You’ve just been put in charge of an audit program for a claims department. You may need to create a program from scratch or revise an existing program. Either can seem like a daunting task! In 2019, I had the honor of speaking on this topic along with other industry leaders at the Long Term Care International Forum. Here I offer a short blueprint on how to get started.
The First Step
What many will want to do first is to get to work and start reviewing claim files; however, before you do, you should ask yourself a crucial question. “What is important and to whom is it important?”
Let’s take a page out of the project management discipline. A claims department has many stakeholders who care about the accuracy, consistency, and efficiency of the process involved in making claims decisions and payments. Before creating a program, you must identify the stakeholders and what matters to them. If you design a program without stakeholders in mind, then you’re destined for a program revision (or even creating a second program).
Processes that occur in the claims department have a far reaching impact on the organization. Ignoring or not understanding the needs of the following stakeholders will lead to extra work and a lack of confidence in your program.
- Compliance cares about adherence to state regulations (so do the DOIs)
- Legal cares about litigation risk
- Actuaries care about experience topics such as incidence, duration, and utilization
- Operations cares about efficiency, consistency, and performance management
- External customers are stakeholders as well, and they care about accuracy and timeliness
- Internal customers (agents, marketing/sales, senior leadership) care about brand reputation
The Next Step
OK, you know all the people who care about the process and results. You know what they care about and how they would like to receive information. Now it’s time to design your program. Wait, it’s not as easy as just reviewing files? Unfortunately no, you now need to decide what type of program you want to build. You’ll see a couple of approaches below:
What’s the Best Way?
The answer to the question is easy, but not always satisfying. I know this is a frequent response when you ask a question in claims, but…IT DEPENDS.
Many factors going into this decision.
- How large is your block and organization?
- What is your risk tolerance (sample size)?
- How complex is your product design? (Indemnity vs. Reimbursement)
- Is QA a part of the business team or a shared service?
The most likely answer is a combination approach:
Overall audit of the entire file (Health of the Claim)
- Satisfies many stakeholders
- See the big picture
Targeted risk based audits
- Accuracy of decisions and payments
- Consistency across multiple associates
- Performance management
You must find the right balance of depth and breadth while also balancing your stakeholders’ needs and your own. It won’t be as simple as you’d like, but if you find the right balance, you’ll set your team up for success.