Medical Information Analysis - EXL Service...party auto lines, as an illustrative example. These...

AN EXL WHITE PAPER

Medical Information Analysis

Kevin LoftusVP, Medical Claims Management Business Head

Brad BurdickSVP, Insurance Platform Services Practice [email protected]

The Key to Improving Bodily Injury Claim Handling

Written by:

Solutions for analyzing this medical

information must target the challenges

in digesting complex source files and

containing the medical severity problem.

This issue continues to grow, despite

the development of a host of tools and

attempted solutions.

Using a “back-to-basics” approach,

carriers can implement a medical record/

bill review program that routinely analyzes

medical information for a predefined

segment of claims. In turn, the adjusters,

attorneys and medical management team

are positioned to efficiently use critical

medical information, and deliver accurate

and consistent outcomes for both single

claims and across the claim portfolio.

In order to achieve value from such a

medical information analysis program, it

must be able to be implemented without

a material IT investment or delay, and

deliver a reasonable ALAE charge per

claim by applying standardized processes,

the right labor pyramid, and best-in-class

technology.

ContextBy the Numbers

Management at automobile and workers

compensation carriers recognize that

deficient medical record analysis drives

medical inflation and greater average loss

per claim. Medical inflation continues to

rise at 3-5% per annum within the property

and casualty industry, despite a mature

ecosystem of solution providers and tools

designed for halting this upward trend.

Admittedly, changes in treatment types,

medications and diagnostic tests over the

years have contributed to annual increase

amounts.

Medical expenses impact financial results

both in terms of direct medical expense

and indirect general damages. To this

point, carriers achieve a fairly wide range

of results for medical and liability expense

Bodily injury claim outcomes depend on the information contained in medical records and bills.

Carriers with the strongest performance ratios employ disciplined approaches, tools and techniques

to leverage the information in these source documents.

Medical Information AnalysisThe Key to Improving Bodily Injury Claim Handling

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per claim, with the lowest performing

national carriers paying an average of up

to 33% more per claim than top performing

national carriers. Claim management

philosophy, procedures and medical

information decision tools contribute to this

variance in settlement performance across

carriers.

An inverse relationship exists between the

quality and timeliness of medical record

and bill review and the results achieved

by the claim adjusters and attorneys.

Proper linking of treatment to diagnosis,

complete collection of medical records, and

optimally timed ordering and completion

of independent medical examinations are

but a few of the medical review related

elements impacting claim outcomes.

Medical Records: a Clumpy Process

Insurance carriers receive medical records

in a clumpy manner within first- and third-

party auto lines, as an illustrative example.

These medical documents support

payment of medical bills, and aim to justify

monetary damages resulting from an injury

including incurred medical treatment, pain

and suffering, and diminished daily activities.

Records are submitted to the carrier

by the insured, medical providers and

attorneys depending on the type of claim

(direct, attorney-represented or litigated).

In litigated matters, medical information

provided by the claimant’s attorney is

subject to a form of advocate bias, in which

certain records may be omitted from the

carrier.

Consequently, the carrier has to request

the complete record set for all past and

present treating providers via a subpoena,

or with the consent of the claimant through

a medical authorization. The records are

sent directly to the carrier, or are collected

by a document retrieval firm that provides

these files to the carrier in a digital format.

A member of the Claims, Legal and/

or Medical Management team will then

organize, review and document their

findings.


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Injury Claim Handling

The volume, density and complexity of

medical records necessitate that an adjuster

spends approximately 10-20% of their day

(or more depending on the insurance line)

reading, interpreting, and applying these

medical facts. In some cases, an estimated

one-third of medical pages are not

reviewed and applied to the claim handling

strategy. The impact of not completing

this analysis can be significant, as many

of the claimed injuries contain subjective

elements and are prone to build-up.

At top-performing carriers, claim handling

protocols ensure that the adjusters plan

for and handle claims based on profiles in

terms of average medical pages per claim,

the time required to organize, review and

document findings, and how long it takes

to reconcile medical records with adjusted

medical bills. These critical activities often

compete with non-core tasks that consume

the adjuster’s scarce time.

Deployed Medical Tools

To mixed results, carriers have employed

a host of tools to streamline medical

information review activities.

• Document Management Systems

These systems assist adjusters by providing

them with the equivalent of a digitized box

of records. The individual records can be

sorted by date of service and identified by

provider. However, these systems often

lack consistent naming conventions, ready

access to specific files and make version

control difficult. Other concerns can include

security and a tendency to inhibit effective

collaboration across multiple end-users.

• Bill Review

This process provides ready access to

diagnosis and treatment codes, as well

as any associated charges by date of

service. This allows for a straightforward

identification of duplicate charges,

unbundled line items and limited

relatedness. Issues often arise from its

tendency to omit layered content contained

in documented clinical encounters rather

than the bills themselves. Key value drivers

such as pain progression, patient history,

pre-existing conditions and symptoms,

and intervening causes can also cause

complications by influencing the injury

investigation.

