Towards fully digital and automated healthcare insurance claims

October 27, 2019

1. Healthcare industry at a glance

Digital advancement has started to reshape the healthcare insurance industry. However, digitization, particularly automation and the use of AI in the healthcare industry has been slower, compared to other industries. Discontinuities exist in all stages started from opening the claim until final decision making. In most cases sending the claim, technical and medical claims auditing as well as claim approval and decline are not automated. Several important factors lie at the root of the need and importance of digitization and the use of AI solutions.
  • Growing and ageing population
Growing and ageing population imposes a pressure on the labor market, economic development as well as fiscal policy hindering state’s efforts to building and maintaining public healthcare and other systems. According to the latest reports, global population is predicted to record a 10% increase by 2030 and a 26% increase by 2050, comprising 8.5 billion and 10.9 billion respectively. The largest increase in population will be recorded in Sab-Saharan countries (99%) followed by Northern Africa and West Asia (46%). While Europe and North America will have the lowest population increase (2%) by 2050. Growing population is accompanied by population ageing. By 2030 older persons are projected to surmount children under 10. Moreover, people aged 60 and over are expected to outnumber adolescents and youth aged 10-24 in 2050. By 2050 the number of people aged 80 or over is estimated to triple. Around 60% of old population live in developing countries. Europe and Northern America experience the largest increase in aging population. In Europe old persons are projected to count around 35% of total population, while in North America they are projected to count 28%.
  • Increase in healthcare spending:
Healthcare spending continues to escalate globally, implying that the health system needs to reduce costs and increase efficiency. According to statistical reports, global healthcare is estimated to reach $10,059 trillion in 2022, which is 30% increase, compared to 2017 estimates. The annual increase rate of global healthcare is 5.4%. The highest increase is estimated to take place in Middle Eastern and African countries. In Western Europe healthcare expenditure is projected to increase by 31% in 2022 compared to 2017 estimates. Parallel to increase in healthcare spending public and private resources allocated to healthcare are not used effectively. With above-mentioned indicators, the pace of global healthcare spending surpasses the increase in GDP. The highest increase is recorded in low and middle-income countries.
  • Increase in Non-Communicable Diseases (NCD):
The number of deaths attributed to NCDs or chronic diseases comprises around 41 million people annually or 71% of all deaths globally. Furthermore, around 15 million death between ages 30-69 is occur because of NCDs annually, 85% of which in low and middle-income countries. In this framework, NCD related healthcare spending tends to empty out household and public resources. Annually almost 44% of deaths is attributed to Cardiovascular followed by Cancers and Respiratory diseases.
  • Quality vs. spending 
Increasing healthcare costs and NCDs, population aging as well as continuing government pressure have led to the overall decrease in the quality of healthcare provision worldwide. Because of this healthcare providers, including insurance companies lack sufficient resources to provide quality and timely services to customers. This has led to substantial complaints on behalf of consumers and lead to continuous increase in service costs.  According to the latest reports
  • Changing demands and consumer needs
Consumer demands are changing over time and nowadays consumers want to be engaged in their healthcare more than ever, they want to own their health data and be part of the decision-making. According to the McKinsey Consumer Health Insights Survey, Consumers now want more digital solutions for service provision and engagement: 58% of respondents indicated they would prefer more email text or phone appointment reminders and 53% said they would prefer to get electronic health records from their care provider. The survey particularly revealed three main areas where consumers were less satisfied – claims submission, cost information and provider performance data.    

1. Digital claims - moving forward

  Healthcare industry is evolving over time. From the viewpoint of private payers or service providers, digital claims encompasses not merely automated processing and claim payment, but also strategies that will manage medical costs in the long run and improve customer experience and satisfaction. In spite of technological advancement end to end digital claims management remains a vision throughout the world. However much of the claims management process can be automated and will result in a substantial reduction in spending, will increase access to healthcare provision and will provide a quality data that can be used by both public authorities and private sector. Fully digital claims tied with AI solutions can address the following issues that exist in the healthcare industry:
  • Reduction of costs, efficient allocation of time and resources
According to the McKinsey reports with current system of healthcare claims a mid-sized healthcare insurer receives more than 700K claims for refunds from hospitals annually. After receiving the claims the company should verify whether the claims are correct. As a rule, around 70% of claims received by insurers are marked as unusual or potentially incorrect – based on the health insurer’s specific rulebook. The claims are than checked in detail by the administrative staff and decision for intervention is made after the after the examination of the claim information and patient history data. In this framework AI solutions, that continuously evolve and can identify and correct errors, can save around € 500m annually. Hence, the automation of healthcare insurance claims process, tied with AI solutions can result in considerable savings and better resource allocation. Claims audit is a time and resource-consuming task that can be potentially used elsewhere, not only in the insurance industry.
  • Incorrect claim detection
According to recent studies, around 8-10% of clams received are incorrect, and this amount increases over time. The identification and correction of these claims can reduce great amount of time, money and resources. Health insurers can reduce the total amount of money originally submitted in claims by around 3%.
  • Quality data and analysis
Better use of health data for research and innovation purposes and for shaping the healthcare policy on behalf of the government, healthcare and insurance providers is essential. Having a quality data will allow to provide sector specific data and statistical analysis, which will result in a decrease of state allocation on research and development. Furthermore, in a lot of countries, particularly in low income countries quality data remains and issue and hinders the development and implementation of targeted policies.
  • Increasing customer needs and expectations
The attitude of consumers towards their healthcare has changed over time and transformed to consumer to business (C2B) delivery model. Consumers strive greater access and ownership of their healthcare data. Healthcare service provision, including insurance provision has started to transform to patient-centered. This implies that service providers, including insurance providers need to use technology and innovation, customized programs and improve consumer experience. They need to communicate the value of products and services with consumers and payers in a way that helps them compare cost and quality information and enables them to make confident decisions about healthcare. Nowadays consumers expect more coordinated, customized, convenient and accessible solutions to healthcare provision that will promote greater transparency around price, increase quality of service provision and safety.