‘Integrating clinical logic into claim processing systems,’ healthcare demands for processing guidelines

Most existing health insurance claims systems focus on data and workflow management. The primary goal is to achieve process efficiency. The workflow management module is meant for better work distribution and routing or in-built escalation. It integrates simple rules engine to configure products and automate various validation checks on policy, claimant, benefits and provider. The ability to efficiently link policy benefits, enrollment and underwriting information, previous claims, prior authorisation and any subsequent enhancements to the current claim, is deemed as mandatory. This article explores how clinical logic can be integrated into claims systems so that the knowledge and experience of doctors who process claims is built into the system.

The need for standards in claims processing

Indian health insurance companies or TPAs (Third Party Administrators) generally hire medical professionals ranging from pharmacy graduates to alternative systems doctors to MBBS doctors for process claims. These results also vary for how a similar claim is processed within a single TPA and also from one TPA to another. The significant variation of care across providers further complicates the problem. Due to all these factors, it is felt that claim processing is discretionary or arbitrary. This leads to provider-customer disputes. In other countries, a common solution to these problems are usually found as some set of protocols or guidelines are already adopted by the industry. Without widely accepted and evidence based guidelines, which detail what is ‘medically appropriate or justified’ or what is ‘reasonable and customary’ for a particular medical or surgical intervention, conflict is inevitable.

The two main initiatives in the last few years in developing standard treatment guidelines or clinical protocols by WHO/ AFMC STGs (2008) and FICCI STGs released in 2009 have limitations in terms of conditions covered and have been written with minimum standards of care or from the public health system infrastructure perspective. They do not truly fulfill the needs of the insurance industry as the content is not specifically designed for pre-authorisation and claims adjudication. The health insurers and TPAs require guidelines that help to define the medical complexity of a particular case, providing appropriateness and reasonability checks for diagnostics, treatment, associated consumables and indicative length of stay.

In some countries such guidelines are developed by independent organisations and are regularly updated. These are viewed as benchmarks and thus become a widely accepted basis for prior authorisation and claims resolution. It is commonly accepted that to be effective a guideline should only focus on the clinical aspect. They do not provide the cost of investigations or surgical charges or consumables that may be required. The cost is determined by provider and insurer negotiations, which include factors such as patient volumes, speed of payment etc. Thus both the parties rely on the guidelines to determine clinical appropriateness and rely on agreed tariffs or package rates to take care of the cost issues.

Medical professionals use their training and experiences to verify a healthcare claim and to determine if the procedure, diagnostics, consumables being billed are warranted and if the costs are reasonable.

Claim processing guidelines

Milliman recognised that India needed similar systems to bring about some form of standardisation and two years ago they set out to create a complete suite of solutions specifically for India. Thus the solutions developed for India represents the practice patterns, infrastructure, equipment physician training, culture and costs prent here. The claim processing guidelines were part of a larger ongoing initiative by Milliman in India which included the development of various tools and products. Richard Kipp, Managing Director, Milliman India, explained, “Our efforts in this direction started two years ago with discussions about treatment protocols with industry stakeholders. It was very clear that standardisation based on Indian evidence and practices is required in India. We are building a complete suite of solutions with evidence based treatment protocols, pathways and hospital order sets being the center piece. We have two derivate products from this process, claim and underwriting guidelines. These products use the same evidence based medical content. We are yet to officially launch the treatment protocols and pathways. We are also in the process of creating a distribution and support network.”

The claim processing guideline was launched in 2009 under the brand name of ‘ClaimsRef’ and they cover 200 common in-patient interventions that aims to enhance productivity and optimise cost savings by:

  • Improving efficiency, uniformity and accuracy in claims processing
  • Promoting standard practices across different TPA / insurer sites and personnel
  • Ensuring early identification of ‘incomplete claims’ and ‘inaccurate charges’
  • Supporting information based negotiation with providers

Milliman has conducted formal external review of these guidelines with practicing experts to ensure they are comprehensive and accurate. It has been found that almost all common causes of admission are covered by the 200 conditions in ClaimsRef. Further, the design of ClaimsRef helps with two critical steps, the prior authorisation and final claim settlement.

