Healthcare Industry Case Study
/ / Healthcare Insurer Saves Millions by Automating Claims Processing
Overview
Country/Region: United States
Industry: Healthcare
Customer Profile
Motion Picture Industry Pension & Health Plans (MPI) of Studio City, CA is a Taft-Hartley trust fund dedicated to the motion picture industry, with 100,000 covered lives.
Business Situation
MPI was facing skyrocketing labor costs and a growing backlog of claims. Its legacy system was not capable of adjudicating claims electronically or meeting The Heath Insurance Portability and Accountability Act of 1996 (HIPAA) readiness requirements.
Solution
MPI implemented QMACS, a health management and administration system from QCSI. The solution runs on Microsoft® Windows Server SystemTM.
Benefits
n >70% increase in productivity
n 50% lower administrative costs
n 50% decrease in claims backlog
n 30% increase in accuracy
n $3 million annual savings / "Our use of QMACS on Windows Server System has helped put MPI exactly where it wants to be. We have recaptured $3 million per year and are getting a lot of buzz within our industry."
Anwar Abbas, Chief Information Officer, MPI
MPI is a specialty union benefits provider with big ideas about technology. The organization, which administers healthcare coverage for 100,000 film industry workers and dependents, has replaced its manual, paper-based claims processing system with a state-of-the-art electronic processing system from Microsoft® Certified Partner QCSI®. QMACS®, which runs on Microsoft Windows Server SystemTM, has increased MPI’s efficiency and productivity so much that the organization is already saving more than $3 million per year.
Situation
A few years ago, the Motion Picture Industry Pension & Health Plans (MPI) found itself in an increasingly untenable business situation. The organization, which administers a Taft-Hartley trust fund for entertainment industry unions, was facing skyrocketing administrative costs.
MPI was employing 35 full-time claims processors and racking up more than $200,000 a year in overtime expenses. Yet, even at that level of staffing, it still had a steady 3-4 week backlog of 30,000-45,000 claims. Furthermore, MPI was having to spend approximately $2 million per year on administrative costs to outsource the processing of its hospital claims because it did not have the capacity to perform this function in-house.
These business burdens were due to a primarily manual system for claims processing. All 850,000 physician claims per year came in on paper and had to be entered into MPI’s legacy system by hand, creating numerous opportunities for clerical errors. Each claim also had to be adjudicated personally by a claims adjuster, causing more delays.
Soon after Anwar Abbas joined MPI as Chief Information Officer in 2000, he realized that the organization’s claims processing system would have to be upgraded. Not only were MPI’s processing costs out of control, but Abbas also learned that the mainframe system that MPI used as its hardware platform would no longer be supported. Furthermore, MPI’s then current claims software would not support The Heath Insurance Portability and Accountability Act of 1996 (HIPAA) compliance, which would be required in just a few years. “I looked at our rising costs and backlog and saw no end in sight,” Abbas recalls. “If our number of claims went up, I didn’t know how we could handle it.”
MPI brought in consultants from Ernst & Young to work with Judy Taylor, Director of MPI’s Claims Department, to analyze the organization’s business processes and make recommendations. Their study showed that 68% of MPI’s claims paid $100 or less, and 88% had three or fewer claims service lines. This meant that the majority of the organization’s claims could quite easily be transitioned to automated adjudication.
On that basis, MPI decided to implement a new electronic claims system, for which it set out the following requirements:
n Ability to adjudicate claims electronically, quickly, and accurately
n Inclusion of HIPAA-preparation features
n Scalability to grow as MPI’s business expanded
n Compatibility with a Microsoft Windows Server System infrastructure
Solution
MPI asked six different companies to propose solutions based on its stated requirements, and quickly narrowed the field down to two: a mainframe-based solution; and QMACS, from Microsoft Certified Partner QCSI. Though the former option appeared less expensive at first, MPI soon realized that QMACS was a much more cost-effective long-term solution, for the following reasons:
n QMACS would have a significantly lower total cost of ownership, because it would be easier to integrate with MPI’s existing, homogenous Microsoft software infrastructure and its intuitive user interface would necessitate less training.
n QMACS would provide the flexibility to process MPI’s hospital claims, which would allow the organization to eliminate $2 million per year in outsourcing fees.
“Given these considerations, QCSI was clearly the better long-term choice for our organization,” comments Abbas.
QMACS is a comprehensive system that manages all relationships between a payer organization, its members, and the providers. This includes managing complex benefit plans and provider contracts, referrals, utilization management, claims adjudication and payment, call tracking, and financial reporting.
QMACS runs on Microsoft® Windows Server SystemTM, integrated server software designed to optimize manageability, security and reliability, while lowering the overall cost of operations. A multi-tier system with a Microsoft SQL ServerTM2000 database layer, QMACS can scale from 10,000 to 10,000,000 members.