• Bodily Injury Evaluation Software

This mature technology leverages historical

settlement data, bill review inputs and

carrier claim philosophy to propose


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estimated valuations for a given jurisdiction.

Carriers often find that these ‘black box’

tools lack transparency, defensibility

and case specificity. They also produce

inaccurate results if the input assumptions

do not reflect the totality of the medical

facts in question, which can occur due to

processing challenges.

• Guidelines and Deviations

Published guidelines are well-established

tools within the insurance industry for

providing directional inputs to the individual

adjudicating the claim and evaluating an

injury. Unless they are frequently updated,

industry-level guidance may not reflect the

current injury trends or the specific claim

types experienced by a carrier. This can be

attributed to the underwriting decisions and

specific venues in which policies may be

issued.

• Biomechanical Analysis

This technique can be employed to prove

injury mechanics and causation based on

the quantification of forces experienced

by a claimant. Per new regulations, US

auto manufacturers are increasingly using

event data recorders, which inform the

bio-mechanical analysis. There is currently

an ongoing professional disagreement

as to the utility and accuracy of this

analysis. Much of this controversy stems

from whether biomechanical analysis can

accurately define whether the source of

a patient’s claimed pain may stem from

psychological rather than physical factors.

Injury Evaluation and Resolution: Current TechniquesIn order to minimize the complications

during the review process, top insurance

carriers have deployed the following

established methods:

Central Repository: Medical records are

utilized by both internal (claims, legal,

medical) and external users. Typically, there

is no centralized location for these files,

which results in obstacles to collaboration

and correct decision making during claims-

legal roundtables and interaction between

claims and the medical management team.

Establishing a central repository allows ease

of access for all parties using this data.


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Point-in-Time Decision-Making: Effective

claim adjusters and attorneys review the

medical records upon their arrival and make

point-in-time decisions. This approach

impacts prospective treatments, identifies

and prevents build-up and reduces

incurred medical expenses.

Active Approach: End-users of medical

data appreciate a fact-based analysis

supporting the injury investigation and

evaluation. The adjuster balances intuitive

reasoning with fact-based decision-making.

Fact-Based Negotiation: Claim

management continues to emphasize

the need to proceed through rounds of

negotiation only after having put forth the

arguments and facts supporting estimated

damages. A high level of interaction with

the medical evidence and ready access

for retrieving key medical data from

source files increases the probability that

a negotiation moves based on facts, rather

than the monetary amount alone.

Performance Measurement: Top

performing carriers use systematic

performance evaluations to determine the

adequacy of a medical information review.

This monitoring can be used to eliminate

redundant activities and ensure compliance

with claim and litigation guidelines during

the medical record review, as well as

for improving the identification of pre-

existing conditions, medical causation,

admissions against interest and treatment

reasonableness.

Improving the Current State of Medical Information Review

In order to improve the medical review

process, carriers should take an approach

that codifies the review of medical records

according to lean operations principles.

Efficient and effective medical record review

activities cannot be expected without

standardized processes, key performance

metrics, and enabling tools. Without this

infrastructure, the reviewer invariably

misses key, high-leverage data because of

missing medical records, illegible content,

lack of context, technical jargon and lack

of training.

ApproachConnecting Words (From Records) to Numbers (From Bills)

Carriers could utilize a system which

delivers a holistic medical information

analysis, starting with the medical records.

Medical bills are derivative of medical

records, some of which contain errors

which occur during their translation from

unstructured words to discrete codes.


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Casualty claims turn on the content held

in medical records. The granularity of

a medical record review solution can

supplement the software driven bill reviews.

Lean Operations

Employing lean operations principles can

achieve specialization, standardization,

oversight of key performance indicators

and labor pyramid optimization. The key

activities of organization, analysis and

reporting should accomplish the following:

• Eliminating low value-added, repetitive

activities

• Improving and standardizing tasks and

sub-tasks

• Identifying common activities that would

benefit from a specialist, consolidated,

shared service approach

• Implementing automation across

common, shared, and unique workflows

Technologies

Any technologies employed by carriers

must afford rapid speed-to-value, and

provide security and privacy for personal

health information. These tools must

be able to be implemented without

experiencing common delays associated

with IT system implementations. These

tools can meet a carrier’s essential needs

across a variety of areas.

• Content Management: Document intake,

file organization, sorting and identification

can be improved through optical character

recognition and text mining.

• Flagging and Tagging: Certain tools can

allow for the persistent highlighting and

tagging of key passages within source

documents, and the storage of created

tags in a data warehouse.

• Reporting: Flexible, searchable, structured

reporting can be designed to meet the

wide range of needs expressed by the

end-users tasked with analyzing medical

records. In many cases, reports can be

delivered through an online portal with

the option to securely download reports

to claim systems and/or authorized

hardware.

