Tag Archives: rx

This Is Not Your Father’s Life Insurance

Soon-to-be published editions of dictionaries will list “InsureTech” as one of the newest words. We all own a piece of that new word and all that comes along with it. More than a new word, it is becoming a new world in the insurance industry. We’re on an InsureTech expedition.

Having spent decades of my life developing products, marketing programs and delivery systems in the life insurance vertical, I feel compelled to share some insights into the unique characteristics of the life insurance segment within the InsureTech movement. I will offer a recipe for an end-to-end digital system that bypasses legacy system quagmires and shifts digital life insurance sales into warp speed in both the consumer-direct and agent-broker categories.

But first a few words about what makes life insurance different from other types of insurance, along with some commentary on the state of affairs in today’s market.

Life Insurance Is Optional

Let’s think about the major types of insurance that consumers buy. Auto, home, health and life. We are required by law in all but two states to have auto insurance. If you have a mortgage on your home, you are required by the lender to have homeowners insurance. Federal law now requires that most of us must have a health insurance policy. These types of coverage are not optional. You don’t see articles about a trillion-dollar middle market coverage gap in the auto and homeowners insurance segments.

See also: What’s Next for Life Insurance Industry?  

But there is a trillion-dollar life insurance coverage gap in the middle-market today in the U.S. Why is that?

First, the process of obtaining a life insurance policy for typical middle-market needs is overwhelming, tedious, intimidating and mysterious for consumers. We’re talking about a basic term life policy with coverage of $250,000 or $500,000 or, OK, perhaps a million dollars of coverage in some cases in the middle market. Seems like it should be easy. But, even though we have seen price reductions across the board during the past 20 years for term life, individual life insurance ownership has actually decreased. The buying process is broken.

Second, combine the antiquated buying process with the fact that the purchase of life insurance is optional, and consumers repeatedly push the chore of buying life insurance to the bottom of their to-do lists. To make matters worse, because the fulfillment process for these smallish policies is so expensive for brokers and agents, they cannot make a profit focusing on the middle market. You end up with an unmotivated distribution system and a trillion-dollar coverage gap.

You Also End Up With a Trillion-Dollar Opportunity

I’ve taken it upon myself to write down the recipe for a digital process for capturing a sizable share of that opportunity.

This is what we need to mix together to end up with a complete system that is capable of starting with “Hello” and ending minutes later with a completed transaction: an “in-force” policy for the consumer.

  • User-friendly graphical user interface for both consumers and agents. (You would be surprised.)
  • Easy quote engine — provides all relevant price quotes so you don’t jump back and forth looking at one quote at a time. First thing I notice about most designs is that you have to keep re-entering inputs to see different quotes instead of being able to scan all of them on one screen.
  • Digital life insurance application process. Simple application language. Find just the right balance between just enough questions and not too many questions per screen.
  • Decision time. Consumer-direct or agent-assisted? Both models will become more numerous in the marketplace. Carriers need to understand that many consumers need and want some level of assistance. So, carriers need to be prepared to offer chat and over-the-phone assistance to complete the online process. Perhaps even full-blown call center agent “take over” of the application process when the applicant calls for help. Or some combination of these.
  • Collection of contact information from website visitors who are “just looking” so that carriers can conduct email and phone nurturing campaigns. Carriers need to understand and appreciate the tremendous dollar value of these campaigns and not leave a huge percentage of potential revenue on the table.
  • Compliance with Do Not Call and telecommunications statutes and CAN-SPAM. By the way, CAN-SPAM is widely misunderstood, and many marketers do not understand the generous powers it provides to contact potential customers via email. Email is still the “killer app” it was labeled as many years ago. Text messaging is a first cousin for certain market segments. Special language is needed on website(s) dealing with consumer permissions to use their mobile number.
  • Secure payment gateway to provide PCI-compliant credit card processing and deliver premium payments to the carrier. The ability to accept consumers’ checking or savings account numbers for payment is also necessary. Payment screens need to be seamless, transparent and simple.
  • Secure digital signature interface for consumer-direct and face-to-face sales as well as agent-assisted phone sales. All are slightly different. All are important. Again, seamless, transparent and simple.
  • Behind-the-scenes secure interfaces to the Medical Information Bureau (MIB), motor vehicle records (MVR) provider and pharmacy records (Rx) provider must be built to provide capability for real-time queries and retrieval of third-party data.
  • If the life insurance product being purchased does not require a medical exam (“non-medically underwritten,” which requires no blood or urine tests), then the process can proceed to the next step, which is the underwriting decision engine. If the design and pricing of the life insurance product do require blood and urine testing (“fully underwritten”), then the system will present a screen in the process for an appointment to be scheduled. Many designs are getting away from blood and urine testing, but, to be realistic, these tests will still be needed in many cases for years. This topic deserves to be considered in the system design sessions.
  • Underwriting decision engine that compiles all answers provided by the consumer on the digital application form with the MIB, MVR and Rx data. In real time, the underwriting engine then renders a decision on the application. Some straight-through systems are considering using third party software for this. Others have their own, proprietary engines that afford much faster adjustments to the underwriting engine rules and settings. Controlling the underwriting engine technology also can be the difference between a “go” or a “no go” answer when seeking to add features, change processes, edit code and take other similar actions, which are needed on a continuing basis, and sometimes quickly.
  • As applications are approved, the system must package the approved policy for the state of issue with all the necessary additional pages, such as HIPAA forms, Consent to Do Business Electronically forms and other pages, which can vary from state to state. This policy package must be provided to the new customer, the policyholder, in real time using a secure link for downloading.
  • All data pertaining to the new customer’s file must be transferred to the carrier’s administrative system in real time. A new customer is born.
  • Finally, a deep and broad suite of analytics must be baked into the system’s DNA and designed to manage the business being put on the books on a daily basis. Take this data in real time and reinforce what is working. Correct that which is not. Just this one necessary component alone could be the topic of an article several times the length of this one. We’ll get right on that.

