InsureIT Case Scenario – Business Process Management

Click to see Scenario

This project includes our deliverables in order to provide a comprehensive analysis and redesign of InsureIT’s claims handling process, beginning with the development of an As-Is Process Model. This model helped us understand the current state of the process, identifying key areas for improvement. We then conducted cycle time calculations to quantify the efficiency of the process, followed by a thorough qualitative analysis. This analysis utilized techniques such as a Stakeholder Analysis to understand the impact on various parties involved, Waste Analysis to pinpoint inefficiencies, and the use of a PICK (Possible, Implement, Challenge, Kill) Chart for prioritizing potential improvements.
Our study highlighted several critical inefficiencies within InsureIT’s claims handling process, particularly evident in the handling of long-term claims. These inefficiencies are a major blemish on customer satisfaction and present a multitude of operational challenges. Most apparent is the extended cycle time required to process long term claims. This delay is caused by the current system's lack of automation, notably in data entry and payment processing. These factors combined not only prolong the duration of a claim’s resolution, but also contribute significantly to a customer's negative sentiment about the process.
To address these issues, our team recommends a strategic overhaul of the claims process. Key recommendations include the introduction of automated systems for policy validation and customer data entry, shifting the responsibility of obtaining medical reports to customers, and automating payment processes. These changes are expected to enhance efficiency significantly, reduce cycle times, and improve the overall customer experience.
Additionally, we propose leveraging technological advancements for data processing and advocating for a
more customer-centric approach, including better, more transparent, communication channels. These solutions not only aim to streamline operations but also position InsureIT as a forward-thinking player in the insurance industry, adapting to modern challenges and customer expectations.
Our proposed redesign, therefore, marks a pivotal shift towards a more efficient, streamlined, and customer-focused claims handling process at InsureIT, setting a new standard in the industry.

High-level Process Model

The insurance claims process at InsureIT is a structured and methodical one encompassing three critical subprocesses: Process Claim Details, Perform Benefit Assessment, and Issue Payment. The process begins when a customer submits a claim through various channels such as branch visits, postal mail, fax, or email, requiring the completion of a form and a 2-page health condition questionnaire. This initiation stage is crucial as it sets the tone for the entire claims handling experience. The first subprocess involves meticulous handling of claim details, where accuracy and promptness are paramount. The subsequent stage is a thorough assessment of the claim, where the nature and extent of the benefits are carefully evaluated. This assessment is pivotal in determining the course of the claim processing. The final subprocess involves the financial aspect of the claim, where the entitlement is translated into tangible payments. Throughout the entire process, consistent and clear communication with the customer is maintained to ensure transparency and provide updates on the claim status. However, despite the workflow’s structured approach, it exhibits inefficiencies and delays, particularly in processing long-term claims. This issue often results in a bigger one involving customer dissatisfaction and operational challenges for Insure IT.

Process Claim Details

The “Process Claim Details” subprocess is the initial stage in InsureIT’s claims handling workflow. It begins when a customer brings a claim to be processed. The Junior Claims Handler plays a vital role in this process. Firstly, the details of the claim must be entered into the system. Then, the policy must be checked to ensure its validity. This step can include activities such as checking that premiums are paid, the policy is up to date, and that the type of claim is covered under the customer’s policy. From there eligible claims are moved forward in the process while ineligible claims are rejected, and the customer is served a notice of rejection.

Perform Benefit Assessment

The "Perform Benefit Assessment” subprocess is the second component, where much of the work involved in handling a claim takes place. After the Senior Claims Handler receives a claim, they first determine the benefit duration, this can be either short or long term. Short-term claims are relatively simple as they can immediately be assessed for any applicable benefits. Long-term claims, however, require significantly more information, which is mainly the medical report. This first requires the Junior Claims Handler to request authorization from the customer to receive their medical report from their medical provider. The customer has 14 days (about 2 weeks) to respond to this request before their claim is automatically withdrawn. Once the customer has authorized the medical report's collection, the Junior Claims Handler must request it from the medical provider. Only after the medical report is received can the Junior Claims Handler assess what benefits the customer will receive.

Issue Payment

The “Issue Payment” subprocess is the final stage in the claims handling process at InsureIT, where the Finance Officer executes the payment based on the assessment outcome. The Finance Officer manually triggers the first payment, then creates a schedule for the remainder of the monthly entitlements. This marks the closure of the claim from a process perspective.

Using the case description, we calculated the theoretical cycle times by multiplying the duration estimate for each activity by the percentage of cases that flow through that activity. This “Effective Time” is then summed for each activity to arrive at the total theoretical cycle time.

Theoretical Cycle Time:

Justifications and Assumptions

The table below outlines the activity and associated justification for the percentage of cases that flow through that activity. These percentages are derived from evidence in the report.

Actual Cycle Time

We then calculated the actual cycle time based on the 2nd paragraph on page 3 of the report saying, “the average time between a claim being lodged and a decision being made is three working days in the case of short-term claims and 22 working days for long-term claims.” We subtracted the time taken to wait for the medical report authorization and the report itself as cycle time only focuses on processing time and disregards waiting and handoff times.

Justifications

Cycle Time Efficiency

Next, we used analysis tools to identify process bottlenecks and areas for improvement.

