Claims Process Automation: Modern Solutions for Insurance Claims Management
15 min read
60-Second Summary
The blog discusses Claims Process Automation in the insurance industry, highlighting its importance in modernizing claims management. Claims processing, which is both data-intensive and repetitive, often involves substantial manual tasks, leading to inefficiencies and errors. The article points out that claims leakage, which is the difference between actual and ideal expenses, accounts for approximately 5-10% of claims costs, amounting to tens of billions of dollars annually for US-based insurance companies.
Modern insurance claims processing continues to become increasingly complex –many different types of data need to be factored in when processing a claim on top of all the types of technology available to insurers.
With all of this in mind, how do you maintain the speed and accuracy necessary to retain customers?
Stop relying on outdated legacy systems to manually manage paperwork and data entry that deteriorates speed and accuracy, leaving your policyholders wanting a better resolution from their insurance company.
Automating many of the manual and redundant tasks included with the claims adjudication process not only helps the adjuster process claims more effectively, but helps save time, improve accuracy, and increase the company’s profitability.
In this blog, we’ll discuss how automating outdated legacy claims processes and manual tasks will help solve many of the challenges insurance companies face daily.
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What is Claims Processing?
Claims process automation refers to the implementation of technology used to automate manual steps in claims processing, adjudication, and management. It can be used for virtually all types of insurance claims. This type of automation helps to lower operating costs, streamline settlements, reduce processing times, decrease claims leakage, and improve the overall claims management process. Claims process automation allows decisions to be made up front as information can be more easily digested and analyzed.
With new tools such as RPA (robotic process automation), AI (artificial intelligence), anti-fraud software, drone footage, and photo evaluation software, insurance companies are already on track to implementing a fully digital workflow supported by automation.
But what do you do about the paper part of the process that’s left behind?
What is Claims Leakage?
Automating the claims process doesn’t mean eliminating people from the claims management process altogether. It involves using technology to streamline manual processes such as document scanning, mail opening, and data entry which allows insurance adjusters to focus on more value-adding tasks and delivering high-quality customer service.
CLAIMS LEAKAGE REPRESENTS ROUGHLY 6% OF TOTAL CLAIM PAYMENTS ACROSS THE INDUSTRY, COSTING $67 BILLION A YEAR FOR US-BASED INSURANCE COMPANIES ALONE.
COMMON CHALLENGES OF CLAIMS PROCESSING (AND HOW TO FIX THEM WITH AUTOMATION)
It’s no secret that claims adjudication comes with many challenges for both insurers and policyholders. A few common challenges with insurance claims processing and how automating the data capture process can help are:
1.Large Amounts of Data Entry
It’s quite common for insurance claims to require a massive amount of information during the processing stage. When this data is managed using paper-based documents, records, or mail, it takes a lot of time and effort to not only collect this data, but to enter it correctly and accurately into the company’s records system. Claims processing is prone to errors due to the amount of data from multiple sources needed to create and process a claim, including information from the policyholder and other companies.
Using OCR (optical character recognition) software to automatically identify and ingest data from documents and mail during the scanning process can significantly help speed up claims adjudication and resolution. When choosing software, consider compliance with regulations – does the software help to meet HIPAA or GDPR regulations by handling data appropriately?
Having a dependable data validation system in place will also ensure data entry has been completed accurately. High-speed capture systems paired with modern software can help catch errors quickly and improve processing rates. This can be further optimized after establishing workflows and identifying patterns to streamline the claims process further.
2. Manual and Redundant Tasks
Manual and redundant tasks may seem like a necessary evil, but they contribute to higher claims leakage, slower processing times, and lower customer satisfaction. Manual processes such as sorting documents and mail to multiple levels, stapling pages together, inserting patch sheets, and keying in data were developed to prevent costly mistakes and improve accuracy. Fortunately, new and improved types of technology are available. Doing everything by hand and living on outdated systems to prevent mistakes is no longer the only option.
Different types of automation that remove the need for these manual steps, contributing to a more streamlined, accurate, and effective claims management process include:
- Implementing scanners with OCR-based software to automatically pull and categorize data from documents, mail pieces, and other types of items including license plates, X-rays, and prescription bottles.