See also: InsurTech Can Help Fix Drop in Life Insurance  

These are the many pieces that I truly believe are necessary to work together perfectly to achieve the kind of disruption that is so necessary. We’re already all over this one.

8% Reduction In Claims Costs Spells Success for Workers' Compensation Pilot Program

Physician-Guided Managed Care Achieves Better Results

Ever wondered why managed care costs more every year but the results seem about the same? For decades, the most expensive portion of a claim was the indemnity payments. Today, with medical advances, it’s the medical expenses, which in workers’ compensation alone, have increased nationwide by an annual average of 8 percent, nearly double the medical consumer price index of 4.3 percent over the same six-year period.

Although managed care services vary somewhat from company to company, they are more or less delivered as commodities, with each service providing similar capabilities regardless of vendor. Upfront fees are the selling point, and price is the primary differentiator. Some service providers may be more efficient than others, but only because their technology underpinnings are better (or better managed). Either way, technology-based processes often define the service, with poor accommodation for human intervention.

In this typical managed care model, medical bill reviews sail through software systems as fast as possible, grabbing savings along the way based on automated business rules and built-in triggers. Experienced nurses conduct utilization reviews (URs), but generally in a rubber-stamp role, and escalation of questionable utilization reviews to physicians can slow the review process by days, or even weeks. Similarly, case management is a nurse-based service in which physicians come into play only on an exception basis. And finally, there are the networks of doctors and hospitals that discount fees. Because the managed care vendors that build these networks absorb part of the discounts as payment for network access, they have little incentive to choose these providers selectively.

In this standard managed care model, one service provider might boast the lowest price for medical bill review, another for utilization review, and both will attract buyers on price alone. But insurance entities that choose providers based on upfront fees are sacrificing a higher level of savings — one that can only come with a more holistic view of managed care services.

Current Managed Care Model
Many insurance companies use managed care services to find the obvious savings (or “low hanging fruit”) through case management, bill review, utilization review of patient treatment plans, and provider networks at discount prices.

Yet most managed care service providers seem powerless to arrest medical costs and have been unable to utilize or develop a different approach. They continue to use nurses and clerical review staff to oversee the medical component of a claim, when their valuable input often doesn't reach the treating physician in any meaningful way. And when a physician finally does become involved, the case is often already derailed by out-of-control treatment plans and costs.

Instead of charging fees to catch problems after the fact, industry innovators want a new, more effective model to lower costs and influence the quality of care from the beginning of a claim.

A New Model: Physician-Guided Managed Care Services
What is needed is a managed care infrastructure that leverages the credibility and expertise of doctors at key points in every service.

Physician-Guided Care (PGC), a ground-breaking approach to managed care, combines knowledgeable individuals with predictive analytics and systems to measure and influence medical care. It's a model where treatment is lead by doctors — not clerical review staff or nurses.

Widespread as it is “holistic” in nature, the Physician-Guided Care model informs the overall delivery of all managed care services. Put another way, Physician-Guided Care can be defined as supporting the right treatment at the right time by the right professional — and all at the right cost to workers' compensation programs. And this model has been proven to deliver better results, including:

  • 11% faster return to work for injured persons; and,
  • 8% reduction in overall claims costs.

The Right Treatment At The Right Time — By The Right Professional
To understand the value of “right” in this context, consider the prevailing practice of nurse-conducted utilization reviews (UR). Customers pay for the nurse's review, and again for a second review at a higher incremental price; each time a utilization review case is escalated to a doctor for specialized medical advice.

