Is Your Claims System Creating Operational Value?

Over the years I have had the privilege to use, configure, and review a multitude of claim and benefit administration systems. Some have been home grown systems that have evolved as a business changed, while others were off-the-shelf versions that had minor tweaks and customizations to fit a specific business need. But the common capability they all shared was this: provider submits a claim, claim is entered into said system, system figures out a price according to the provider’s contracted status and the member’s benefits (sometimes with the help of other systems), and then the priced, or denied, claim is sent for payment resolution (fig. 1). Sounds fairly simple, right?

Figure 1: Basic Claim System Flow

Basic Claim System Flow

So why are there so many variations to systems, what makes one system better than another, and ultimately how does an organization know if they have the “right” system? The answer to each of these questions lies within understanding Operational Value. That is, the determination of the level of value the system in play has created, and will continue to create, for your organization’s administrative processes.

Finding a System that Produces and Sustains Operational Value

When thinking about operational value, I use the adage, “What’s in it for me – WIIFM,” or in this case, what’s in it for the business. It is imperative to have a clear understanding of what the organization requires in order to process a claim using the highest degree of quality and efficiency, all while maintaining the lowest operational cost. In other words, and as demonstrated in the diagram above, it’s the process of digging down into the requirements and business rules in order to systematically get from claim entry through disposition, as cheaply and quickly as possible, and with minimal mistakes. This is where variances enter the equation, and subsequently, a host of systems aimed to solve for the variables that are presented.  Contract language, benefit packages offered, and business rules are what compose a payer’s “secret sauce;” thus, finding a system that can support the sauce can be a bit tricky.

Once you’ve gained an understanding of the business imperative, you can then begin to tackle the question: “Does my current, or proposed, claim system create high operational value?” Simple questions to get started in the operational value evaluation process of your current, or potential, claim system are:

  • What manual processes are still in place and why?
  • What is the timeline and training tolerance for end users?
  • What is the automation cap or comfort level for automation within the organization?
  • What is the organization’s integration or change tolerance?
  • What resources are needed to effectively maintain the system?
  • What are the anticipated volumes over the next three to five years?
  • What type of system performance or up-time is required?
  • What is the overall cost of the system (system costs and related organizational costs)?

It is recommended to have a comprehensive, in depth operational value assessment every five years; this larger, more in-depth assessment should be complimented by annual refreshes for continued system validation. Assessment processes should be built into the existing organizational processes to aid in gathering information for the comprehensive operational value review.

A method for doing this on an ongoing basis would be to use a collaborative team, composed of IT and operations business personnel, that is keyed into the organization’s long term objectives and that understands the value of continual improvement. The team would be used for fielding questions, performing the system assessment, and defining potential changes. Another possibility method would be to make the operational value process systemic in the organizational culture; for example, it can become a subset within the organization’s existing project management framework.

Going through an operational value assessment process can be daunting; but, it is necessary. Organizations that do not go through the exercise, at least occasionally, run the risk of having higher administrative costs, ill performing systems, and laborious work processes.  Assessing your system’s ability to meet business requirements and validating it creates the highest operational value is not only best practice; it ensures you are on the right system, or gives you the information you need to help get you on the appropriate system. But above all, it helps keep IT and business in sync – and that is the indispensable WIIFM answer.

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Email: marketing@westmonroepartners.com
222 W. Adams
Chicago, IL 60606
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