Analytics

Data can present new opportunities for

the claim analytics team and special

investigations unit. Analytics can empower

these employees to perform meaningful

analyses across claims, and deliver value


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both on a by-claim transaction level and

across a claim cohort. The application of

analytics falls along a continuum ranging

from descriptive to prescriptive.

Descriptive: The analysis of medical record

content can inform efforts to identify trends,

associations, and relationships to provide

much needed insights in to claim resolution.

These findings can serve as the basis

for developing business rules and claim

handling protocols.

Predictive: Combining medical record data

with medical bill data adds predictive value

to analytic models, which can be used to

address multiple common problems.

a. Segmentation and assignment

of claims

b. Ultimate loss reserve

c. Litigation probability and

resolution type

ResultsThis set of practices and tools can generate

insights that result in adjusters arriving at

more informed decisions. The ‘back to

basics’ approach of reviewing medical

records in detail and understanding the key

injury and treatment facts can drive a host

of productivity gains and optimized claim

outcomes.

Productivity Gains: The adjusters, attorneys

and nurses can rebalance their activities

with less time spent on mundane tasks

and more on activities requiring critical

interpretation and judgment. In many cases,

this leads to a 50% reduction in time spent

on medical record-related activities for

each claim. Low value-added processes

can be eliminated, allowing for greater

collaboration among all end-users of the

medical content, and improvements across

the multiple hand-offs from adjusters to

internal and external parties.

Accuracy and Consistency Improvement:

Decision-making can benefit from both

an absolute improvement in accuracy and

a reduction in the variance associated

with interpreting medical information.

Identification of potential build-up and

excessive claimed damages can result in a

5-10% impact of payments.

Cycle Time Gains: Such a solution can

provide a 20% reduction in cycle time

due to better assignment, earlier case

assessments, and more efficient settlement

activities. Active decision-making drives

aggressive claim handling and earlier

resolution.


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Employee Satisfaction: The aging claims

workforce nearing retirement has begun

to mesh with the incoming Millennial

generation. While both cohorts benefit from

utilizing a combination of technology and

methods, the incoming younger workforce

is uniquely suited to benefit due to their

tendency to be more accustomed to using

technology applications.

Next StepsCarriers will continue to explore the

best methods to seamlessly glean key

insights from medical information and

effectively resolve claims. The internal

carrier efforts will be influenced by the

growing adoption by providers of electronic

medical records, mandates by states for

electronic submission of medical bills and

supporting documents to carriers, and data

standardization of medical record data

through ACORD.

As carriers evaluate and weight core

versus non-core activities, the analysis of

medical records will continue to evolve and

be sourced appropriately. Shared service

centers and outsourcing to deep domain

specialists will gain traction within secure

information exchanges.

Consequently, the adjusters, attorneys and

medical management teams can benefit

from greater access to chronologically

organized, non-duplicate content that has

been flagged for high-leverage data points

within the context of the source medical

documents.

Carriers relying on traditional techniques

for document management will not be able

to streamline processes for gaining insight.

Gaining value from the medical information

analysis process requires implementing

standardized processes, improved labor

pyramids and best-in-class technology.

Such an approach will enhance productivity

and generate optimized claims outcomes.


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About The Authors Kevin Loftus, VP, Medical Claims

Management Business Head

Kevin leads EXL’s Medical Claims

Management business. Prior to joining EXL

in January 2013, Kevin served as the Chief

Operating Officer of MedNeutral LLC, which

delivered medical record optimization

services to several top tier P&C carriers. He

co-developed solutions for claims and staff

counsel, and managed strategy, business

development, delivery and corporate

administration. His multidisciplinary

experience was honed at The Walt Disney

Company, where he led finance and

planning for a $1.5B business unit with

operations in 20+ countries. He previously

held financial management roles over a ten

year period at various Fortune 100 media

& entertainment and financial service firms

leveraging his Certified Public Accountant

designation and decision analysis acumen.

Kevin earned his MBA from the Kellogg

School of Management at Northwestern

University.

Brad Burdick, SVP, Insurance Platform

Services Practice Head

Brad co-leads EXL’s P&C business.

With over 30 years’ experience in the

management of technology, operations and

strategy, he has responsibility for building

BPaaS capability for the business. Brad also

leads Trumbull Services – an acquisition

EXL made 4 years ago. Prior to joining EXL,

Brad worked for The Hartford Insurance

Group where he held various leadership

positions in Service Operations, Strategy, Six

Sigma, and Sales and Distribution. He also

has experience as a managing consultant

for PA Consulting Group a London based

global consultancy and Channelpoint

formerly a dotcom start up focused on

insurance transactions. Brad has degrees in

engineering from the University of California

and an MBA from MIT’s Sloan School.


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Medical Information Analysis - EXL Service...party auto lines, as an illustrative example. These...

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Transcript of Medical Information Analysis - EXL Service...party auto lines, as an illustrative example. These...