Insurance claims administration is one of the most critical aspects of insurance processing. Whether you are an insurance carrier or an agency, you want your insurance claims management to be top-notch, timely, and free of errors. After all, delayed or erroneous insurance claims management can lead to multiple problems like unhappy customers, fraud, expensive lawsuits, and negative damage to their brand. Over the years, there has been a substantial increase in the outsourcing of insurance claims administration services. This trend is likely to continue. Let us look at a few reasons why there will be further growth in insurance claims outsourcing.
Availability of Trained Claims Adjusters & Managers:
The process of claim adjustment involves skills and domain knowledge. Traditionally, these skills were limited to local regions, thus making outsourcing of claim adjustment unviable. However, over the years, more and more remote workers have trained in claims adjustment, and have only become better at the process. These professional claims adjusters have garnered tremendous experience by handling a large number of claims and thus have become highly skilled at processing claims of different kinds. Whether its claims in health insurance or auto insurance experienced claim adjusters thoroughly understand the procedures for different types of claims administration.
Furthermore, these claim adjusters are led by a team of professional unit managers who use real-time analytics to manage their process operations. This way, the managers can keep a close eye on the work in progress, and whether the process moves smoothly. If they see a delay at a particular claim adjusters’ end, they quickly intervene to distribute their workload to others. This way, a lot of claims are processed at scale, while ensuring high quality and adherence to timelines.
Better Fraud Detection:
According to the FBI, the total cost of insurance fraud (excluding health insurance) is over $40 billion per year. A large portion of this relates to property/casualty insurance. There are different reasons for fraud. Sometimes, customers engage in fraud willingly to make an extra buck. Sometimes, they do fraud to take revenge from insurance companies. For example, in auto insurance, causes of fraud can range from staging fake accidents to submitting claims for non-existing injuries/damages.
Fraud is not restricted to customers alone. Unethical healthcare providers and attorneys also contribute to fraud to unfairly charge insurance providers. In healthcare, common causes for fraud include:
- Billing for services not provided
- Using an erroneous code (upcoding) to charge a higher amount for a service
- Filing duplicate claims
- Performing procedures which are not needed
- Billing bundled offerings separately to inflate their costs
Insurance claims management companies hire professional claims adjusters who are highly skilled at detecting discrepancies in claim forms. Fraud detection is not restricted to manual processes alone. Providers of insurance claims administration services also adopt intelligent data analysis and machine learning to detect fraudulent claims. The use of predictive models helps in identifying frauds based on past data. The systems get more intelligent as they process more and more claims, thus increasing the accuracy of fraud detection. This is a unique advantage for insurance claims outsourcing companies because they are processing claims in large amounts. As a result, they are getting more and more data, and their predictive models are getting more influential in fraud detection. Suspicious claims are flagged instantly, leading to better scrutiny.
These providers also have stringent processes for conducting background checks on claimants, checking their credit scores, and so on. In specific cases, where more information is needed to validate the authenticity of claims, Insurance claims management companies also collaborate with professional private investigators to get reliable information.
Fewer Claim Disputes and Lawsuits:
If the health insurer is not paid the claim, they think they deserve it, and it can likely lead to lawsuits. Insurers have a right to appeal against unsatisfactory claim amounts or denied claims. As per a 2019 report by the National Association of Insurance Commissioners (NAIC), of all the complaints filed by insurers, a vast majority or 18% were because the claimants were not satisfied with the claim amounts offered by insurance providers. And more than 14% of complaints by insurers were due to denial of claims. As you can see, a whopping 32% of complaints are related to unsatisfactory claims settlement or denial of claims. If these complaints are not resolved, they can further lead to expensive lawsuits. Of the total complaints, the highest (39%) are in the category of health and accident insurance. The second-biggest category is auto (32%), and the third is homeowners (more than 20%.) Many believe claim denials have become a mini-industry. According to a study, the annual value of challenged claims ranges from $11 to $54 billion per annum.
One key cause of denials of claims is a discrepancy in information. At times, the patient’s records are not updated in the information system of the insurance provider. For example, in the case of auto insurance, there may be a discrepancy in a patient’s narration of events around the accident. A simple check of calling the patient and getting the missing information at this stage can prevent costly legal hassles at a later stage. Professional insurance claims management companies have rigid processes in place to ensure no key information is missed out at the verification stage.
Professional Claims Management:
The process of claims management involves several steps. It involves a thorough analysis of claim forms for accuracy and providing a detailed report on resolution/denial of claims. Some of the things checked during this stage include:
- Whether the claimant or the beneficiary is eligible for the claim?
- Whether the healthcare services undertaken by the beneficiary were absolutely essential?
- Is the healthcare provider a part of the approved network list?
- Is there any duplication in the claim?
Professional insurance claims management companies also support insurance companies in verifying patient insurance coverage by medical/auto offices. With insurance claims outsourcing, insurance companies do not have to worry about carrying out these processes themselves. They can leave this job to specialists and focus on their core business.
|Claims Administration Trends Induced by the Pandemic |
—Remote claims processing will become the most enduring solution to claims administration. It comes with potential benefits such as lower costs related, enhanced customer experience, and accelerated claims processing.
—Adjuster based assessment of catastrophic damage will be a thing of the past. Carriers will use tech-based assessment like drones to capture remote snapshots of losses and process claims accordingly.
—Telemedicine consultations will become the most acceptable form of treatment and will stay long after the pandemic is over. Health insurance claims administration will involve evaluating and reimbursing for treatments availed remotely.
—The COVID-19 pandemic will accelerate the digitization of the insurance industry and claims administration in particular will make a gradual shift to digital claims processes with the help of next-generation tech like AI, analytics, and automation.
