Improving Supplemental Health Claim Utilization

I recently attended LIMRA’s Supplemental Health, Disability, and Long Term Care conference, my first in-person conference in over 30 months. After two years of COVID-dominated virtual conferences, the wait was worth it as I learned something new.  

Claim utilization is ridiculously low for supplemental health products like hospital indemnity, critical illness, and others. This means that the loss ratios are well below what was expected, and what was filed with the state departments of insurance (e.g., instead of paying out 75% of premiums in claims, the percentage being paid out is much lower). However, the lower utilization is not necessarily because events that trigger benefit payments under these supplemental health products are not occurring sometimes it is because insureds forget that they had enrolled or purchased a supplemental health product. I am one of those people! I had surgery earlier this year that required a week in the hospital. Only upon attending this conference did I recall that I might have enrolled for our company’s voluntary hospital indemnity policy!  

Connected benefit-eligible claim events 

Wouldn’t it be helpful to have a connected view of all the insured benefits in one place?  

Supplemental health insurers are looking for ways to identify potentially benefit-eligible claim events proactively to notify insureds that they may have benefits available. One panel described four levels, each increasingly robust, that insurers are progressing through to improve claim utilization.  Contrary to what some think about insurance companies … they want to pay legitimate claims! 

The four levels are as follows:  

  1. Manual product-to-product integration in the supplemental benefits space.  For example, if the insurer enrolled a person in both critical illness and hospital indemnity, a claim for one could and should require the insurer to look for potential eligibility for the other benefit as well. Unless their claim system presents all of that to the claim analyst, such check is almost always manual.
  2. Manual supplemental health to disability crosschecking.  Should the insurer also administer disability insurance, either directly or through a TPA, insurers should again be checking to see if one benefit might trigger the other. For example, medical records requested for the disability policy might reveal a hospital stay that could trigger outreach to the insured that it appears they might be eligible for additional benefits. 
  3. Automated mapping between supplemental health products and disability.  This entails having a system identify specific ICD-10 and CPT revenue codes found on claim forms for eligibility with other benefits the insured may have with an insurer.
  4. Medical files integration to automatically trigger a supplemental health claim. The Holy Grail is receiving a feed regularly from the health insurer to automatically find and trigger eligible supplemental health benefits and enable both auto-adjudication and higher utilization.  However, only a handful of supplemental health providers also offer traditional health insurance. Those that do not need to use a data clearinghouse and often must clear many hurdles to gain such access (enough to justify another separate blog post). 

Connected claim events: What’s the value?  

Not only will progressing through the four levels and ultimately landing on levels 3 and 4 be beneficial to the enrolled employee or policyholder, but also it will ultimately benefit the employer (where applicable), the broker, and the insurer: The employer, because their employees will view the benefit plan provided as valuable; the broker, because delivering on the promise of what they sold originally always assists in future renewals with the employer or policyholder; and the insurer, because greater automation brings reduced costs. Everyone wins! 

It should be noted that claims administration costs are much higher for HI, CI, and Accident than most other products in the market (e.g., dental, vision, medical, etc.) because today, most adjudication is still manual, and everything needs to be reviewed vs. being hands-off and automated. 

How FINEOS can help insurers and employers:  

While many insurers are grappling with the four levels of improving utilization, FINEOS Claims aids many others in achieving both utilization and automation.  Customers using FINEOS Claims find that any claim event will trigger whatever benefits may be applicable for the event, not just the one for which the claimant is submitting a claim. For example, should a disability claim be lodged, FINEOS Claims automatically identifies if that claimant is also eligible for other benefits such as CI, HI, and Accident.  This achieves the proactivity that insurers and insureds want and need.  FINEOS has also successfully integrated medical data into one of our client’s supplemental health claims processing, resulting in nearly 70% auto-adjudication of supplemental health claims.  In this instance, the insurer’s parent company is a health insurer, but the logic to make all the needs work and trigger benefits automatically resides in FINEOS Claims. 

Contact us today if your priority is increasing supplemental health utilization and automation in processing claims. 

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