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Stopping Claim Overpayment Leaks

By Colm O'Connor

A recent report documented that up to 7 billion gallons of water is lost to poor infrastructure in the USA every day. That is allegedly enough to bury Manhattan under almost 300 feet of water! Leaks, however, are not just limited to the public infrastructure. Recent reports have highlighted that social security overpayments over an approximate 2 year period are estimated at $1.3 Billion . Maybe by addressing this, some of the public funds to start addressing the water problem can be sourced!

So what causes an overpayment leak in the Social Security or in the Life, Accident and Disability insurance market? Evidently there are multiple contributory factors including inefficient benefit assessment, an on-going inability to keep data current and a need to prevent payment accuracy from being compromised by legacy or manual tools. Addressing each of these is central to the challenge of fixing those leaks!

Efficient benefit assessment requires multi-channel options to enable an application to be submitted based on customer preference. Via the provision of real-time feedback, accurate and current data can be sourced up-front and then used to drive intelligent assignment of the benefit. Examples of intelligent assignment include allocation based on directly sourced data such as the benefit type or provided medical / injury information. Alternatively derived scores (based on data analysis and predictive analytics) can be used to both balance workloads across teams and to assign work directly to those best qualified to assess the benefit.

Within the Life, Accident and Disability market providing visibility of the data and the entire benefit management process to the customer is key. Research has demonstrated that if the customer trusts that any data they provide is being used responsibly, is being protected and they can understand what this information is being used for, that they will be much more likely to share detailed information . Hence, customer trust in this space is achieved via the provision of accurate, informative and empowering information – it is no longer acceptable to provide a static status that a benefit is “Approved” “Being Assessed” or “Denied.” By clearly demonstrating how decisions are being made and proactively encouraging data to be kept current and accurate via the provision of multi-channel customer friendly interfaces all aspects of the benefit can be better managed – including payments. This all helps to prevent leaks!
Evidently addressing overpayment leaks also requires a focus on payments. Given the volume of benefits being processed and the substantial collective cash value of these benefits, even small discrepancies or inaccuracies can result in significant cumulative overpayment amounts ($1.3 billion in the case of the Social Security benefits!). As with water, it is the total impact of the overpayment leak that is the problem…. any single customer is not going to get rich quick on the basis of benefit overpayments, but the funding organisation may become poor!

Accurate payment requires correct data, robust and configurable calculation tools and an ability to disburse payments across multiple payee’s while fully accounting for all appropriate offsets and adjustments. Critical however is an ability to recalculate (often retroactively) payments both automatically and on-demand based on changing customer circumstances and the potentially unique aspects of a benefit application. Real life determines that the information available over time will change, hence flexible payment solutions are required to ensure that payments can be kept in sync with changing customer circumstances and reference data.

So how many leaky pipes do you have in your claims business? It is these types of business opportunities that we are addressing at FINEOS. Via the application of a customer centric and innovative mind-set we challenge our consulting and development teams to address the source and cause of the leaky pipes within our project engagements, enabling our customers to make a real difference to their customers.

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i) The Case for Fixing the Leaks: http://www.cnt.org/2013/11/18/the-case-for-fixing-the-leaks-release/

ii) Social Security Overpayments: http://money.cnn.com/2013/09/13/pf/social-security-overpayment/

iii) Online Information Exchanges: http://onlinelibrary.wiley.com/enhanced/doi/10.1111/j.1745-6606.2009.01147.x/