In this article, alongside Gen Re’s Liang Chen and Weibo Chan, we consider some of the developments taking place within the critical function of claims processing. We also assess the contributions that various insurers, startups and third-party administrators (TPAs) are making to combat fraud, waste and abuse within life and health insurance.
Until recently, healthcare claims processing was an area of the Asian insurance industry somewhat lacking in innovation. This is despite the fact that the function impacts profitability directly. While overcharging in public hospitals remains a problem common to many countries in the region, other issues relating to ‘fraud, waste and abuse’ vary significantly by market. In certain markets, the dominance of private healthcare means managing hospital networks through technology will become more important. In emerging markets, a different approach will be required. Against this varied backdrop, several trends have emerged:
First, the arrival of advanced analytics and mobile payments will have far-reaching consequences for claims processing due to the ability to parse data and identify anomalies within large data sets.
Second, many Asian governments have realised that public/private partnerships will play a role in their ambitions for the insurance industry. Specifically, providing insurers with access to data about treatment and claims from public hospitals will increase visibility into hospital processes.
Finally, a host of startups and technology enabled TPAs have emerged to help insurers upgrade their claims experience, with the likelihood of further industry disruption coming from external rather than internal forces.
To grasp these changes, and the consequences for this sector of the industry, it is worth considering each of these trends in turn.
TPAs originally handled much of the paperwork associated with health insurance claims. However, the notion that software will perform functions typically associated with manual tasks is fast becoming a reality. Advanced analytics tools can now parse petabytes of historical claims data to identify instances of fraud, waste and abuse, issues that were previously hidden by a cyclical claims pattern.
For example, Taikang Life in China has released a claims engine that will further its ongoing efforts to recognise instances of overcharging, over utilisation, and fraud across public and private hospital networks.
Taikang Life’s claims processing function is available across WeChat and native apps to increase visibility into public hospitals and streamlining claims by capturing a more complete view of a customer’s medical journey.
Elsewhere, Life Insurance Corporation of India, India’s largest life insurer, is working with provincial level governments and public hospitals to aggregate medical data from clinics, hospitals and pharmacies to support cost control (validate claims), serve actuarial functions (price new products), and co-ordinate medical resource management (route claimants to lower cost hospitals).
Another example can be found within mobile payments whereby the arrival of offline payment terminals in public hospitals has the potential to validate claims, calculate co-pay obligations, and even identify market segments that can be up-sold additional coverage at point-of-claim.
Mobile payments have the potential to revolutionise health insurance claims by calculating co-pay agreements, identifying claim anomalies and even helping insurers with new product development.
Ultimately, bringing mobile payments into public hospitals will require regulatory encouragement to allow access to data held by public hospitals about treatments and claims. Only then will it be possible to bring technology to bear on the claims process within hospital networks.
In most Asian markets, governments hold the primary responsibility for healthcare and private insurance acts mainly as a supplement to state coverage for those with expendable income. As a result, public hospitals are at the forefront of claims processing for life and health insurance. Recognising this, regional governments have been trying to standardise data across clinics, pharmacies and insurance companies, in addition to providing ease of access. Although state-owned life insurers are rarely noted for innovation, they are often the first to benefit from such government initiatives.
As a state-owned insurer, China Life has been given access to public health data that enables it to identify instances of overcharging at public hospitals.
Ultimately, efforts such as these will allow life insurers to
- Gain more access to claims data in order to identify fraud, waste and abuse at public hospitals.
- Access treatment data, which can be used to agree pricing and treatment protocols with hospitals directly. This act alone will dramatically improve the loss ratio of some health insurance lines.
- Make public healthcare data readily available to insurers thereby allowing the accuracy of emerging tech, such as advanced analytics, to improve, and allowing tasks previously outsourced to TPAs to be brought in-house through automation.
Startup and TPA innovations
Finally, no discussion of claims would be complete without acknowledging the work to prevent claims happening in the first place. In this regard, Practo in India, WeDoctor in China, and Halodoc in Indonesia, which we have previously examined here, are not only enabling early diagnostics but also lowering inpatient rates through remote consultation and chronic disease management.
A range of startups and TPAs are also working on new claims processing techniques. These include:
|Name||Overview||Key Claims Functionality|
|Taiwan AI Labs||Taiwanese research startup which is digitising Taiwan’s medical records at point-of-claim.||Digitised medical records will allow for a hybrid OCR (optical character recognition) based claims process combined with offline analysis to identify anomalies in charging across both public and private hospital networks.|
|Tongdun||Tongdun styles itself as China’s answer to Palantir, and is bringing advanced analytics to medical data, medical institutions, hospitals and insurer legacy databases.||Tongdun has established a unified database that helps insurers to identify duplicate policy holders, fraudulent claims, and instances of over-charging in hospitals.|
|Remedi||Malaysian startup providing prescription management, online triage, and claims processing services.||By providing access to medical records securely, Remedi hopes to build a bridge between Malaysian public hospitals and insurers.|
|MedImpact||US based TPA that has expanded to Asia with a white-label backend that plugs into health insurers’ customer facing frontends.||A white-label with built in hospital networks and appointment booking facilities to route consumers to lower-cost hospitals.|
|Prixia.ai||Indonesian-based startup that is trying to bring AI to Indonesian healthcare.||By offering data analysis (analysis of claim data and medical examination), able to make suggestions for designing the following year’s insurance plan.|
Although these startups are heralding a new era of claims oversight, it’s important to remember that AI-based claims processing still rely heavily on human intervention to judge outlier cases, which harbour a disproportionate number of problematic claims. For example, Ant Financial’s Xianghubao outsources its claims validation to Bihubao, a Beijing based InsurTech that specialises in providing TPA services to online health insurers.
Given the present forces at work, the industry will need to re-imagine its approach to claims processing.
First, lessons from the more developed markets of Singapore, Japan, and China can be applied to developing markets. Examples include mobile payment innovations and public-private partnerships that can provide access to data needed to identify fraud and better understand claims data.
Second, re-establishing control over hospital networks, those currently managed by TPAs, will be important. Although this will primarily benefit private health insurers, guiding policy holders to lower-cost hospital networks, calculating co-pay arrangements between public and private health insurance, and allowing insurers to negotiate pricing directly with hospitals will not only increase customer retention but also lower loss ratios by routing patients away from hospitals identified as repeatedly over-charging.
Finally, the emergence of new market segments, which can be identified at point of payment or claim, such as first-time mothers or those with elderly parents can be upsold additional coverage and/or services that conform to their current life phase. Although such up-selling is still rare, the increasing ubiquity of mobile payments in healthcare is bringing about a new era of product development capabilities.