- Choosing scanners that can handle a variety of mixed document types, sizes, and weights with minimal prep or sorting required.
3. Multiple Touchpoints of Sensitive Information
You already know insurance claims require sensitive information to be processed accurately. Any errors pose a risk of negative consequences, such as unnecessary administrative costs, hefty fines, or even lawsuits. The more touchpoints needed to process information for claims adjudication, the more sensitive information is exposed to additional parties, which risks HIPAA or GDPR regulations being broken.
The solution: create an automated, streamlined workflow that requires minimal prep work and data entry with a dependable data validation system.
MORE TOUCHPOINTS = MORE RISK
Taking a centralized approach to process claims documentation will also help communication and organization. Implementing a central document scanning solution that can limit prep work by processing difficult, damaged, or varied documents at high speeds can help remove the need for multiple people to repair or presort documents and drastically reduce touchpoints.
4. Cumbersome Paperwork and Mail
Even with digital technology integrated into every aspect of our lives, the use of paper remains entrenched when it comes to sending mail and retaining information. Policyholders still need to mail or fax over their own documents, health providers continue to need to provide proof of medical services, and so on.
So how do we manage the amount of paperwork involved in the process?
Having an efficient document imaging and mail handling process can help limit the need to manually sift through paperwork for information. Implementing a scanning platform equipped with software that enables documents to be accurately sorted after scanning will help to limit manual filing, sorting, and prepping steps that hold the process back. Having batch validation capability where the accuracy of data is validated will help to ensure paper and mail are handled appropriately.
Implementing a scanning platform that includes automated mail opening will allow you to scan documents right from the envelope, mitigating these challenges.
5. Slow and Expensive Claims Resolution
While many factors contribute to slow and expensive claims resolution, it’s a huge issue for insurance companies. Policyholders and other stakeholders want to know the status of a claim throughout the entire process and where information is located. Claims can be slowed down by all the manual processes, document handling, and data entry needed to resolve a claim.
Depending on state laws, open claims need to be processed within certain timeframes to avoid penalties and meet policyholder expectations. For example, in New Jersey, claims need to be settled within 30-45 calendar days after filing (depending on the type of claim) and claims need to be acknowledged within 10 business days.
Introducing automation into the claims process, whether through software, scanning platforms, or mail sorting systems can speed up the process and meet service-level agreements. Keep in mind that the entire claims process should be considered when introducing a new workflow, including administrative processes, to avoid inconsistencies that can pose future challenges.
Labor Shortages
Labor shortages continue to be a difficult challenge for all industries, and insurance is no exception. According to Insurance Business Magazine, insurance companies have between a 12-15% turnover rate, with some companies operating with higher rates as voluntary employee turnover spikes.
In cases where companies are struggling to find and retain labor, automation can fill the gap in maintaining necessary productivity levels to keep up with claims processing and resolution.
As mentioned before, too many touchpoints can leave sensitive information vulnerable. Automating manual steps can limit these touchpoints.
Benefits of Automation in Claims Adjudication
To summarize, introducing automation into the claims process can help solve many of the challenges providers experience. Some key results of claims process automation:
- Improved Claims
- Management
- Enhanced Adjuster
- Performance
- Higher ROIs
- Reduced Operational Costs
- Better Quality Customer
- Experiences
- Fast Claims Completion Time
- More Information Available to Adjusters Faster
- More Competitive Advantages
- Decreased Loss Exposure and Risk
How Does Automation Impact the Insurance Industry and the Claims Process?
With new tools, such as artificial intelligence (AI), automated document scanners, and advanced software, insurance companies and healthcare providers need to adopt new technology to keep from falling behind their competitors, or worse, losing their customers. According to Octamile, 87% of customers say claims experiences influence their decision to stay with an insurer.
Automation works to enhance speed, accuracy, and fraud detection, all while making the claims process less of a headache. Be proactive, and consider end-to-end solutions that streamline the entire claims workflow now rather than later.
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