Best practices in claims management

Health insurance, although one of the fastest growing general insurance segments in India, is still one of the least penetrated segments. It is estimated that of a total population of about 135 crore, only about 40% Indians have some form of health insurance cover. Among the overall insured population, private individual (or family floater) health insurance accounts for a mere 6%.

While this data may sound alarming, the silver lining is the increasing awareness about health insurance among people, especially in the backdrop of escalating healthcare costs and the recent announcement of the Pradhan Mantri Jan Arogya Yojna (India’s first public health insurance scheme).

The era of 1980s saw the introduction of “mediclaim” policies and subsequent introduction of TPAs (third party administrator) for claims management gained traction. From the 80s to early 2000s, the focus of claims management was only on the reimbursement model. But the global digital revolution led to innovation and disruption even in the field of claims management system for insurance companies, which was later picked up by the Indian markets too.

A new service called ‘cashless hospitalisation’ was introduced which empowered a customer to seek treatment at a hospital without worrying about arranging money beforehand for the treatment. Cashless hospitalisation also meant that prior authorisation had to be secured within 4–6 hours for full treatment to commence, while interim limit enhancements could also be provided as the treatment continued. To effectively manage and implement all these crucial services, there arose a need for a robust and seamless claims management system.

A claims management system’s routine functions involve managing and evaluating insurance claims. A good claims management system must service the existing products well while having an in-built flexibility to support products with new and unique features, such as outpatient coverage or products with a wellness component. It should also have increased flexibility to incorporate on-the-fly modifications in benefits and processes, in-built intelligence to standardise routine processes and rules-based prompts and alerts etc. There are three major features that set apart a good claims management system from others, especially in the context of the Indian marketplace.

In-house system: Having an in-house claims management system equips an insurance company with high levels of flexibility and automation. The owned model also allows for optimum work distribution and routing, escalation and strong communication features such as letter generation, SMS gateway etc. The automation system also allows for validation checks and adjudication of claims which help in faster turnaround time for claims, both in cashless and reimbursement models, thereby increasing client delight.

Integration with payment gateways: Simplification of payment process at hospitals is vital for any insurance company that claims to be in ‘people service’. While network hospitals are serviced seamlessly, ensuring an efficient and quick cheque-printing or NEFT module to facilitate reimbursement claims in case of non-network hospitals will be beneficial. An efficient model will help provide excellent feedback to the company which can then identify and leverage beneficial trends. The vast amount of claims data can be combined with enrollment data to be productively used in actuarial pricing and underwriting.

Data security: A system that combines the powers of AI and Data Analytics to enable fraud detection, management and prevention in any claims management database is crucial. It helps to identify anomalies in claimant information, as well as payments made on claims with a possibility of being fraudulent. By detecting patterns or anomalies in large claims databases, the analytical tools employed by the system, can identify potentially fraudulent cases for further investigation, including potential cases of fraud at the first notice of loss, helping to avoid the “pay and chase” model, thereby reducing handling costs, and in some cases avoiding loss costs outright.

The core function of the system is claims management and underwriting. Technology, business practices combined with standardised processing guidelines will go a long way in ensuring faster claims resolution and consumer delight.

Over the next decade, the insurance industry will witness continuous evolution in health insurance products and processes. The trend to move the claims function in-house is something that should be adopted by more insurers. This will create a unique opportunity for claims system developers to offer systems and applications with a high level of flexibility and automation resulting in efficiencies of scale for all.

(The writer is CEO and Whole Time Director of Liberty General Insurance Limited)