Alternatively, if the nurse chooses to call the treating physician to discuss the matter, there's no guarantee the call will be returned quickly, if at all, and nothing preventing the provider from proceeding with the planned treatment. Either way, relying on nurses at the initial stage of less-routine utilization review cases can increase costs, slow turnaround times, and prolong the life of the claim.

With the Physician-Guided Care model, only physicians conduct utilization reviews. The collaborative nature of physicians, trained to work together, delivers greater efficiencies and better outcomes to the process. In fact, the approach of using physicians at the appropriate level of every service has upended the commodity-based service model favored by the managed care industry. As trained clinicians, they pinpoint problems, negotiate with treating physicians, and arrive at fair resolutions more quickly and effectively. Physicians are used in the following ways:

  • Medical Bill Review: The Physician-Guided Care model combines the expertise of senior-level bill analysts with proprietary quality assurance technology that flags possible violations of medical procedure coding, PPO network discounts, and state fee schedules. Level of Physician Involvement: Questionable treatment, billing codes, and charges for medical services are escalated to physicians for clinical review.
  • Utilization Review: The Physician-Guided Care model uses staff physicians to review medical treatment plans and collaborate with treating physicians on patient care. Level of Physician Involvement: All utilization reviews are conducted by physicians.
  • Rx Utilization Management: The Physician-Guided Care model reviews prescriptions before they're filled, specifically Class II and III drugs, special requests, and prescriptions flagged by specifically configured triggers as potentially out of scope or harmful to the patient. Level of Physician Involvement: All requests are reviewed by physicians.
  • Case Management: The Physician-Guided Care model for case management combines physician and field nurse case managers who work with treating physicians and families to ensure the best possible patient care without incurring undue costs. Level of Physician Involvement: In the Physician-Guided Care model, physicians are assigned to any claim that meets at least one of dozens of critical factors and anticipates six weeks or more of lost work time, based on predictive modeling.
  • Physician on Call: The Physician-Guided Care model makes physicians available via an 800 number to help claims examiners resolve medical issues quickly, especially when they're under pressure. Level of Physician Involvement: All calls are handled by physicians.
  • 24/7 Nurse Triage: The Physician-Guided Care model uses phone-based triage-trained registered nurses to guide accident victims to the right treatment option the moment an accident occurs. Level of Physician Involvement: Nurse triage operations are overseen by a physician certified in internal and emergency medicine.
  • Claim Analysis: The Physician-Guided Care model helps claims examiners resolve persistent issues and move toward settlement of difficult or long-term claims. Level of Physician Involvement: All analyses are performed by physicians.
  • Medicare Set-Asides (MSAs): The Physician-Guided Care model helps claims staff forecast Medicare Set-Asides more accurately, expedite reporting, and comply with Medicare's Secondary Payer Act for case settlements. Level of Physician Involvement: Physicians oversee the work of analysts and forecasters.

Delivering Better Results For Claims Organizations
Over the last few years, Physician-Guided Care has confirmed its value for businesses by reducing medical costs, accelerating patient recovery, and minimizing appeals of managed care decisions.

Many workers' compensation carriers choose to first pilot the Physician-Guided Care model in order to evaluate results and confirm the benefits of the approach. One example of such a pilot was an insurance company specializing in workers' compensation claims. This organization chose to evaluate the Physician-Guided Care program in order to measure the success of using physician case managers, specifically on cases that involved severe injuries.

This pilot program ran between July 1, 2010 and May 31, 2011, during which time physicians were assigned as case managers to any claim that met the following criteria: involved an injury with certain critical factors and had at least six weeks of anticipated lost work time due to temporary total disability (TTD), based on predictive modeling.

By any measure, the results were impressive. During this pilot program, the use of physician case managers resulted in:

  • Medical expenses to drop by 8 percent.
  • Compare that to the 2 percent increase in the medical cost inflation rate for workers' compensation insurance in 2010, and the effect is a 10-point better result.

The Physician-Guided Care Model: Making an Impact
One thing is certain: the traditional model for managing medical costs and care is outdated and no longer generates sustainable improvements. The new Physician-Guided Care model has been tested with thousands of claims, and shown to deliver measurable improvements in claims outcomes and costs.

Physician-Guided Care is the groundbreaking approach successfully leveraging the credibility and expertise of doctors at critical points in every managed care service. The Physician-Guided Care model is successful due in large part to its foundation — the collegial and collaborative nature of physicians. In an environment where doctors have historically been trained to work together, the Physician-Guided Care model harnesses the peer-to-peer relationship to manage patient care from the start and throughout the entire claims process. The result: the treatment plan is set on the right course to get the injured person back to health quickly, and unnecessary medical procedures, costs, and prescriptions are avoided.