An insurance carriers’ auto adjudication rate often provides insight into its third-party claims processors capabilities. Have you ever asked your insurance carrier what your auto adjudication rate is and how it compares to the industry average? You might be surprised by their answer.
Is a rate lower than the industry average something to be concerned about? Generally speaking, plans with a non-standard benefit structure or process will have an auto adjudication rate lower than the industry average. How much lower? It depends, but generally it should not be more than 10% below average. If the response you receive provides a rate below your expectations, you should be concerned that your third-party administrator’s claims processing system is unsophisticated or not utilized to its fullest potential.
What about a rate that is higher than the average? If you have a cookie cutter plan, you should expect your rate to be at, or slightly above, the average. How far above average? It also depends, but generally it should not be more than 5% above average. If the response you receive is higher than your expectations, you should be concerned that the claims processor may be sacrificing quality in favor of automation.
So you asked the question and received an answer, now what?
If the response you received is not consistent with your expectations, you should work with your third party claims administrator to gain further understanding of what is driving the disconnect to determine what, if anything, needs to be done to address the problem. Analyzing this data over the most recent five-year period will provide useful insights that may help steer the conversation in the right direction. Additionally, correlating this information with the result of a claims audit for a similar time period is useful in assessing the possible impact to your plan. If you find yourself in this position and have not conducted a recent claims audit, it might be time to consider performing one.
Each year you should include this analysis as part of your routine health plan monitoring and oversight process. You may be surprised at how useful this simple analysis may be, what discussions may arise, and problems it might detect.
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