—As remote claims administration is a relatively new concept with unknow perils, fraud activity is likely to increase by many folds. The onset of the pandemic saw suspicious claims grow to nearly15 %.
Support Beyond Verification:
A lot of complaints also happen because patients may not be aware of what is covered in their policy. According to a report, more than three-quarters of patients find medical bills and explanation of benefits confusing. Many consumers do not understand the meaning of basic terms like deductibles or provider networks.
Outsourcing of insurance claims administration services is not restricted to verification of information alone. They also process the claim and provide supporting information on deductibles, coinsurance, and copays. They understand that claims administration is not simply looking at the expenses incurred or the original claim amount. For example, if the patient has availed services from a Preferred Provider Organization (PPO), they get services at reduced rates. Such factors also need to be looked at during the claims administration process.
Error-free calculation of total claims payable, after looking at the various factors, gives a clear idea to the insurance provider of the exact amount to be settled. They get peace of mind that at a later stage, even if a customer were to contest the claim amount because of lack of sufficient knowledge, they know their initial calculations were accurate.
Streamlined Operations with Automation:
The NAIC report mentioned above cited delays in settlement of claims as to the second biggest reason for unhappiness among insurers. By outsourcing insurance claims administration services in the USA, insurance companies get access to automated solutions, thus improving their efficiency. For example, major insurance claims management companies providing services to clients in the USA have an in-depth understanding of standards set by the Association for Operations Research and Development (ACORD.) This includes an understanding of all aspects of ACORD, including their wide library of forms, such as Form 25 (Certificate of Liability Insurance), Form 27 (Evidence of Property Insurance) & many more. Professional insurance claims management companies provide automated solutions to fill up forms without any manual work. They also use technology for automating workflow management and business continuity. As a result, insurance providers can streamline their claims administration process and get an uninterrupted supply of claims handling. They do not have to worry about local holidays, or any time zone issues. They can be at peace that their claim adjustment process is going round the clock.
The annual healthcare spending on billing and insurance costs in the US is expected to be $496 billion. One of the elements of this figure is the cost incurred on claims submission, reconciliation, and payment processing. Given the high amount being spent on this process, any efficiency in this process can lead to substantial gains to insurance providers.
Costs have become particularly important because of COVID-19. According to a report by Willis Towers Watson, a global financial firm, COVID19 could cause general insurance losses of between US$30 billion and US$ 80 billion. Insurance companies have to deal with a sudden surge in claims, which were not factored into their original models. These could put substantial financial pressure on insurance firms.
In such a time of financial crisis, outsourcing insurance claims management services can help both insurance agencies and carriers reduce their operations cost. Insurance claims management companies have remote teams of professional claims adjusters who can process a large number of claims at substantially lower costs. Insurance providers can get the same high quality of services like in their home country by outsourcing their claims administration process.
Cost benefits also extend to eliminating inefficiencies in calculating claim amounts. Professional claims management helps insurance providers in settling exact claim amounts and minimizing losses either due to overcompensating for claims or legal fees due to undercompensating/denial of claims.
Furthermore, they carry a detailed analysis of in-network and out-of-network coverage to ensure the claimants get only the benefits that are part of their plan. This way, insurance companies get a lot of savings over time by outsourcing insurance claims administration services.
Benefits of Insurance Claims Outsourcing During COVID-19
During COVID-19, insurance carriers witnessed a rapid surge in customer support queries. Some insurance providers saw a 1000% increase in queries. This has put a lot of pressure on the process of claims administration. Here are a few ways outsourcing can help insurance providers in streamlining insurance claims administration services.
The Rapid Transition to Remote-working Environments:
Due to lockdowns in various parts of the world, insurance carriers are faced with an unprecedented resource crunch. While there are more queries to be handled, there are fewer trained resources to handle queries and claims. Outsourcing insurance claims administration services can help in rapidly scaling remote teams to ensure efficient claims administration. Furthermore, some insurance claims management companies also provide back-office support to handle the massive call volumes. This ensured the in-house teams of claims adjusters were not burnt out.
Facilitating Remote Working:
Professional insurance claims management companies have teams worldwide, and remote working is not something new to them. They have years of experience in efficiently managing remote workers and have the necessary technology to do so. For example, insurance back-office service providers have access to the best video conferencing software, ensuring seamless collaboration.
Digitization of Claims Handling:
Specialized insurance claims management companies have access to the best tools and technologies to ensure digital processing of claims eligibility. As a result, during the COVID-19 crisis, where manual processing has almost come to a standstill, outsourcing of insurance claims administration services can ensure claims eligibility is carried out digitally and with high efficiency. This way, carriers can get faster and automatic capture of claims and supporting documents with fewer errors.
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Covid 19-specific Claim Handling:
It will be difficult for insurers segregate Covid-19-related claims in terms of the severity. Expert third-party vendors create separate pandemic catastrophe codes for all insurance business lines. These codes help to segregate the pandemic-related claims. This segregation is then fed to the analytics models to quantify the effect on the basis of actuarial models and forecasts before the pandemic. Vendors are also known to set up separate cross-trained teams who address Covid 19-related claims for specific insurance business lines.
Insurance Back Office Pro has more than 8 years of experience in end to end claims management. We have a large team of experienced claims adjusters, thus providing a quick turnaround for the processing of insurance claims. We have a proven track record of serving more than 1000 clients in diverse sectors like auto, health, and more. We have access to the best technology for business management and the use of predictive intelligence to ensure faster detection of fraud. We have rigid claims handling processes that ensure the entire process is carried out smoothly without any hassles.