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case study
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
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| 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
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| 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.
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