How to Digitize Claims Processing for HR

Human resources is a notoriously labor-drenched component of the modern business ecosystem. Despite massive digital advancements across various pods of business, HR still requires a burgeoning volume of paper documents, manual touchpoints, and redundant activities. In fact, the average HR worker spends over 70% of their time on HR administration, which includes painstaking processes like claims management and payroll.

In particular, claims management is a burden for HR teams. Not only are workers' comp claims a primary source of HR paperwork (there are around 3.4 claims per 100 employees on average), but they're fraught with risk, costs, and (worst of all) complexity. The average cost of a single claim is over $40,000, and any minute budges in your experience modifier or rates can have a massive impact on your end-of-year budgets and ability to secure government contracts.

Managing claims can be a mind-numbingly difficult task. You have to converge multiple sources of paperwork (e.g., medical paperwork, histories, interviews, etc.), and you also have to carefully identify any fraudulent claims — which costs businesses over $30 billion per year. So, how do you navigate workers' comp claims without sacrificing HR people to the manual labor gods?

Recently, we helped one of the largest claims processors in the United States maximize their claims architecture with a best-in-class combination of outsourcing, automation, digitization, and modernization. Today, we want to break down some steps that went into this process and talk about how you can overhaul your claims framework to introduce value and cost-savings without breaking the bank.

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The average claim carries a significant document burden. In fact, for many processors, there are over 100 clearly identifiable document types that go into processing claims. These range from medical, indemnity, and investigation documents to state forms, hearing/legal filings, and rehab paperwork. Trying to categorize, organize, and manage these documents in a traditional setting is a nightmare filled with bulky filing cabinets, full-time personnel, and hordes of office supplies. In today's digitally-charged ecosystem, it's your Achilles heel. How do you both categorize these documents and properly ingest them into your digital systems?

One answer is labor, money, and time. But that's not a long-term solution, and it certainly isn't ideal in today's economic landscape. To be clear, every business will, at some point, have to deal with workers' comp documents. Over 2.8 million workers are injured on-the-job each year, and workers' comp premiums alone — which aren't the primary cost associated with workers comp (hint: it's labor) — cost $0.46 per hour worked by an FTE. But larger businesses, Professional Employer Organizations (PEOs), non-profits, public bodies, and outsourced HR agencies have to deal with a significant amount of workers' comp claims.

When you have 1 or 2 claims a year, manual labor and a pot of coffee may work. If you're dealing with tens, hundreds, or even thousands of claims, you need a system. At DRS, we paired our client with a full-service digital mailroom. They got full-time, on-site employees that ingested thousands of documents, sorted them appropriately, and labeled and stored them for shipping to digitization centers. You need something similar. Don't overlook the sorting and storage component. Often, we see organizations hyper-focused on the digitization component of claims modernization. That's certainly a critical part of the process, but you still need a way to manage those paper documents. They're not going away. And, ideally, you should manage these documents before you start digitizing them.

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Digitization and Image Conversion

It's easy to digitize documents; it's hard to digitize documents right. Forty percent of tech investments go directly toward digital transformation and digitization, so there are plenty of solutions out there that quickly and easily convert paper to digital files. But, again, you need to think of this entire process holistically. The strategies and techniques you use to digitize will have a long-term impact on the fragility or strength of your digitization architecture. You don't want to simply brute-force a bunch of paper documents into digital systems; you risk security, continuity, scalability, and classification issues.

At DRS, we follow AIIM's best practices.  Using a standardized system may take time to set up, investments to establish, and plenty of headaches to research, but the result is a more comprehensive and meaningful ingestion process.

As an example, our docuLynx Operations team (which uses AIIM standards) custom-engineered a development process for our client's massive backlog of claims documents. For this particular client, that involved libraries of paper, microfilms, and microfiche documents. But your exact needs will certainly be different from this particular client. You need a unique system that leverages best-practices to help you build out a streamlined and secure digitization process.

Modernization and Automation of the Capture Process

Claims administration — which converges multiple systems and leverages a variety of downstream technologies — requires the careful combination of digitization and classification. Often, businesses partially ignore the latter. While 49% of businesses say their primary reason for digitization is to "better manage business performance through data availability," many skip over classification — which is the lever that unlocks end-to-end data availability across systems. To be fair, businesses aren't entirely to blame. Classification is drenched in standards, strategies, and processes that are often outside of the domain of many businesses. Yet, fewer than 30% of tech vendors actively help their clients pursue digital transformation. Most are just looking for a quick conversion. This puts businesses in a tricky position. It's easy to adopt digitization technology. It's incredibly challenging to adopt digitization tech that appropriately ingests and classifies data in a way that's uniquely valuable to your organization.

We highly recommend partnering with a vendor for this step. Building out your own internal system would take years, and you would need a healthy dose of FTEs to support the classification process. To give an example of the technicality that's baked into this process, let's look at how we helped our client navigate through digitization-fueled data classification.

First, we leveraged PSIcapture and a horde of experienced FTEs to deploy intelligent classification systems across our client's tech framework. Not only was this system capable of identifying over 130 claim form types — with multiple versions per form — but our indexing classification tech could identify form fields (up to 70 per form with this particular client). Our SLA inspires us to deliver one-hundred-percent clean and validated index data across all of these form types. The ultimate goal is to provide unparalleled value for downstream business apps while baking continuous improvement and intelligent AI/ML to deliver consistent and meaningful results.

We Can Help You Build Out A Claims Processing Framework

Managing claims is a highly complex process, even with today's tech. The sheer number of forms, fields, and data points can create havoc for internal systems and FTEs. We can help. At DRS, we provide end-to-end data scanning, ingestion, classification, and utilization technology for our clients. From digital mailrooms and facility management to world-class classification processes and ERPs, we have the tools, technology, and people to help you avoid digital extinction. Contact us to learn more.