Better claims processing, better health care experience | Oscar Rx | hioscar Blog | Oscar
Better claims processing, better health care experience
Claims processing is at the heart of what health insurers do. Oscar's on a mission to build it better.
Behind the ScenesOur Culture
7 min read
Ashley Taylor Anderson
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Gabe Drapos spends a lot of time at the doctor’s office.
Seven years ago, Gabe was diagnosed with a chronic autoimmune disease. Since then, he's made monthly trips to see his gastroenterologist. While he’s there, he gets an IV drip of medication that helps manage his symptoms. All told, he spends about an hour at the clinic.
By now, Gabe’s visits are pretty routine. He checks in with the front desk, sits in a chair while the drugs work their magic, and then heads home.
But once he steps outside the office, behind the scenes, an incredibly complex system whirs into motion—a system many people don’t even know exists. Neither did Gabe, before he became a professional insurance nerd.
This is the mysterious machinery powering approvals and payments in healthcare: the insurance claims process.
It’s vast. It’s complicated. It’s important. And it’s also strangely fascinating.
A crash course in insurance claims
Unless there’s a hiccup during processing, most people never have to deal with medical claims. Because the system is so complex, claims do occasionally show up in consumers’ lives. But even when everything works smoothly, claims processing affects two things everyone cares about: How much (and how quickly) their doctor gets paid, and how much they owe their doctor. For this reason, it’s useful to understand claims at a high level.
A medical claim (opens in new tab) is an invoice a doctor or medical facility sends to a health insurance company after a patient receives care. It provides details on the services a patient received and the associated charges set by the doctor or facility. These services are communicated with an enormous set of standardized medical codes, called Current Procedural Terminology (CPT) codes that streamline the claims review and payment process. For example, Gabe’s medication Entyvio is CPT code J3380, which has an allowed cost of $13,000.
What is claims processing?
Claims processing is an intricate workflow involving 20+ checkpoints that every claim must go through before it’s approved. If a claim makes it through all these checkpoints without issues, the insurance company approves it and processes any insurance payments. If it doesn’t, it gets denied or sent back for more information.
What happens to a claim after it gets submitted?
The easiest way to understand claims processing is to follow a claim through the system. Let’s take one of Gabe’s appointment claims as an example. Here’s what happens after he leaves the doctor’s office.
Step 1: Submission. The doctor’s billing department mails a claim to a clearing house, often weeks after the appointment, where it goes to data entry to be entered electronically. (Yep, hard copy paperwork is still a thing in the medical world.) Once there’s an electronic version, it’s transmitted via API to Oscar, Gabe’s health insurer.
Step 2: Initial review. Gabe’s claim is run through an algorithm to make sure it contains no duplicate charges, typos, illegible content, or inaccurate data. (One of the most common issues with claims is inaccurate or inconsistent doctor/facility information.) It’s also checked to make sure the doctor filed it within Oscar’s deadline.
Step 3: Eligibility. The system checks Gabe’s name and policy number against Oscar’s database to verify that he’s a member with an active insurance plan.
Step 4: Network. The system checks Gabe’s doctor and clinic location against a database to see if they’re in Oscar’s network (opens in new tab).
Step 5: Repricing. The system looks at the services Gabe’s doctor billed for and applies negotiated rates—that is, the prices Oscar agreed to pay the doctor and facility in their contract.
Step 6: Benefits adjudication. The system compares Gabe’s insurance plan benefits (opens in new tab) to the services he received. Based on his plan details, it identifies whether Oscar covers each service and how much it’ll pay.
Step 7: Medical necessity review. The system reviews Gabe’s claim to ensure the items his doctor billed are medically necessary, in line with industry best practices, and safe for the patient. This step ensures Gabe doesn’t pay for services he doesn’t need.
Step 8: Risk review. The system flags the claim as low-risk or high-risk for insurance fraud depending on the types of services rendered, individual line-item charges, and the total charges on the bill. Gabe’s claim checks out as low-risk.
Step 9: Payment. Oscar sends a payment to Gabe’s doctor for the amount Oscar covers based on negotiated rates (Step 5) per Gabe’s benefits (Step 6). If Gabe hasn’t met his deductible (opens in new tab), he may be responsible for the full amount.
Step 10: Explanation of Benefits (EOB). Oscar creates an explanation of benefits (opens in new tab) to show how much the doctor billed, how much Oscar paid, and what Gabe may owe as an out-of-pocket expense. He checks his EOB to make sure that all the information is correct and it matches up with the services he received.
Step 11: Bill. If a payment is due, the doctor’s office will send Gabe a bill, which should match up with the amount and services listed on his EOB.
Building a better claims process
It may seem like a miracle that claims get through all these steps without hitting roadblocks along the way. But Thorsten Wirkes, Vice President of Insurance Operations at Oscar, isn’t content with simply getting claims from point A to point B. He defines claims processing success in this way:
“The three main goals are accuracy (did we pay the right price for the right services), timeliness (did we process claims quickly), and cost efficiency (did we process claims automatically). If any of these goals aren’t met, it can cause headaches for all parties.”
Historically, these goals have been difficult for insurers to achieve. The industry as a whole has been stuck in the 1970s using legacy systems, guidelines, and processes to manage claims. Thorsten’s mission at Oscar is to build a better claims processing system, one that uses modern software, optimized procedures, and advanced automation.
By refining the team’s operational approach, using data to learn and evolve, automating claims holds and routing, developing sophisticated matching algorithms for doctor and member information, and flagging risky charges early, his team has been able to reduce accuracy issues, pay claims faster (on average, within 5 days of receipt), and increase the number of claims that move through the system without needing a person to look at them.
Although the team has made great strides, they aren't stopping at “better.” They still see ample room for improvement, with technology paving the way.
From outsourcing to advanced tech: A claims odyssey
Claims processing is extremely complicated, so understandably, many health insurance companies rely on outsourced solutions. Initially, Oscar did the same thing to get off the ground quickly. But because claims processing is so core to the member and doctor experience, Thorsten and his team advocated from the beginning to move claims processing in house. While they were able to make incremental improvements with their vendor, they knew the only way to make major optimizations was to own the system from beginning to end.
Doing so was no small undertaking. In fact, it took 9 months to transition from an external setup, which included operational and technology components, to an internal one—and that was just to replicate the existing infrastructure. Oscar is currently building a brand new claims processing system from the ground up, rolling out in 2018.
Thorsten is excited for the future of claims processing. “We recently merged our claims team with our technology team. The long-term goal is to fundamentally rebuild the entire infrastructure of claims processing. We believe there’s so much that can be done with automation and technology to improve operations, providing a better experience for both doctors and members.”
The end goal is to process claims efficiently so doctors spend less time hunting down payments for the care they already gave, and reduce errors so consumers never have to deal with denied claims or paying for services they never received. With any luck, the claims processing system of the future will work so seamlessly, we never know it’s there at all.
Back at Gabe’s house...
Weeks after he goes in for an appointment, Gabe receives an explanation of benefits from his insurance company. To him, it looks like a simple piece of paper that took a few seconds to print and stick in an envelope.
But it’s so much more than that.
This EOB is the output of a sophisticated claims machine—powered by hard-working people, processes, and technology—that transformed a complex medical invoice into a check cut to Gabe’s doctor and a statement in his mailbox.
It’s not magic. It’s health insurance at work. And a lot of effort goes into making it look easy.
