between modernization and the attraction and retention of niche talent and their existing workflows. 

In this post, we explore questions insurers are facing today and the intricate dynamics of healthcare claims management, focusing on the interplay between operational excellence, innovation, and the human element. These elements collaborate to shape the future of claims automation in the healthcare sector, confronting challenges, and offering promising solutions to streamline workflows and automate processes.

Every health plan and administrator is under pressure to reduce healthcare costs, improve patient outcomes and increase patient and stakeholder satisfaction. Because claims processing plays a significant role in control of costs, (potentially) improvement of outcomes, and assurance of patient and stakeholder satisfaction, modernization of claims automation and workflows can play an important part in achieving these goals. 

1. What areas can claim automation help improve? 

Each organization is different, but the market leads us to common themes.

A report by McKinsey identifies pressure on private health plans to innovate in three dimensions of claims management:

• Medical spending

• Customer interactions

• Claims operations

In addition to the interest in reducing the cost of manual intervention in claims operations, this report identifies four drivers of the need for innovation in claims operations:

• Competitive pressure to use technology advances in data processing to lower operating costs

• Growing pressure to reduce traditional paper-based processes

• Pressure to eliminate siloed functions and duplicative infrastructure

• Emerging need to develop contemporary working norms

Further, this report observes that while the vision for future claims operations may be fully digital claims management — 100% “straight through claims processing” — full digitization is not a realistic short-term goal, but taking steps toward a long-term goal of fully digital claims management can result in “significant improvements in efficiency, usability, and customer satisfaction.”

So, what is the #1 problem that you would like to address with improvements in claims automation? Claims automation initiative should focus on addressing one or more measurable performance gaps in claims management efficiency, usability, and member, beneficiary or provider satisfaction.

Some common measurable performance gaps in claims automation include:

• The cost of manual intervention to a line of business compared to an internal or external benchmark

• Claim denial rate compared to a benchmark

• Reducing complaints made by members of an important provider specialty

• The ratio of straight-through claims processing compared to a benchmark

• Claims savings opportunity lost due to the time it takes to make changes to claim edits to (re)align claim processing results with payment policy 

2. How does the goal of business agility not become an obstacle while trying to implement claims automation?  

The health insurance industry in the USA is enormously dynamic, with many hundreds of health plans and many millions of health plan customers across a range of state, federal and commercial marketplaces. Business agility in this industry is one key to success, and business agility depends in no small part upon operational agility.

For example, a health plan is typically focused on developing or adjusting products and launching them into the marketplace as quickly as possible. Health plan operations is one place where product promise is realized, but product promise can only be realized after necessary changes are made to align operations with product. Operational changes often include adjustments to, or improvements in, claims automation. 

Business agility depends upon operational agility. Since a health plan or administrator may automatically process and pay as much as 90% or more of its healthcare claims via straight-through processing, agility in claims automation, including modernization or improvements in claims automation, is key to keeping pace with business agility. 

3. How can claims automation reduce the number of manually processed claims and create better efficiency? 

A health plan or administrator may automatically process and pay as much as 90% or more of healthcare claims via straight-through processing. The balance of claims processing requires manual intervention. One of the great values of straight-through processing is that it institutionalizes business knowledge, which is increasingly important as healthcare’s reimbursement models rapidly evolve, and the health plans experience continuous change in their network ecosystems. 

Excessive or unnecessary manual intervention in claims processing should be avoided, as it dramatically increases claim processing cost, increases the risk of errors and delays in claims administration, and may also harm patient, provider and stakeholder relations. A health plan must strike a balance between straight-through claims processing and manual intervention to deliver a safe, effective and consistent experience for patients and providers. 

One consistent goal of claims management is to improve the rate of straight-through processing, moving the goalposts ever closer to what is an unachievable 100% automated claims processing. Through the introduction of innovations like AI and other techniques, it becomes possible to identify new swaths of now excessive or unnecessarily pended claims that can be automated. 

For example, many health plans are now employing advanced computing techniques to fill gaps in patient information in a claim, approve prior-authorization requests, and make complex clinical recommendations, without human intervention. There are many commercial off-the-shelf mid-market software offerings for these types of solutions. However, the leading trend with larger plans is to reduce technical debt and pursue an applied intelligence platform approach, leveraging opportunities to apply advanced analytics, AI and ML while keeping claims management software and development in-house. 

An applied intelligence platform approach to modernization of claims management allows a health plan or administrator to develop sophisticated capabilities on a common set of technology tools that becomes more capable, intelligent, and nimble with every new addition to it. 

