Large Regional Group Insurer and HMO Claims and Customer Service Redesign

The Nolan Company was enlisted to aid a large regional group insurer and HMO with the redesign of its claims and customer service areas in the company's growing managed care business segment. Problems included inefficient processes, incorrect use of existing technologies, random assignment of work and rework, and staff training which was not linked to improving customer service. When the Nolan Company was brought in, the company was undergoing two distinct cultural changes: the change from a traditional functional unit organizational structure to a client-focused team concept, and the transformation from a traditional product to a portfolio of managed care products. In addition, the company was implementing major systems changes and new imaging technology.

Project objectives included:

  • analysis of current staffing levels
  • staffing model development for quantifying projected improvements
  • redesign of the front-end work flow
  • improved claims processing and inquiry practices
  • development of key indicator report to track progress
  • development of high level implementation plan

The Nolan Company utilized a fact gathering, analysis and participative focus group to achieve these project objectives, recognizing that the company has three key external clients: the employer, the member and the provider. Improvements were installed where possible. For example, the first pass rate analysis was improved, revealing the potential to remove several pend categories. This improvement was installed during the study and resulted in a pass rate improvement from 44 to 60 percent, which created a capacity equivalent to a minimum of 10 FTE.

Another area the company wanted to address was refund recoveries. Information Technology had years of backlog recoveries that needed to be recovered. The Nolan Company created a groupware approach for refund recovery activities, increasing collections by nine times. In addition, a more effective process for recoveries was developed, allowing the company to have a process to detect the root causes for incorrect disbursements. And this more efficient way of recovering the money is system and platform independent -- it can be used across the various company divisions, including the company's indemnity business.
All of the objectives have been met and the results have far exceeded those projected. The analysis resulted in categorizing the identified improvements into two categories: short-term and long-term. The short-term improvements are those that can be in place in four to six months, with benefits beginning to accrue in that timeframe. The long-term improvements were those that require a slightly longer timeframe for full implementation: 6-12 months.

Projected short-term impacts include:

  • improvements in cycle time, inventory control and quality
  • a projected FTE requirement of 518, which is a reduction of 127 from the base period
  • a projected reduction of $2.6 million in salary benefit cost, from $16.4 million to $13.8 million

Projected long-term impacts include:

  • significant improvements in cycle time, inventory control and quality
  • a projected FTE requirement of 441, a reduction of more than 200 from the base period
  • an additional projected reduction of $2 million in salary benefit cost, from $13.8 million to $11.8 million

Through a redesign of the claims and customer service processes and the elimination of paper via integration of imaging technology, claims processing system technology and other technologies such as fax and OCR, the company realized capacity savings of $4.6 million.