August 22, 2023

Reducing Claims Adjudication Processing Times from 20 Days to 24 Hours

By Niraj Dave

Senior Director, Enterprise Product Development

Manual claims adjudication can be a major source of inefficiency among healthcare payers. Beyond the administrative headaches, it can be a resource drain that decelerates revenue—especially for those facing tens of thousands of claims.

Thankfully, there are technological solutions to automate and drive efficiencies in the claims adjudication process. Read on to see how 3Pillar Global helped build such a solution for a large third party administrator (TPA), and why solving this problem within your own organization is a critical, urgent need.

How 3Pillar Global helped a client reduce manual claims adjudication

A large TPA, specializing in home health, durable medical equipment (DME) and sleep services  for the nation’s largest payers and prominent provider network, averaged 75,000 to 80,000 claims per day. While these claims needed prompt processing overnight, their legacy system was hardly sufficient to handle this volume.

The client then partnered with us to transition from manual claim adjudication to an automated, rules-based system. Leveraging The Product Mindset, we began by minimizing time to value and solving for a specific need. In this case, we started with basic eligibility checks. Success in this area laid the foundation for a broader automation effort.

We engaged in a multi-phased implementation, including configuring medical services-based adjudication rules, optimizing skill-based exceptions routing, automating eligibility and benefits validations, clinical validations for high-cost medical services, and a pre-authorization portal for preferred provider networks.

We then proceeded with a claims adjudications rule engine by optimizing database performance for high throughput and swift processing, using in-memory databases to meet performance requirements. Next, we conducted “rules harvesting,” which involves extracting business rules from existing systems and procedures. This enabled users to develop a rules management tool, which users could then configure independently.

Finally, with the goal of driving adoption, we build an intuitive user interface (UI), cognizant of the fact that many stakeholders—customer care agents, business governance, payers, and physicians—would all be using this platform.

Within 30 days, the new system reduced average claims processing time from 20 days to less than 24 hours, with over 50,000 claims handled per hour at a 90% accuracy rate. What’s more, the cost per claim dropped 110% to only 95 cents.

Why do manual claims adjudication drive inefficiencies?

The effect of tens of thousands of manual claims on organizational efficiency is obvious. The sheer volume demands high levels of resources to manage. However, at a deeper level, there are other problems manual claims adjudication creates within the payer organization, including:

  • Manual data entry errors for patient information, treatment codes, and billing details, leading to claim denials or processing delays
  • Challenges interpreting and applying billing codes, which increases the likelihood of coding errors
  • Delays in the adjudication process that can reduce and decelerate payments
  • Limited transparency and visibility into claim status and payment updates, which can drive dissatisfaction among employees, providers, and patients
  • Opportunity costs as resources used to handle manual claim adjudication are diverted from other, more value-add tasks
  • Inconsistent decision-making, as different adjudicators interpret billing guidelines differently or apply varying levels of scrutiny; this can lead to unfair claim denials, overpayments, and reduced satisfaction among patients

Why reducing manual claims adjudication is an urgent need for healthcare payers

As mentioned above, 3Pillar Global helped our client reduce manual claims adjudication by implementing rule-based automation, skill-based routing, and a pre-authorization portal for preferred provider networks, among other digital solutions.

While such digital transformation may not automatically seem high-priority, there are numerous reasons why sticking with your manual processes any longer than you have to is harming your insurance organization. Here’s why the time to change is now.

Increased administrative costs

The most obvious risk to your organization is the increase in administrative costs taken up to review, process, and manage claims. Given the time and attention necessary to determine whether a claim should be paid, reduced, or denied, these can add up quickly. What’s more, there are also the opportunity costs incurred as staff are diverted away from other, more mission-critical tasks.

Higher error rates

Manual data entry can lead to higher error rates, especially considering the complexities of healthcare coding and billing. Different coding systems, including ICD, CPT, and HCPCS, mean that human workers must maintain a high level of focus to avoid confusion and submission errors, which in turn can lead to claim denials, payment discrepancies, and rework from employees, further ballooning administrative costs.

Fraud and abuse risk

In many cases (not all), manual processes lack robust fraud detection mechanisms, which can expose payers to fraudulent or abusive billing practices, including the following:

  • Upcoding, or billing for a more expensive service than what was provided
  • Unbundling, or billing separately for services that should be billed together
  • Duplicate billing for the same service or procedure
  • Falsified documentation submitted by dishonest healthcare providers
  • Phantom billing, where the accuracy of billed services aren’t verified against actual patient visits or treatments
  • Kickbacks and self-referral schemes, which involve financial incentives for referring patients for unnecessary tests or services, lead to inflated claim costs for payers
  • Coordination of Benefits (COB) errors among multiple insurance plans or providers

Automated claims adjudication systems can help flag suspicious claims, reducing payer losses from fraud and abuse.

Inconsistencies across the organization

Manual adjudication, unless subjected to rigorous processes respected across the entire organization, can drive inconsistencies across the organization. At best, these can lead to slowdowns and rework. At worst, they can lead to disparities in claim approvals, denials, or payment amounts, increasing the risk of disputes and appeals.

Limited scalability and adaptability

The ever-evolving landscape of healthcare requires a degree of scalability and adaptability beyond what has been the norm thus far. Growing healthcare demand, complexity of care and payments, digital transformation, and data volume and access are among the trends demanding this shift.

Failure to keep up with these changes can result in stretched staff struggling to keep up with an increasingly growing workload, leading to bottlenecks, backlogs, and decreased operational efficiency.

Provider & patient dissatisfaction

Delays, errors, and inconsistencies in claim adjudication can strain relationships with providers and patients. Providers may become frustrated with slow and error-prone processes, leading to dissatisfaction and potential contract disputes.

Final thoughts on reducing manual claims adjudication

Manual claims adjudication can lead to many issues that can negatively impact not only payers, but also providers and patients. Adopting automated processes, then, isn’t something to put off. The sooner you get started, the sooner you can start building efficiencies and accelerating revenue within your organization.

3Pillar Global’s approach to building healthcare technology involves minimizing time to value, solving for real need, and excelling at change. If you need to quickly update your claims adjudication process—or any payment management tool or system—let’s figure out the best way to help you.

Learn more about 3Pillar Global’s healthcare expertise here.