Reducing Pending Claims Via Lean Six Sigma
Health Insurance Project Overview
Industry
Service
Company
Health Insurance
Results
22% reduction in pending claims and $366,236 in savings.
Tools Used
Six Sigma DMAIC
Timeline
Seven months
Problem Statement
A large health insurance carrier was receiving approximately 22,000 claims per day, totaling approximately 5.5 million per year in their Maine office. Fifteen to twenty percent of the daily claims (roughly 3,800) required manual intervention to adjudicate, meaning they were “pending.” Each time a claim was pended, it required extra handling, at an average cost of $2.00 per claim.
The insurance provider could not expect to entirely eliminate pends. Some claims are automatically sent to a manual process, because they require special handling, for example, if they require a medical review.
Business Case
By improving the current process, this insurance provider would reduce the number of claims pended daily, thereby reducing the number of claims that were being backlogged. Customer and provider satisfaction would increase due to this more timely process.
Project Goal
The project goal was to reduce the number of claims pended each day by 20%, resulting in monthly savings of approximately $30,000, equaling roughly $360,000 per year. To achieve this, the company reviewed exactly what was making a claim “pend” and how they could improve the system flow. They hoped to increase customer satisfaction, decrease their administration costs, and put a faster, more accurate, and seamless claim process in place.
Projected Savings
Working with Juran, this insurance carrier identified and fixed 27 system issues, achieving a 22% reduction in daily pends and a savings of $366,236 in 7 months. The Maine office’s pends are expected to continue to decrease, resulting in annual savings of almost $900,000. The team also was able to foster interdepartmental and interstate relationships, the value of which is priceless.
Results
The insurance carrier was able to successfully reduce the number of daily pends, and add a significant amount in savings to their bottom line.
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