Claims Pend Reduction

22% reduction in pending claims and $366,236 in savings
Claims Pend Reduction
22% reduction in pending claims and $366,236 in savings
A customer success story

Problem Statment

A large health insurance carrier was receiving approximately 22,000 claims per day, totaling approximately 5.5 million per year in their Maine office. Fifteen to twenty percent of the daily claims (roughly 3,800) required manual intervention to adjudicate, meaning they were “pending.” Each time a claim was pended, it required extra handling, at an average cost of $2.00 per claim.

The insurance provider could not expect to entirely eliminate pends. Some claims are automatically sent to a manual process, because they require special handling, for example, if they require a medical review.

Project Goal

The project goal was to reduce the number of claims pended each day by 20%, resulting in monthly savings of approximately $30,000, equaling roughly $360,000 per year. To achieve this, the company reviewed exactly what was making a claim “pend” and how they could improve the system flow. They hoped to increase customer satisfaction, decrease their administration costs,
and put a faster, more accurate, and seamless claim process in place.

Business Case

By improving the current process, this insurance provider would reduce the number of claims pended daily, thereby reducing the number of claims that were being backlogged. Customer and provider satisfaction would increase due to this more timely process.

Industry

Service

Company

Health Insurance

Results

22% reduction in pending claims and $366,236 in savings.

Tools Used

Six Sigma DMAIC

Timeline

Seven months

Projected Savings

Working with Juran, this insurance carrier identified and fixed 27 system issues, achieving a 22% reduction in daily pends and a savings of $366,236 in 7 months. The Maine office’s pends are expected to continue to decrease, resulting in annual savings of almost $900,000. The team also was able to foster interdepartmental and interstate relationships, the value of which is priceless.

Define, Measure, Analyze, Improve, Control

Results

The insurance carrier was able to successfully reduce the number of daily pends, and add a significant amount in savings to their bottom line.

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