Better claims recovery can save millions
Cost containment and claims recovery processes aren't always the most exciting of topics. But what if I told you that by focusing on these procedures, one insurer saved more than $10 million in two years?
Albuquerque, N.M.-based Lovelace Health Plan decided to examine its cost containment and claims recovery processes and discovered what many insurers would--significant room for improvement. So Lovelace execs took action, starting with automating processes, implementing better data mining procedures and managing claims smartly.
To learn more about how Lovelace was so successful at reining in millions of dollars, FierceHealthPayer caught up with Karen Eskridge (pictured), chief operating officer for the insurer.
FierceHealthPayer: What problems was Lovelace seeing that made it decide to improve its cost containment and claims recovery processes?
Karen Eskridge: We realized we could do more to improve our processing quality and reduce erroneous claims payments while improving our cost recovery efforts. Today, with the [Affordable Care Act] and other compliance mandates, every health plan is challenged to do more with less. This means at Lovelace, all operational functions are open to inspection, and sometimes we see room for improvement.
Our subrogation and coordination of benefits programs were humming along, but when we took a closer look, we determined there were new technologies and best practices that could improve how we identify and manage potentially recoverable claims cases. We also needed better transparency in every stage of the recovery process. Our reporting was inflexible and didn't allow us to drill easily into individual cases and also see the big picture without a great deal of effort.
FHP: What steps did Lovelace put into place to boost cost containment and claims recovery?
Eskridge: We partnered internally, forming a cross-divisional team focused on cost containment and recovery. And we partnered externally with a vendor that looked holistically at what we were doing and created a plan for improvement that broke down obstacles and identified new savings opportunities we hadn't seen before. We then systematically executed the plan--automating our entire case management process, enhancing data mining for better case identification, and implementing a new reporting and analytics tool that allowed us to closely monitor the status of subrogation and coordination of benefits cases.
When those programs showed measurable progress, we shifted our focus to another area that needed attention--validating and correcting our Medicare Secondary Payer records. Medicare Advantage plans often receive incorrect primacy information from the Centers for Medicare & Medicaid Services regarding members with other coverage. This means in a few months' time there could be millions of dollars in underpaid premiums. But by focusing heavily on tracking the process to drive results, we were able to recover about $16 million from these programs in two years.
FHP: Can you describe how you automated processes? What changes did you make to your data mining and claims management processes?
Eskridge: We automated many processes through our case management tool. Our subrogation process was streamlined and, as a result, 50 percent to 75 percent shorter than what we were previously doing. We tap hundreds of letter templates and outsource our outbound mail, and we enable a variety of ways for members to respond to our questionnaires. This tightened, automated process significantly increased the number of closed cases. All of our plan documents are digitized and stored in our case management system. That means we've gone paperless.
We also moved from good data mining to superior data mining. To pinpoint the ripest recovery opportunities, yet remain sensitive to our member population, we had to go beyond just diagnosis and dollar amounts to identify potential cases. We used intelligence based on a member's prior claims data to improve algorithms and results over time. For example, if a member had a persistent condition (such as chronic back, knee or shoulder pain), this information is applied to all data analysis about their claims. This helps to avoid opening new cases for charges related to the member's existing chronic condition and minimizing disruption.
FHP: What goals do you seek to achieve by improving these processes?
Eskridge: Our goals related to cost containment and cost recovery were to increase the volume of paid claim recoveries and recover them faster and move to cost avoidance. We also wanted to use these processes and technology to identify other areas for potential recoveries, cost savings or avoidance. A web-based case management tool gives us the ability to track the progress of all cases, and we can run virtually any type of report on demand. Now we have the transparency needed to inform our budget, planning and forecasting activities.
Editor's Note: This interview has been edited and condensed for clarity.