Think of it like your kitchen: You outfit your kitchen with certain must-have items and complement that basic toolkit with gadgets to suit meals that you commonly make. As your taste evolves or a new dietary restriction enters the home, you do not hire a contractor and renovate the kitchen. Instead, you adjust the capabilities of your platform. The variety of challenges in claims processing and health plan administration, overall, lend themselves to endless possibilities via advanced technology platforms, rather than reliance on vendors or IT resources (the kitchen contractors).  

4. What are the key benefits of using advanced analytics, AI and/or Machine Learning to improve claims processing? 

Modern health insurance claims automation may include the use of business or decision rules to institutionalize claims processing logic in a form that is more easily understood and managed by business users and non-technical stakeholders. By adding advanced analytics to claims automation, a health plan or administrator can further improve their claims decision making with applied intelligence regarding procedures, amounts billed and paid, members or beneficiaries and providers, etc. that leverages a decision asset like an analytic model. 

Advanced analytics, AI and machine learning can take many forms. Despite the current popularity of the topic of AI, the use of AI in health insurance claims management – for example, advanced analytics that mimic human intelligence for specified tasks like identification of suspicious claims – is not new. However, the popularity of the topic of AI has generated concerns about its use in healthcare and health insurance. 

For organizations that want to use analytics, AI and machine learning (ML) in claims automation, there may be human and technology challenges to getting their analytics into production. If your organization is struggling in this regard, you are not alone. Getting analytics out of the data science lab and into production is a common challenge in many industries.

Concerns about advanced analytics, AI and machine learning among health plan stakeholders or customers may include concerns about AI explainability - understanding why an AI model made a given decision. Or there may be concerns about AI accountability – for example, the potential for loss of privacy when a member’s or beneficiary’s protected health information is used to build an AI model. Or there may be concerns about AI ethics – for example, the use of ethically sensitive data elements like race in claim processing decisions. Concerns about explainability, accountability and ethics can create pushback from customers and stakeholders about the use of advanced analytics, AI and machine learning in claims automation. 

Despite these kinds of concerns and obstacles, every health plan administrator feels pressure to use advanced analytics, AI and machine learning to improve claims automation. From FICO’s perspective, the concerns of customers and stakeholders may be successfully addressed by adopting a “Responsible AI” approach to safely apply machine learning and artificial intelligence with explainability, accountability and ethics. Technological obstacles can be addressed by using digital decisioning capabilities that can leverage advanced analytics, AI and machine learning in their “native” form without having to manually convert these decision assets into computer code. 

5. How can innovation in claims management play a part in attracting and retaining knowledge workers and niche specialists?

Every organization has two types of people: the business as usual or “caretaker”, and the growth minded or “innovator”.  Some of us are one, or the other, at various times. There is an equal need for both types of people, but they have vastly different interests when it comes to talent acquisition and management. Each is subject to healthcare burnout, which is common in the industry. Talented contributors may find themselves in a place where they feel marginalized, overworked, and their strengths underutilized in the name of “streamlined business processes.” Many will be skeptical any time an innovation is introduced for fear of either being displaced or being dragged into another failed attempt at reinventing the proverbial wheel.

Claims management requires niche specialty knowledge not only with the subject matter at hand but also within areas of specialty billing, such as with surgery, anesthesia, emergency, liability claims, etc. These important team members can be motivated by providing them with opportunities to engage with cutting-edge technologies, specialized training programs, and access to advanced data analytics tools. Leaders can also leverage innovation to address burnout and attract niche specialists. 

In summary, the future of healthcare claims management stands at the junction of innovation and tradition, propelled by the dual forces of advances in technology and human expertise. As we navigate this transitional phase, striking a balance between innovation and the human element becomes critical. This delicate equilibrium shapes our ability to attract and retain the two vital human resources in health insurance. The adoption and integration of AI and machine learning in our legacy systems promise unprecedented efficiency and accuracy. However, the transition is not without its challenges, as resistance and apprehension towards these innovations persist. With skilled leadership and a focus on operational excellence, we can manage these interests, foster a conducive work environment, and revolutionize healthcare claims management. 

How FICO Can Help You Manage Claims and Achieve Better Efficiency

• Learn how FICO drives smarter, faster, and more insightful decisions for healthcare insurance providers 

• Read Transforming Digital Healthcare Claims Administration | FICO

• Explore FICO Platform

• Discover why health plans and administrators worldwide are turning to FICO platforms