Claims Rework Reduction

Lean Six Sigma Black Belt Project

Final Report06 Jun 08

Black Belt Candidates:

Andy Booth

Mary Kay Gilbert

From the charter:

Project Description: To reduce claims rework rate by indentifying and addressing the root causes which motivate members/providers to contact us. In addition, to streamline the current Claims & Claim Inquiry process as well as ensure that the Perfect Service characteristics are incorporated into the process.

Problem Statement: CompBenefits Dental processed claims produce a significant number of phone calls (300+K) and claims inquiries (1.9%) that dramatically increase the cost of processing claims.

CompBenefits Org chart

Operations

PMO Claims Customer Care

Provider Services

Billing & Enrollment

Suppliers Input Process Output Customers

Dental Provider Submitted Claim Claim Processed Approved Claim Members

Dental member Manually Entered Claim ↓ Declined Claim Providers

Claims Operations Electronic Claim EOB/Check Produced Mailed Question Answered Groups

Claims Data Entry Vendor Paper Claim ↓ Open Claim Inquiry Agents

3rd Party Claims Review Vendor Phone Call to Cust. Care Question from a processed claim Closd Claim Inquiry Claims Dept

Customer Care Email to Cust Care ↓ Reprocessed Claim Customer Care Dept

Claims Inquiry Reprocessed Claim Claim Inquiry Opened Provider Svc's Dept

    (if not immediately resolved)    

    ↓    

    Claim Inquiry processed    

    ↓    

    Member/Provider notified of disposition    

         

Metrics   Metrics

Time   Time

Accuracy rate   Accuracy rate

Inquiry rate   Cost

    Reprocess rate

     

SIPOC

Dental Claims

2.1 Million

Claims Processed

Claims Approved/Declined

DENTAL CLAIMS PROCESS MAP- AS IS

Claims sent to outsourced

companies for review

- 87% of claims approved

- 13% of claims declined

- 63% claims auto adjudicated decision

- 37% claims manual decision

- 45% received electronically - 45% received via paper and sent to data entry outsourcer - 10% received/processed via paper

- 35% claims go to HCI for code edit review - 4% of claims go to P&R for professional review

Claims

Presort

Claims

Processing

Claims

Review

Claims

System

Claims

Determination

Claims sent from

Outsourcers

back to CB

Dental Claims

Processed

2.1 Million

Customer Contacts Company regarding

claims status

300k calls/ 5k e-mails

Claims Resolves Inquiries

DENTAL CLAIMS INQUIRY PROCESS MAP – AS IS

Customer Care opens Claim Inquiries for unresolved issues

38k Claims Inquiries

- 89% of claims inquiries resolved by reprocessing

claims (61%) or returned to customer care (28%)

- 11% of claim inquiries require re-contact by customer

- 87% questions resolved over phone/ e-mail

- 13% requires claims inquiry

87% Claims Approved13% Claims Declined

Claims

Process

Customer

Customer Care

Claims

Activity Unit Cumulative Annual Total

    Cost   Cost   Volume   Cost

Claim $2.00 $2.00 2.1M $4,200,000

Processed

Calls $3.00 $5.00 300K $1,500,000

(1st, 2nd, 3rd)

First $3.00 $8.00 38.5k $308,000

Inquiry

Reprocessed $2.00 $10.00 24.6k $246,000

Claims

Second $3.00 $14.00 4000 $56,000

Inquiry

Third $4.00 $21.00 1400 $29,400

Inquiry

Grievance $200.00 $221.00 900 $198,900

Grand total $6,538,300

Cost-volume

Voice of the Customer

Strongly Agree Agree Neutral DisagreeStrongly Disagree N/A

Timely Processing 7.0% 40.7% 15.1% 16.1% 18.9% 2.1%

Accurate Processing 7.8% 41.3% 14.9% 19.9% 13.9% 2.1%

Efficient Re-proessing 5.7% 33.3% 20.8% 20.8% 15.4% 3.9%

EOB Info Easy to Use 13.9% 49.3% 15.0% 16.1% 1.8% 4.0%

Online Access Helpful/Easy 8.1% 13.9% 14.9% 9.7% 1.5% 52.5%

Automated Phone Service Helpful 8.9% 38.9% 20.7% 12.6% 7.4% 11.5%

Electronic Claims Processed Quickly 13.3% 29.5% 22.9% 7.8% 12.7% 13.9%

Direct Deposit Faster than Check 6.6% 10.9% 19.0% 9.3% 3.5% 50.8%

Historical Claims & Error Data

2005 2006 20070.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Annual Inquiry Rate

2005 2006 2007 1,950,000

2,000,000

2,050,000

2,100,000

2,150,000

2,200,000

2,250,000

Total  Annual Claims Processed 

0

100

200

300

400

500

600

700

800

1 day 2 days 3 days 4 days 5 days 6 to 10 days

11 to 15 days

>15 days

2007 Turnaround Cases

Average: 2.45 days

Reason Code Popularity1 2 3 4 5

CHI 9 2 47 29 36ATL 47 36 25 2 9MIA 9 29 47 8 16JAM 2 9 36 25 7TMP 36 31 9 10 47

9 2 47 29 36 16 31 25 44 8 10 7 30

2

4

6

8

10

12

14

16

18

20

Reason Code Score

Reason Code #

weighted Score

Standardization & Variation

House of Quality

House of Quality

Claims Processing

Correlation   Competitive Evaluation

$$Strong Positive   O Us

  # Postive   X Major Competitor

#     @ Negative   5 is Best

         

      $$ #  

Technical Requirements

Online Claim Submissions

Resubmitted claims processed

quickly

Direct deposit of claims

processed

Online access to Claims

Processed

IVR access to claims

processed

Customer Requirements           1 2 3 4 5

Accuracy X X XX X X       XO   5 3.4 1 3.2 13.1

Timeliness XX X XX X X     O X   4.2 4.6 1.5 7.5 31.2

Easy to Understand       XX XX     XO     3.2 4.4 1.1 4.9 20.7

Responsiveness   XX           X O   3.8 4 1.6 6.1 24.8

Easy Access to Information       XX XX   O   X   3.2 4.2 1 2.5 10.2

Technical Evaluation (5 is best)

5                    

Importance to Customer

Target Value (Qualitative)

Ratio Target- Current

Absolute Weight

Absolute Weight %

4   O X X   Relationships

3 OX X O   XX Strong O = 9

2           Moderate O = 3

1           Weak ∆ = 1

Target Values 3.2 4 3.5 4.8 4.5

Difficultiy (Qualitative) 4 4 5 4 3

Absolute Weight 19.2 30.6 19.2 31.9 42

Relative Weight 17.1 35.4 17.1 38.6 37.9

Improvements

• Kaizen Event• Eliminate P&R outsourcing• Standardize training for Customer Care Reason

Codes– Reduce # of codes from 43 to 12

• Coerce/reward providers into automated/online submittal

Dental Claims

200K

Claims Processed

Claims Approved/Declined

DENTAL CLAIMS PROCESS MAP- Redesigned

Claims sent to outsourced

company for review

- 93% of claims approved (from 87%)

- 7 % of claims declined (from 13%)

- 76% claims auto adjudicated decision (from 63%)

- 24% claims manual decision (from 37%)

- 65% received electronically (from 45%) - 35% received via paper and sent to data entry outsourcer (now single vendor) - 0% processed paper only!

- 23% claims go to HCI for code edit review (from 35%)

Claims

Presort

Claims

Processing

Claims

Review

Claims

System

Claims

Determination

Claims sent from

Outsourcer

back to CB

Questions ?