Health plans are hard at work squeezing the phones, faxes and envelopes out of the business of processing health claims, and it can’t come a moment too soon. New laws and customer expectations are placing a premium on adjudicating claims quickly, cheaply and electronically.
A recent survey by America’s Health Insurance Plans shows that 93% of claims were processed within 14 days of receipt, and 98% within 30 days. The average cost of processing a claim was reported at $1.36, and electronic claims adjudicated automatically—without human intervention—cost just under a dollar. Significantly, the percentage of automatically adjudicated claims rose to 79% in 2011 from just 37% in 2002.
Those gains for health plans represent more than basic business efficiency, says Susan Pisano, AHIP’s vice president of communications.
“There’s a great focus across the health care system on what people like to call experience of care,” she says. “Certainly the ability to adjudicate claims quickly, even at the point of service, really helps to improve the experience of health care for consumers, and helps to improve the experience of delivering care for physicians.”
In the quest for ultimate efficiency and satisfied patients, electronic processing capabilities are being developed and implemented where more is done before a patient walks out the door.
“A lot of the work is done ahead of time–you walk in, they know that your co-payment is X, the payment from the health plan will be Y, and it’s done at the point of service,” says Pisano.
Administrative efficiency is becoming necessary in other ways. For example, under the Patient Protection and Affordable Care Act, health plans can’t spend any more than 15% of premium dollars on administrative overhead and profits, or if they do, they’re ordered to rebate the excess back to their members. This pressure is forcing an even greater examination of administrative savings, says Dwight Klunziger, chief operating officer of Healthx, a firm that develops new ways for plans to use electronic means for claims.
How fast claims are turned around depends on providers sending their claims in soon after the service dates. The track record on that has improved notably: The percentage of claims received by health plans within two weeks of the billed service climbed to 66% in 2011 from 58% in 2009 and 45% in 2002, according to the AHIP survey. And the percentage of claims received electronically by health plans reached 94% in 2011 compared with 44% in 2002.
A turning point for the use of electronic insurance transactions was the federal requirement in October 2003 to use standard data sets included in the Health Insurance Portability and Accountability Act. Both providers and health plans now had one way to structure health claims and conduct other tasks by computer such as determining a patient’s eligibility for services and explaining the adjudicated bill.
But although the number of claims submitted on paper declined from 56% in 2002—before the HIPAA effective date—to 25% in 2006, Pisano says the “…bigger deal is just the natural progression of things with the rise in technology.”
Younger physicians coming into the work force were more likely to use computers and also more apt to join large medical groups, where office managers and ready computer systems provided “…more in the way of infrastructure, better support than if they’re an individual practitioner,” she says.
Electronic claims submission alone won’t make processing any faster unless providers are adept at getting their claims in quickly, and that’s one area with room for improvement. For example, according to the survey, 16% of electronic claims were received by health plans more than 30 days after the service. For claims still submitted on paper, 54% came in more than 30 days after the billed care was rendered.
For health plans seeking to further increase their efficiency, electronically communicating the resolution of claims to their members is yet another opportunity, says Klunziger. That requires a plan to push members to a web portal to download documents such as explanation of benefits (EOB).
For the Southeastern Indiana Health Organization, or SIHO, Healthx sent out email invitations to those members not already electing to receive documents electronically, with a personalized message from the health plan and a link that took them to the website for signup. Within 90 days, SIHO had realized a 57% user adoption rate and a 50% cost reduction in the EOB end of claims processing by going paperless, says Klunziger.
Though there’s more that health plans can do to wring inefficiency out, AHIP says it’s encouraged about the surge in efficiency gained so far.
The trend established in its survey “…demonstrates that health plans are playing a leadership role in improving claims processing,” says Karen Ignagni, AHIP president and CEO, in a prepared statement. “Increasing the percentage of claims submitted and paid electronically will reduce paperwork, improve efficiency and help bring down costs.”