Stake Your Digital Claim
Optimizing Health Insurance Claims Management through Digital Transformation
In 2023, it’s hard for health insurers to stand out from their competitors. The industry is of course commoditized, with providers competing largely on price and services. Relatively undifferentiated products in a highly competitive marketplace and increasing combined ratios present serious profitability challenges.
The increasing cost complexity of claims management is among the most pressing challenges here. Insurers need to focus on the right links across the claims value chain to streamline claims management and boost efficiency and accuracy.
How to best resolve these challenges? The smartest health insurers have started to embrace digital transformation (DX) to improve claims management, deliver better customer experiences and optimize costs and internal processes.
The Need for Optimized Health Claims Management
Rising Healthcare Costs
Advances in quality of care also raise healthcare costs, with an average per capita cost of healthcare rising at a CAGR of 4% from 2010 to 2020 in many countries.
Labor Intensive Processes
Insurers are operating with labor-intensive claims processes which are inefficient due to re-work, manual ways of working, multiple handoffs or duplication.
Identifying Fraud, Waste and Abuse (FWA) Claims
Claims leakage costs USD30 billion annually to insurers, accounting for 5-10% of all claims paid, or up to 25% in a life insurance provider’s case.
Shift to Digital
Consumers are increasingly demanding digital and intuitive experiences and are also turning to digital channels to invest in health and protection.
The Need for Optimized Health Claims Management
- Rising Healthcare Costs: Advances in quality of care also raise costs. Globally, employer-sponsored healthcare benefit costs increased from 8.2% in 2021 to a higher-than-anticipated 8.8% in 2022 and are projected to rise to a global average of 10% in 2023. The projection stands at 10.2% for APAC (climbing from 6.9%).
- Labor-Intensive Processes: Insurers currently operate with labor-intensive claims processes which are inefficient due to re-work, manual inputting, multiple handoffs or duplication. To improve, companies must reassess their current processes and examine opportunities for automation and intelligent operations.
- Identifying Fraud, Waste and Abuse (FWA) Claims: Insurers are often unable to identify anomalous claims because of fraud, waste or abuse by individual claimants, providers or intermediaries. Claim leakage costs 30 billion USD annually to insurers, accounting for 5-10% of all claims paid, or up to 25% for life insurance providers. In short: Insurers need to uncover opportunities to optimize the claims ratio and contain claims costs.
- Shift to Digital: Consumers are increasingly demanding digital and intuitive experiences, and they are turning to digital channels when seeking coverage. According to a Swiss Re article, around half of APAC (46%) consumers expressed openness to purchasing coverage from insurers’ apps and websites, while up to 43% have managed their insurance policy digitally in 2022.
Optimizing Claims Management with Digital Transformation
Automation & Process Simplification
Health insurance providers can reduce up to 30% of operating expenses for claims processing by using automation solutions.
Effective Data Management
New sources of health data call for new approaches to manage and leverage this data for better product design, operational controls, customer management and more intelligent claims operations.
Ecosystem Partnerships for Better Clinical Health Outcomes
Data and analytics can help companies gain insights into treatment pathways and patterns, for better assessments and preventive health programs.
FWA Detection & Control
FWA detection can be improved by introducing new enhancements such as the detection of non-disclosure, and prediction scoring based on past claims history.
Optimizing Claims Management with Digital Transformation
DX offers high strategic relevance for insurers’ success. However, companies must incorporate structural and operating model changes to secure the sustainable impact of new technologies.
- Automation and Process Simplification: Automation can eliminate key workflow obstacles, such as remediation and exception handling, and simplify inefficient processes. This reduces the average completion time of tasks and offers straight-through processing (STP) for low-value, high-frequency claims.
Process simplification delivers multiple benefits for insurers, such as reduced turn-around time, faster payout cycles, lower claim management expenses and improved loss ratios. Insurers should of course work with reputable partners that allows them to focus on complex, high-value claims. - Effective Data Management: Health data is now widely available and accessible digitally, from claims records to wearable devices. New sources of health data call for new approaches to manage and leverage it for better product design, operational controls, customer management and more intelligent claims operations.
Data and analytics can be used to assess and adjust according to client risk appetite. This allows an insurer to focus on complex claims, as well as engage in claims prevention, offer analytics-backed risk management as a service and assist customers in reducing their exposure to a claim event.
It’s important that carriers prioritize accurate and efficient data collation. Inaccurate records and poor data collation will require companies to allocate more time and effort to put together policies. Poorly organized or unclear data impacts an organization’s ability to make better claims decisions and customer experience. Defining the right set of data use cases, ones that have a meaningful impact on claims, is critical to building the right data sets, driving necessary tracking and, finally, making improved decisions. - Ecosystem Partnership for Better Clinical Outcomes: Companies can also leverage data and analytics to gain insights into treatment pathways and patterns, to form an assessment baseline for claims and to design preventive health management programs. Collectively, these interventions promote active health management, reducing longer-term healthcare costs and leading customers to healthier lives.
- FWA Detection and Control: FWA detection can be improved by introducing new enhancements such as the detection of non-disclosure or misrepresentation via prediction scoring based on past claims history. This allows companies to build capabilities for claims triaging through fraud investigation units, based on fraud likelihood and feasibility of investigation. Highlighting the growing importance of analytics in this area, APAC’s healthcare fraud analytics market is expected to grow at a CAGR of 23.7%.
We continue to see advancement in technology to better drive digital experience and seamless execution of tasks. Insurers are already exploring ChatGPT/generative AI to drive certain use cases for better digital experience and claims processing is certainly on top of that agenda for insurers. Use cases include streamlining of the claims process by collecting relevant information from customers, such as the date of the incident, location and type of damage, and then automatically generating a claim report, identifying potential frauds or providing customers with updates on the status of their claims among other use cases for claims.
Leveraging DX Effectively
Although full digitalization of claims management is an ambitious goal, some of our clients highlight important benefits they have reaped by embracing DX.
The key to success here is an effective approach to change management with a strong focus on culture and mindsets. But that’s not all: Every organization also needs a dedicated cross-functional team to manage the claims transformation journey, tailored to each insurers’ and value chain partners’ circumstances and regulatory environment.
Insurers must find qualified partners to help them optimize their processes by
- Insurers must find qualified partners to help them optimize their processes byImproving process efficiencies by identifying opportunities for intelligent operations
- Assessing claims capability for targeted recommendations
- Enhancing governance and control
- Reviewing their ecosystem for a holistic view of optimization opportunities
- Analyzing data in-depth for FWA detection
