By Larry Dignan  |  Posted 2005-05-23 Print this article Print

UnitedHealth Group's David Astar almost can't help collaborating with his CIO. They sit in the same room, along with his other technology execs.

Curing Defects

Astar's favorite metric is defects, something widely tracked in the manufacturing world but not as much in the insurance industry.

How do defects hurt?

Getting names, dollar amounts and claims categories wrong costs money. There's service time, clerical time, reprocessing time. And the telltale signs are added phone, postage and paper costs. Customer calls usually result in all three. "I see calls and paper as a form of defect," Astar says.

Reducing defects can be a competitive advantage when most insurers ultimately process claims with 99% financial accuracy, according to Astar. Financial accuracy only means the claim was ultimately correct; it doesn't count how many times a claim had to be redone to deliver payment or how many errors were involved, he says. The bottom line difference is how many claims can be automated, completed flawlessly the first time and don't generate calls or mailings.

All projects—whether it's Uniprise's 18 terabyte data warehouse called Galaxy, the rules engine that automates 82% of claims processing or the centralized call center management system that allows customer service reps to work at home—are designed to improve quality and cut defects.

So far, Uniprise's focus is paying off. In 2 1/2 years, it has cut defects by more than half, to 18.5 per 1,000 claims. Astar says it's difficult to generalize how much a defect costs since each claim is different. Uniprise also wouldn't disclose the dollar amounts saved since its defect hunt began.

The focus on defects shows up in one of Uniprise's biggest projects, a claims processing system called Comet. The system, which is currently being implemented, was built internally.

The claims system already is highly automated. Seventy-two percent of the company's claims are received electronically, after customers fill out forms online. The other 28% are typed into the Uniprise database by customer service representatives. Of the 180 million claims Uniprise processes a year, the bulk—82%—is processed by a rules engine in Uniprise that weighs items such as type of service and medication requirements, and spits back amounts to be paid out and where to send them.

The new system, slated to be completed by year-end, is a dashboard for customer service reps; it is designed to speed up the completion of the 18% of claims that can't so far be "auto-adjudicated," or automated. These claims are the most complicated ones, typically requiring a representative to look up various codes on United's intranet, consult manuals if needed and move through nine different green-screen terminals to work through the aspects of a claim. The new system will replace those nine screens with just one. And from that one screen, processors will be able to pull up menus of instructions that will direct them on the right way to complete each claim.

"We were looking at these old green screens and had to go through all these pages for information," Astar points out. "We could do that a lot faster."

Ultimately, Astar's target is to process 90% of claims with the rules engine in future years.

Santelli, who is responsible for delivering the software that will make that happen, says his first step back in February and March 2003 was to observe claims processors to see how they did their work at headquarters in Minnetonka and transaction centers throughout the U.S. His most useful observation: Processors had to open multiple browsers and windows on their terminals to get the information they needed to complete a claim. And, even then, there were certain claims where they had to crack open books as well.

From there, the next task was to build Java-based screens that would pull information from internal Web sites, including the right claims codes, proper reference materials, and the company's claims policies and rules.

Once the prototype of Comet was built, feedback from customer service reps, their managers and the technology team kicked the project into high gear, according to Santelli. That allowed, late in the game, a step-by-step guide to the completion of different claims to be added.

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

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