In health insurance, the pre-authorisation is an important step. When a hospital sends an admission note to a TPA for preauthorisation, the authorisation personnel refer to ClaimsRef for that particular intervention and match the details on the authorisation note to validate appropriateness for admission and to determine the severity of condition. Severity determination is rather important as it defines the likely investigations and length of stay and consumables that may be used during the hospitalisation. Once severity is determined the ClaimsRef indicates the likely length of stay. Claims processors can then look up the rates for the specific facility type and location in the TPAs database and estimate the likely cost of procedure / hospitalisation episode. If a TPA has pre-negotiated package rates, then they can just use those.

When settling a claim, the Milliman guidelines enable a claim processor to accurately determine the severity of a patient’s condition and identify if the length of stay, investigations, consumables and treatment are in proportion to the condition. They also list special checks to identify patterns of inappropriate billing or industry accepted non chargeable items. In addition to standardising and accelerating claim processing, the ClaimsRef also reduces errors and omissions, thus enabling a TPA or an insurance company to process more claims with existing manpower. ClaimsRef guidelines also have additional details which can be useful for a claims team. Possible clinical reasoning for additional investigations and longer hospitalisation are also available. This enables a claim processor to rule out common reasons for variance before calling the hospital and therefore, the claim settlement process is driven by clinical logic.

Integration of claim processing guidelines into a claims management platform

ClaimsRef is not a software or an IT application however Milliman also provides the claim processing guidelines in a rules format they can be easily integrated into a claims system. This significantly automates the ‘clinical checking’ of a claim. This makes the use of the guidelines an inherent part of the claims workflow and increases their effectiveness. The integration is relatively simple as data sets, master tables and rules are provided to the IT team, with instructions for integration.

The rules identify key variations based on the data entered into a claims management platform. The data input is compared against the clinical logic and rules, if any variation is identified then an alert is generated. The key variations that the clinical logic is able to identify include, but are not limited to:

  • ICD CPT mismatch
  • Length of stay mismatch
  • Duration of ICU mismatch
  • Excessive physician visit flag
  • Unwarranted specialist visit flag
  • Unwarranted assistant surgeon fee flag
  • Procedure not indicated for the age group / gender
  • Excessive investigations flag
  • Unwarranted investigation flag
  • Excessive consumables flag
  • Unwarranted consumables flag
  • Excessive drug use flag
  • Unwarranted drug use flag
  • Drug charged above marked price flag
  • Non chargeable consumable flag

The generation of these alerts ensures that these variations are noted by the claims processor. For example, upon receipt of the hospital claims at discharge, a very junior claim processor enters data from the hospital invoice into their claims management system. The system runs the Claimsref clinical logic rules and compares the data entered with the expected investigations, length of stay and consumables etc for that specified procedure. If the hospital has excessive units of a particular billed item, those entries are flagged as variation for a senior claim processor (usually a doctor) to consider. The flags alert the claims doctor to review the clinical reasoning for these variations in discharge summary or to seek details from the provider.

With additional integration, the claims IT system can retrieve the cost of expected services from the negotiated rates database. If the invoice costs are within the expected cost range, it automatically clears the invoice for payment. If any variance is noted it flags them. This ensures that complete and appropriate claims get processed immediately allowing the doctors, who are an expensive resource, to focus on the ‘incomplete or potentially inappropriate claims.’ However, the generation of these rules based alerts is dependent on accurate and the additional data entry will have some implications on productivity. An effective way to manage productivity implications is to recognise, where the maximum value claim processing guidelines. The clinical logic rules can be activated or inactivated for different scenarios. These options may be desired for different claims type, claims value, products, staff experience, provider etc. For example, the customisation provides:

  • option to inactivate data entry and rules for reimbursement claims
  • option to activate detailed data entry and rules for claims that are higher than a specified amount
  • option to activate detailed data entry and rules for all conditions for junior claims processor or specific complexity conditions for an experienced claims processor
  • option to activate additional data entry for specific billing components:-

    critical hi78 cost investigations
    critical high cost consumables
    critical high cost pharmacy items
    industry accepted exclusions that
    are not payable

A robust claims IT system would provide the claims manager at the insurer or TPA the facility to create such rules and then activate or deactivate them based on business needs at a specific time.

Indian health insurance industry is at a critical stage of development. While it is growing rapidly, the associated processes of underwriting and claims processing are yet to be standardised. Specific set of guidelines can be integrated into claims systems to ensure standardised information based claims adjudication and enhanced cost savings. The next generation of claims systems will incorporate more intelligence to ensure quality and standardisation in claim processing.


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