Incorrectly coded claims, paper forms, missing claim information, and physically walking files over to another department all add time and effort to the claims process. What’s not added is value. A few seconds here, a few minutes there, multiply that by the number of people involved, and pretty soon you’re talking about hours – or even days – of wasted time. And wasted time is wasted money.
The first step toward eliminating waste is to find out where it’s coming from. And that’s where lean principles come in.
What are Lean Principles?
The goal of “lean” is to eliminate waste, defined as any component of a process that does not add value. First developed by Toyota to eliminate waste from its manufacturing process, the lean process is now being applied to any business process to improve efficiency and reduce costs – including claims.
Some of the key tenets of lean thinking are:
• Providing the value to the customer at every step
• Making the process move efficiently
• Eliminating interruptions, delays, or bottlenecks from the process
• Attaching a dollar cost to the inefficiencies in the process
• Sustaining improvements and hard-dollar savings through culture change
Identifying Waste in the Claims Process
There are three basic steps for pinpointing inefficiencies in the claims process:
1. Map the claims process from initiation to closure. List all the actions that take place from the time a claim is initially submitted through final settlement, and flag the steps that do not create value.
2. Ask employees about their pain points. Solicit input from those closest to the process – the ones who actually do the work – about what makes their work frustrating or cumbersome.
3. Engage relevant employees in a discussion. Ask those same employees for their opinions about what adds unnecessary time and effort to the claims process.
Common Claims Process Waste
Waste can be anywhere. In fact, it’s often so ingrained in everyday life, you may not realize the magnitude of the problem until you take a closer look through lean. Here are eight categories of lean waste, the definitions, and common examples of waste in the claims process:
Lean Office Waste Categories
1. Defects. Products, services, or information that are wrong, incomplete, or late – e.g., data entry errors or missing information.
• Incident data errors – e.g., wrong DOB or name
• Incorrectly coded claims
• Product ID numbers and updated case status not reported by local counsel
• Keying or spelling errors
• Duplicate claim numbers
2. Overproduction. Having too much of anything on hand – e.g., printing and filing extra paper or including unnecessary people on your email distribution list.
• Manually creating forms
• Printing paper copies of abstracts or resolution/summary page
• Creating a backup paper case file
• Printing and filing emails
• Manually attaching photos and documents to a paper file
3. Waiting. A delay in receiving anything – e.g., approvals, information from customer, clarification of work from others, or slow computer speed.
• Waiting for follow-up from attorneys
• Claims in queue awaiting review
• Waiting for missing claim information
4. Non-Value-Added Processing. Any step that makes the process more cumbersome – e.g., relying on inspections to eliminate errors rather than redesigning the process, re-entering data into multiple information systems, or generating unused reports.
• Recoding incident and claims forms
• Manually compiling paper files of open cases
• Setting reserves using a paper process
• Tracking down missing information
5. Transportation and Handling. Any unnecessary movement in the process – e.g., paperwork endlessly circulating through the office, multiple handoffs of electronic data, excessive approvals, or unnecessary email attachments.
• Physically walking claims packets to other departments
• Manually transporting cash and checks
• Printing, filing, and retrieving email strings
6. Inventories. Having too much of anything on hand – from office supplies to unread emails.
• Incoming mail or requisitions that exceed capacity to respond
• Settlement document backlog
• Claims waiting for information to proceed
7. Motion. Any unnecessary movement of workers – e.g., walking to copier, searching for missing information, or shifting between multiple computer screens.
• Completing paper forms, making copies, and filing in cabinets
• Searching for misplaced paper files
• Manually generating letters to claimants
8. Unused Staff Potential. Failure to leverage the full potential of staff knowledge – e.g., restricting an employee’s authority to make routine decisions.
• Not involving seasoned staff in process improvement efforts
• Lack of staff autonomy
• No forum for staff to freely suggest improvements or share pain points
Once waste has been identified, the discussion can now turn to solutions. Technology is often on the top of the list – and for good reason. However, while the right risk management information system can eliminate much of the waste rooted in manual work and human error, it cannot fix everything. Underlying problems in the process must be addressed directly to maximize efficiency of any system.
Going through a continuous improvement cycle such as DMAIC (Define, Measure, Analyze, Improve, Control) or PDCA (Plan, Do, Check, Act) once is just the beginning of a continuous journey to whittle away at waste. A process may need to go through multiple improvement cycles to completely remove all major inefficiencies. And the payoff can be substantial. When done correctly, lean can create huge improvements in efficiency and productivity in a short period of time, which speeds up the claims process – and lowers costs.
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