Minimize Penalties Due To Delayed Health Insurance Claims By Using Lean Six Sigma

Maybe you have worked on tasks which only lead to momentary advantages? Maintaining advancements as well as carrying on with ratcheting up the performance of your processes can be difficult; numerous people could say the most difficult piece of ongoing improvement.

It’s also this work that begins to push corporate culture forwards. One powerful technique that all too typically teams often do not utilize is Visual Management. It is sometimes testified that if we desire individuals to be liable and responsible, they have to get the data.

Whilst the processes of Lean Six Sigma frequently make use of multiple strategies to uncover better methods of carrying out what we need to have for our customers, the most significant challenge that nearly all institutions deal with in persistently bettering their business is keeping the gains produced and aiding folks continue to make enhancements as time passes.

A Health Insurance Provider’s Delayed Claims

A key  insurance carrier was moving to a new production procedure for the entirety of their claims. The prior process depended on 30 year old technology and the supporting of the “legacy” system was getting expensive and time intensive.

The transfer to the brand-new system was  to be a multi-year project. A state mandate dictates that all medical claims need to be paid within a specific amount of  days of receipt of needed claim info.

If payment is higher than that time, there is a penalty put on to the payment amount. This penalty is prorated by the number of days over the specification days and paid out to the provider, either a hospital or physician.

The new supervision system is dependent on the most recent technology and maintained by a major vendor in the field of claim administration platforms. The new system enables simpler and timelier reporting of records inside the system. The move of accounts started in 2007.

Reigning in Rising Penalties

As of 2008, approximately 2.5% of claims paid out with the brand-new system were having an interest penalty .

These penalties were accepted by the organization as a price of operation, but with fewer than half of the members moved to the new system, the quantity of cash could grow substantially if the problem weren’t attended to.

For 2009, 2 Lean Six Sigma projects were finished to handle the expanding amount of claims with interest penalties. The projects were separated by dealing with electronic claims versus paper claims .

A couple of of the big discoveries from the Six Sigma projects were:

– Several processes utilised in the “legacy” system were still being applied in the new system.
– The processes to “analyze” adjudicated claims for exactness were cumbersome.
– There had not been exposure of the penalty dollars to the management of claims processing.

The last bullet had the biggest impact. In the past, penalty funds were regarded as the burden of the financial sections of this business, because it dealt with dollars paid.

Visual Management to the Rescue

With further rigorous reporting and information accessible to the claims processing areas, it has brought awareness to the expense of claims getting paid “late” to the cutting edge of management of claims.

A process was implemented whereby interest penalty research are reviewed on a weekly and monthly schedule with the claims processing management.

The transfer to the new procedure was carried out in 2011. The visualization above reflects the downward trend in the percentage of claims related to interest penalties within the last four years.

There could be still room for betterment, but we’ve started the trend in the correct course and have prevented a further $2 million in 2011 if the exact same penalty rate had continued through.

All formalized alterations to the process on the work were carried out in 2009 and had a positive effect on lowering the regularity of penalties and the dollars associated.

The Great Results Of Trickle Down

A number of recommendations started small-scale campaigns to address parts of the larger issue.

The quantity of work processed has grown more than four times, and the exposure of the process abilities and continued attention on tackling issues has been a vital aspect of the organization’s financial performance.

As the data has stayed a focus on the dashboard, management has continued to find techniques to view the process with “new eyes” and find out ways to additional refine the process and decrease  penalties.