Capture Solution Brings Efficiency Breakthrough

Handling 10 million claims annually and growing, Downers Grove, IL-based First Health's Mail Handlers Benefits Plan division was reaching its capacity and technology limit.

The business unit had been capturing HCFA and UB-92 health insurance claim forms through a 60/40 combination of a home-grown key-from-image technology and a vendor OCR (optical character recognition) solution implemented in 1997. "We had reached the limit in terms of the level of productivity and wanted to be able to grow and have higher productivity and quality," says Diana Clem, director of application development, First Health.

Quality Strategy

Having identified commercial OCR solution providers with a proven track record, First Health sent RFPs to five vendors. After evaluating the responses the carrier decided on Recognition Research, Inc.'s (RRI, Blacksburg, VA) FormWorks solution. The choice was influenced by RRI's FormWorks' capability to process dental forms via OCR, the solution's higher productivity, and the vendor's SQA quality assurance module, according to Clem. "That was a big thing for us, because that function would enable us to be able to improve quality up front," obviating the need to correct errors caught later in the claims adjudication and adjustment stages, she explains.

First Health signed a contract with RRI in August 2000, and began a three-phase implementation of FormWorks, beginning with dental single-page claims, which were not handled by the existing system, Clem relates. The system went live for single- and multi-page medical HCFA forms in March 2001, and followed with a third deliverable of single- and multi-page medical UB-92 forms, as well as multi-page dental and pend letters.

In preparation for the project, First Health switched from its aging Kodak (Rochester, NY) 990 scanners to new 9250 models. "We built a new application for the scanning using Kofax Image Product's (Irvine, CA) toolkit and integrated that with FormWorks," Clem recalls. "We also integrated it with FileNET (Costa Mesa, CA), which is our imaging system."

Following the implementation, First Health saw an immediate jump in document-level accuracy, from 65 to 86 percent, according to Clem. Through use of the SQA module, the level was brought up to 93 percent. "We were able to use the product to hone skills and get down to what exactly were the errors"-in interpreting content in document fields-"and where we had training issues," she says. The result, Clem adds, was that, having invested more than $1 million on the solution, "we had ROI in less than eight months."

Owing to the experience gained from the OCR implementation in 1997, Clem says the RRI project brought few surprises, from a technology perspective. However, the productivity gains expected brought a staff-related challenge. "We knew we would need a reduced workforce, so we planned a transition, backfilling with temps as attrition occurred on the existing system," according to Clem. "That enabled us to ramp up, manage training and avoid layoffs."

First Health's operator efficiency is up to 700 claims per hour over a rate of 366 on the previous vendor system, and virtually all paper claims are now captured in FormWorks, according to Clem. To expand the system's capability further, First Health is currently developing templates to read black UB-92 forms. Standard UB-92s are printed in red ink to facilitate scanning of typed or written information in dark ink. "Sometimes you get a black form off a laser printer, making it hard to distinguish between the data such as a patient's name and the guide text." Clem comments, "Before, all of those had to be data-entered in the RRI product, but soon they will be able to be OCR'd."

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CASE STUDY CLOSEUP

COMPANY: First Health, Downers Grove, IL, $760 million in revenue.

LINES OF BUSINESS: Group health, workers' comp.

VENDOR/TECHNOLOGY: RRI's (Blacksburg, VA) FormWorks solution, Kodak (Rochester, NY) 9250 scanners, Kofax Image Products (Irvine, CA) toolkit.

CHALLENGE: Increase claims processing efficiency.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio