Get Your Auto Claims Down to Size

Claims organizations are faced with settling claims accurately and fairly, all while maintaining customer satisfaction. There are a variety of factors that can impact claims outcomes—in particular, treatment types. Investigation into the most frequently used codes (based on total allowed amount) experienced by the auto casualty insurance marketplace can provide valuable insight for claims organizations and investigators.

There are thousands of possible services available to medical providers; however, the injury types seen in auto casualty claims appear to lend themselves to a select number of treatments. In looking at the U.S. in 2014, the top 10 professional service procedure codes billed accounted for 48 percent of the total allowance for professional medical services, with the range by state of jurisdiction starting at 33 percent for New York and ending at 69 percent for Oregon.

By limiting investigations to the most frequent codes, users are not overwhelmed by otherwise vast data sets with many false-positive findings that delay appropriate conclusions. Rather, they are left with a clear picture of the medical community’s treatments of choice and how these services are driving results in particular locations. Mapping a high-level snapshot of what the top 10 procedure codes represented as part of the total allowed for the state of jurisdiction paints a picture of where patterns may drive organizational alignment and on-time training.

It may be helpful for an organization that is looking to consolidate claims, reorganize claims teams, or embark on medical claims handling training to fully understand the distribution of top code utilization and associated costs. Understanding that nearly 70 percent of all professional medical services in Oregon are due to 10 procedure codes allows an organization to assign newly hired claims professionals to claims where they quickly can become versed in the appropriate use and medical necessity of each code. This understanding may also afford a claims organization to select Oregon claims as a pilot state for an expedited claims handling process that requires limited human intervention—since rule sets based on 10 procedure codes are more easily managed than those based on 10,000 procedure codes.

An expedited claims handling process also may help to increase customer satisfaction due to a quick response time from the insurance carrier. Customer satisfaction is important for carriers, and the handling and resolution of a claim is a prime opportunity to reinforce a positive customer experience. A claims organization that takes the time to fully understand the intricacies of these 10 medical services may be able to mitigate unnecessary steps in an investigation.

Carriers are responsible not only for following through on the promises made in the application for insurance, but also for ensuring policy dollars are maximized by questioning suspect medical services. However, a long-term customer who is in pain likely will not be in the mood for calls that are perceived as unnecessary or that possibly question the need for ongoing care. The combination of improved efficiency and elimination of unnecessary touch points may reinforce the insured’s belief that he has placed his insurance needs with a carrier that understands what he is going through. By eliminating unnecessary provider and insured touch points, a carrier can become much more efficient while still aiming for claims excellence and best practices.

This knowledge also may improve claims office consolidation by ensuring states of jurisdiction with similar treatment utilization patterns are housed together. Seeing the swath of states on the national map that shows a lesser concentration of the top 10 procedure codes may suggest that a more well-versed team of claims professionals is required to ensure fast, accurate claims resolution, as these states experience the use of many more codes. For example, the top codes in New York and New Jersey account for only approximately 33 percent of the total cost associated with professional medical services. “States with potentially higher medical claim coverage limits and procedure code diversity would require the most experienced and best trained to ensure appropriate claims resolution,” says Michele Hibbert-Iacobacci, vice president of information management and support at Mitchell International.

In addition to aiding in organizational change decisions, looking at the top 10 procedures also can identify training and investigational opportunities. P&C insurance carriers can utilize claims professional training to provide consistency for their procedures. Ensuring that a good understanding of these types of procedure codes is added to training may help organizations with their claims processing.

Digging deeper into a particular state of jurisdiction and comparing the results to a national average can provide an even better understanding of the medical community’s treatment patterns. For example, Oregon is out of line with the national experience for one particular professional medical service—97124 (see Graph 2). According to the American Medical Association’s Current Procedural Terminology reference, 97124 is the code for massage. One must ask what is different about auto casualty injury claims in Oregon that massage therapy would be so out of line with the national average? This simple question may lead to further discussion, investigation, and, ultimately, to the development of claims management training specific to the medical necessity, unit cost, and duration of care specific to massage. This training could improve not only claims accuracy, but also customer satisfaction by ensuring medically necessary care is provided when appropriate.

Finally, the top-10 procedure-code analysis also can provide valuable insight into the urgency at which procedural changes and training may be needed. With an understanding that massage is used extensively in Oregon, the analysis also can demonstrate where Oregon fits with the remaining states with respect to unit cost (allowed per unit) and utilization (medical service units per claimant), along with any trending changes that may be occurring. In Graphs 3 and 4, we can see that Oregon ranks sixth in average unit cost for massage but number two for the total number of units for massage provided to a claimant. The challenge that Oregon faces with respect to utilization is that it is ranked number two in the nation and its utilization trend is upward, having increased nearly 10 percent since 2013. This can be valuable information for organizations interested in creating training materials for their claims professionals.

For some, using data analytics as part of a big data initiative can be overwhelming. Taking all the medical service data encountered by the auto casualty insurance market and cutting it down to size makes the process manageable and more productive. Examining the most frequent medical procedure codes and understanding their state-specific impact and emerging trends will allow for more accurate claims resolution and a more efficient claims organization.