Metropolitan Life Insurance is a company that's used to being first. It's the largest life insurer in the United States with approximately $2.1 trillion in life insurance in force as of December 31, 2001. It's also used to dealing in large numbers. It has 48,977 employees worldwide, serves about 10 million households as well as 88 of the companies in the Fortune 100.
Yet MetLife had not invested in the latest technology for processing claims. As late as 1999, however, most of its claims processing was paper based and accomplished manually - it had no imaging system and no optical character recognition (OCR.) Its workflow was redundant and its call center operating at less than optimal levels. According to Carlos Creamer, Vice President of Strategic Operations at MetLife, an average claim took 10 days to process. "We had a pretty inefficient model for processing," he says, adding MetLife was "unhappy with its levels of timeliness, quality and operational cost in the market place."
MetLife considered outsourcing to improve its product offerings and overall performance. "We wanted to process claims for less expense. That would help us lower customer premiums and raise customer satisfaction, which would drive more business," he explains.
A Partner Who Can Handle the Volumes
MetLife processes tens of millions of claims per year and millions per month. Many outsourcing service providers would be challenged by such volumes. But in 1999 when Creamer interviewed outsourcing candidates, he learned that one -- Affiliated Computer Services Inc. (ACS) -- had some impressive reference accounts. It processes the claims of eight out of the top 10 healthcare providers in the world, a total of 500 million claims per year, says Lesley Pool, Senior Vice President and Chief Operating Officer at ACS.
As a result of its business process outsourcing (BPO) expertise, ACS processes claims anywhere from three to nine times faster, from 25 percent to 75 percent cheaper and 35 percent to 40 percent more accurately than in-house operations, according to Mark King, ACS' Chief Operating Officer. These improvements translate into millions of dollars in savings.
After interviewing other candidates, Creamer says MetLife chose ACS because the service provider "stood apart from the competition in mail imaging and data capture and was definitely in the top competitive echelon as far as pricing."
The Offshore Component
ACS now processes a MetLife claim online in a matter of seconds, not days. MetLife claims arrive at ACS' mailroom in Lexington, Kentucky, where they are opened and prepped for scanning. "Prepping involves a lot of little things that make a big difference," says Creamer. ACS sands the edges off the envelopes instead of slicing open the mail to protect the contents better. Slicing envelopes tends to cut up internal documents which then have to be taped together again before scanning, which adds another step to the workflow.
The next step involves screening the claims to see if documents are missing, then sorting them. Once the staff scans the document, the image "is almost simultaneously beamed offshore" for data capture via ACS' proprietary satellite network. ACS has disaster prevention practices in place, including never sending more than 50 percent of a client's work to one offshore location. MetLife preferred this system to other providers who were limited to a single location or who had no backup or recovery mechanism.
ACS has offshore operations in Ghana, Mexico, the Caribbean, Guatemala and China. When claims arrive at these centers, one operator keys in the data from the digitized image of the claim and another operator independently keys it in again. The system automatically compares the two versions to verify that there is no difference in the information.
ACS passes on its labor savings from its offshore operations to MetLife. "Wage rates in countries like India and the Philippines can provide an 80 percent discount on U.S. wages," says Debashish Sinha, Principal Analyst of IT Services, at the Gartner Group. He says total cost savings are closer to 50 percent "because of the significant additional costs associated with managing the relationship."
Finalizing Claims Faster
ACS eliminates one step by using OCR and comparing that with data that's been keyed in. ACS uses multiple recognition engines that "vote" on the most likely character. When using OCR, the operators might have to verify just one field instead of reading through an entire document, which saves time. Other service providers may review the entire document for just one character or field error. Creamer says "every 1/10th of a percent improvement on quality is very meaningful, based on these volumes."
While most in-house companies might achieve 60 to 70 percent accuracy at this stage, ACS' first-pass processing rate is 80 to 90 percent accurate, according to Pool. This finalizes claims faster. She adds that when ACS "fast tracks" this phase, the processing time is a matter of seconds - even though some of the processing might occur offshore.
Documents that contain errors after the key/verify stage or are missing material are sent to different queues linked to an ACS call center. ACS has call centers located around the world, but since the MetLife operation is so large, it has its own dedicated call center operation on the ACS premises. ACS owns the center and uses ACS employees. Here agents call the doctors, client or other relevant parties who can provide corrected information on the rejected claims (the wrong taxpayer ID for a doctor) or provide missing documents (like X-rays) that support a diagnosis.
Agents handle incoming calls, too. For instance, King says it's common for a patient to call in and report that his doctor said he was not covered by Medicaid while the patient was told by another source that he was covered. In such cases, the agent can go online and verify coverage, fix the claim and alert the doctor to the patient's correct status.
When the claims are completely processed, ACS returns them to MetLife's claims processing system, though it can also archive them in the ACS system if desired.
According to Creamer, the ACS method has saved MetLife time and money. MetLife did not have imaging technology in-house, so it could not process the claims online. With ACS' imaging system, scanning and image routing happens in seconds. Also, ACS' automated workflow is so precise it drives significant time and cost out of the processing cycle. But Creamer adds that ACS also pays less for labor because it uses offshore labor pools and passes on the savings to MetLife. The ACS solution includes a productivity-based compensation model that incents workers by paying them on a piece rate.
To gauge the improvement in processing, MetLife benchmarked its dental claims processing. Prior to outsourcing, Creamer says MetLife was processing less than 80 percent of dental claims in 10 days. Now it is well over 95 percent during the same time period. As a result, Creamer says MetLife has experienced "a significant improvement in customer satisfaction." What's more, he concludes, "our ROI is huge and we are very pleased."
Lessons from the Outsourcing Journal:
- A precise, automated workflow can significantly improve claims processing speed and accuracy.
- Offshore operations save money by using a less expensive and highly motivated labor pool.
- An efficient call center vastly improves the accuracy of data to speed claims processing.