Stakeholder Analysis

For the first tool, we thought it was important to set a baseline for who was involved in the process and their potential concerns. Following this logic, we decided to use a Stakeholder Analysis. The Stakeholder Analysis describes each stakeholder group, their key concerns, their effect on the process, and the level of impact they have on the process.

Waste Analysis

We felt that the biggest inefficiency in this process was waste. So, we decided to use a Waste Analysis table to define, describe, and exemplify what specific elements are waste. By utilizing the table, we were also able to determine the level of waste in the process. After reviewing the waste contributors (Defects, Overproduction, Waiting, Non-Utilized Talent, Transportation, Inventory, Motion, and Extra-Processing), we concluded that the main waste contributor is Waiting. More specifically, there is a significant amount of waste occurring while waiting for certain information, equipment, materials, parts, or people. We were further able to determine this, by finding specific examples in our process including the waiting time involved in receiving a medical report from the health providers as well as in manually informing the customer of the claim assessment decision. Furthermore, the Waste Analysis table can be utilized for further clarification of our analysis and conclusion.

PICK Chart

After we properly identified the waste and stakeholders in the process, we thought it was necessary to map out our potential changes and improvements. We knew that we also had to think about the feasibility of each change. A perfect tool to depict our changes is the PICK Chart. We created a PICK chart and mapped out our main ideas for changes to it. This also helped immensely with our redesign changes because it told us what could be practical and what would not be as practical.

Redesign Recommendations

Our redesign approach is multi-faceted. As demonstrated in the PICK chart above, the primary driver of process improvement is to have medical reports be provided by the customers at the point they file their claims with InsureIT. We justify this as the case study ends by stating that health care providers “perceive that their customers are patients. The process of issuing medical reports to insurers is secondary for them” (source 1), this strongly indicates that customers will have better luck getting medical records faster. While this does transfer more of the burden to the customers, we believe that the drastically reduced claims processing time will result in a net positive in customer satisfaction. Customers who consider obtaining a medical report unnecessary have the option to forego providing it, provided they relinquish their rights to a long-term claim. To further the effort to improve customer satisfaction, customers will be able to view their claims status through the portal in which they submitted their claim, removing the need for manual inquiry on the claims handler’s side.

From an internal perspective, we recommend that InsureIT dissolve the claims handler role into a single position, especially given the stark workload imbalance between junior and senior claims handlers. The new claims handler role would share the effort in processing claims with a claims handling system. This change aims to remove manual entry of data, a simple task yet one highly prone to human error. This new system would take the customers’ details from the form and questionnaire and import it into InsureIT’s database. Switching to a purely electronic filing system would also fall in line with industry standards, as even in 2011, 94% of claims were submitted electronically (source 2). Additionally, a cost sensitive industry such as insurance also benefits from electronic filing being significantly cheaper than paper claims. In 2006, the average cost of an electronic filing was $2.90, compared to $6.63 for paper claims (source 3), a figure which is surely even more disparate today.

Lastly, it is our conclusion that the role of a finance officer does not pose a great enough benefit to the organization to justify its being a unique role. We believe that the claims handler and claims system would be able (given that they are already determining the benefits and their value) to schedule and dispatch the payments automatically, reducing unnecessary handoffs to a finance officer. Modern AI (Artificial Intelligence) solutions, such as CCC Intelligent Solutions’ digital payment software, not only execute digital end-to-end claims processing, but also includes “direction to pay,” the ability for the insurance company to automatically make payments to the repair shop. This technology is proven, having recently processed 14 million unique claims, and seeing $100 billion of transactions annually (source 4), and can be transferred from the automotive to the healthcare insurance industry with relative ease.

The proposed redesign strategy for InsureIT is centered on optimizing operations and significantly enhancing customer satisfaction. By transferring specific tasks to customers, such as providing medical reports directly, and implementing advanced automation in internal processes, the process is set to speed up claims processing and reduce operational expenses. This modernization effort not only aligns with current industry practices but also utilizes innovative technology to elevate the company's efficiency and service quality. The anticipated outcome is a more streamlined, cost-effective, and customer-centric claims handling process, positioning InsureIT as a more competitive and agile player in the insurance industry.

To-Be Process Model

Our “To-Be” process model includes a new “Claims System” swim lane that inputs the claim and makes payments. The claims handler no longer needs to source the medical report for long-term claims, as the medical report is provided by the customers. The improved process leverages technology and eliminates costly steps, providing a better customer experience.

References

Health insurance claims handling at Insure IT. © Queensland University of Technology (QUT) 2015. CRICOS No. 00213J.

Pittman D. More Insurance Claims Filed Electronically. MedPage Today. February 7, 2013. https://www.medpagetoday.com/practicemanagement/informationtechnology/37244.

American Medical Association and Connecticut State Medical Society. The benefits of electronic claims submission—improve practice efficiencies. Copyright 2008-2013. https://www.ama-assn.org/media/11106/download.

PYMNTS.com. Insurance Carriers Use Digital Payments and AI to Shorten End-to-End Claims Process. 2023. https://www.pymnts.com/artificial-intelligence-2/2023/insurance-carriers-use-digital-payments-and-ai-to-shorten-end-to-end-claims-process/