As mentioned in my last article, Do all insurers pay claims the same?, Mercer recently completed a survey of the Canadian group insurance market on technology. This was a followup to a similar survey completed approximately 18 months ago. And despite our frustrations in getting detailed responses to our questions on claims adjudication specifics, the survey still provided some great data on general capabilities. More specifically, we are now also in a position to comment on how much the market has moved since 2011.
First, let’s quantify the scope of the survey. The survey was completed by 13 Canadian group insurers representing more than 95% of the group insurance market. A total of 12 insurers completed the survey in 2011. The focus of the survey was twofold. First, we wanted to focus more on insurer claims adjudication practices, given the increasing importance of claims management. We also took the opportunity to repeat several questions that were asked last time with respect to technology plans for the future. We hoped to get specific data on how insurers would adjudicate sample claims data to support our belief that insurers do, in fact, pay claims differently. Unfortunately, as detailed in my last article, many insurers refused to complete this portion of the survey, citing the proprietary nature of the claims adjudication process.
Here are some of the key findings from the 2013 Mercer Canadian Group Insurer Technology Survey:
- There have been significant advancements in the area of provider submit claims (where the provider submits claims directly to the insurer electronically). Approximately 30% more insurers offer this functionality now relative to 2011. However, there still remains room for improvement. Relatively few medical professions, such as paramedical practitioners, have been targeted to date.
- More insurers are now able to offer online claims submission by plan members, up by approximately 20% relative to 2011. For many paramedical practitioners, together with opticians, between 75% and 85% of the market offer online claims submission.
- As the market has moved to introduce more creative claims management solutions, claims adjudication systems have evolved to accommodate these programs. For example, more than 90% of the market can now adjudicate separate co-insurance levels of specific prescription drugs. In 2011, this figure was only 70%. However, there is still considerable work to be done in this area. For example, approximately only 50% of the market can adjudicate combined pay-direct drug and other health deductibles in real time.
- An insurer’s ability to aggressively manage prescription drug costs is heavily influenced by technology. For those plan sponsors that have adopted a pay-direct prescription drug card, the opportunities to implement a wide range of control mechanisms are plentiful. For those plan sponsors that are still on a reimbursement basis for prescription drugs (no drug card), there are fewer options. For example, only 62% of insurers can adjudicate drug claims opposite a price file for claims on a reimbursement basis. This is standard practice for pay-direct drug claims.
- There continues to be considerable focus on fraud prevention, with more insurers investing in automated audit processes together with an increased focus on claim profiling.
- In 2011, insurers indicated that they were going to invest in more mobile applications, paperless claims submission, more self-service, enhanced reporting for plan sponsors and increased use of social media. For the most part, the market has delivered on these commitments. In our most recent survey, insurers promise more developments in these areas together with additional investments on health portals for plan members, online health risk assessments, more targeted employee self-service, automated booklet and contract production, and enhanced single sign-on capabilities, to name a few.
- And finally, we asked insurers to rate themselves with respect to their technology platforms relative to their peers. Perhaps not surprising, many insurers viewed themselves as technology leaders in the market, and all respondents saw themselves as being in the top quartile.
From a plan sponsor perspective, all this is good news. The insurance industry clearly believes that technology is an important component of the service offering, and, collectively, it is driving significant innovation in this space. However, despite most insurers believing they are industry leaders in this area, there are still important differences in the capabilities of various insurers. Some insurers are still more heavily invested in the employee experience than the plan administrator experience, for example. And insurer capabilities in the area of claims adjudication do vary; all insurers do not pay claims the same, and the ability to implement more aggressive claims management solutions varies.
For plan sponsors, proper alignment of insurer technology capabilities with the needs/wants/expectations of the organization and your employees can significantly improve the overall employee benefits value proposition. It’s simply not the benefit promise that matters. It’s how you deliver on that promise that is equally—if not more—important.