In an architecture review of QMACS, Microsoft Consulting Services healthcare practice noted: “QCSI's QMACS product is a well architectured Windows application and a great example of Microsoft technology at work. QCSI has utilized the recommended layering approach of separating systems services into three logical tiers - presentation services, business logic and data services. In particular, the database team has considerable understanding and experience with techniques and tools for optimizing SQL Server performance within a variety of production environments." In 2004, QCSI formally released its next generation product, QNXTTM.
Implementation of the system for MPI took place over 18 months. QCSI first conducted a thorough Discovery Phase, including a business needs analysis, blueprint, and functional proof of concept. Working closely with MPI, QCSI then proceeded to set up and configure the system. This process was particularly complicated because it was the first time that QMACS had been implemented for a Taft-Hartley fund, which employs different terminology and rules than other healthcare payment plans. Following configuration, the implementation team converted the data from the old system to the new and integrated MPI’s eligibility system. Finally, MPI trained its IT and operations staff in all facets the new system. “The open architecture of QMACS makes it very easy to work with,” comments Abbas.
QMACS automates and streamlines many previously manual processes for MPI.
n The system receives claims electronically, reducing manual data entry and errors. Smaller physician’s offices do not have the capability to submit electronic claims, but many of the larger providers do. HCFA 1500 and UB92 claims arrive directly from providers or via clearinghouses in the NSF electronic format for processing by QMACS. Within one year, MPI was receiving 30% of its claims electronically.
n QMACS automatically adjudicates claims according to the detailed business rules established by MPI. The system is already auto-adjudicating 420,000 claims per year, significantly lowering administrative costs.
n A Microsoft Windows 2000 Professional client interface makes the system quite easy to use. “We saw an increase in productivity which was partly attributable to the QMACS graphical user interface, which is significantly more conducive to heads-down data entry than our earlier green-screen system,” says Judy Taylor.
Benefits
Once the QCSI system was up and running, MPI quickly began to see a tremendous return on its investment.
Productivity Increased by More than 70 Percent: “Prior to implementing QMACS,” says Taylor, “each of our staff members processed 115 claims a day. But after implementation, the rate jumped to 200 claims per processor per day.”
Administrative Costs Reduced by 50 Percent: As a result of the increased productivity, MPI has been able, through attrition and reassignment, to reduce its claims processor staff by more than half. This alone has generated $1 million in annual savings.
Backlog Reduced by 50 Percent: Faster claims processing has made for increased member and provider satisfaction.
Accuracy Increased by 30 Percent: Automation of previously manual processes has dramatically reduced costly errors. “This has resulted in far fewer pended or denied claims and resubmissions,” comments Taylor.
Uptime Increased to 100 Percent: Previously, Abbas says, MPI experienced a system failure at least every other day – a significant drain on productivity. But, “In the year since go-live, QMACS has maintained 100% uptime,” he says.
Outsourcing Eliminated: With the new system in place, MPI was able to begin processing its hospital claims in-house, saving $2 million per year in outsourcing costs.
Hard Dollar Savings of $3 Million Plus:
By reducing labor and eliminating outsourcing alone, QMACS has helped MPI reduce its annual costs by $3 million. And, the system is generating savings in many other areas. “We have even saved an additional $100,000 per year because QMACS automatically ‘bulks’ our checks to providers,” comments Abbas. “Instead of sending multiple checks to one provider, QMACs combines the amounts into one check, saving us the costs of excess printing, processing and postage.”
Building on the Benefits
Encouraged by the success of its new claims system, MPI has only continued to cultivate its technological savvy. Abbas has developed a highly skilled IT team of 12 developers and some have already received intensive training in Microsoft .NET technologies and Web Services.
“We’ve made a strong commitment to the Microsoft .NET Framework,” comments Abbas. “If we were going to be HIPAA compliant, we had no other choice. But more importantly, we see .NET technology as the future for interconnecting disparate systems.”
MPI’s development team is in the final stages of integrating Microsoft BizTalk® Server 2002 and BizTalk Accelerator for HIPAA with its QMACS system. This will allow the organization to receive HIPAA-compliant 837 electronic claims forms from providers.
The team now has a plan to tightly integrate MPI’s eligibility system with QMACS by utilizing Visual Basic® .NET technology. “This will allow QMACS to request eligibility changes instantaneously, and send that information to providers automatically,” Abbas explains.
MPI is also in the process of integrating QMACS with its Microsoft Business Solutions–Great Plains® accounting system. “We will then have total supply chain on the Microsoft platform – receiving, processing, payment, and accounting,” says Abbas.
MPI is now planning to implement QCSI’s next generation application, QNXT, which is built on Microsoft .NET technology. The Web Services architecture of this solution and its use of XML messaging will allow MPI greater flexibility in design and easier integration to existing in-house as well as external systems.
Microsoft Solutions for the Healthcare Industry
Microsoft offers the healthcare industry an advanced set of flexible, cost-effective tools that connect employees, information, services, patients, and business partners, turning the accelerating pace of change into competitive advantage.
For more information about Microsoft solutions for the healthcare industry, go to:
www.microsoft.com/healthcare