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Articles

Leveraging B.O.S.S (Back office Support Services) - By Ramesh I, VA Insurance Consultant

Insurance companies are rapidly learning how outsourcing business processes allows them to address key issues without worrying about routine back-office functions. Companies that implement back office support services (B.O.S.S) can grow their enterprises by focusing on core competencies including customer service, innovative plans, provider relations, underwriting and building networks.

BOSS leverages service providers to provide and manage an organization’s business processes and applications, such as data entry, billing and claims adjudication, to name a few. Partnering with a service provider delivers benefits that help insurance plans succeed in the marketplace. These benefits include the ability to reduce transaction costs; improve service levels; speed membership growth without adding infrastructure; and focus on core competencies and lines of business.

Many insurance companies have determined this partnering model and engaging all or a portion of the administrative workload is the most economical strategic approach. Others want to keep administrative functions in-house but don’t want the responsibility of maintaining an expensive, complex network data center, which can include ongoing hardware and software maintenance and updates, electronic data interchange, IT staff costs and complex integration issues. 

Insurance companies increasingly are turning to BOSS to reduce overhead by streamlining business operations without the investments associated with in-house process administration. By outsourcing non-strategic functions to service providers, organizations can achieve savings of up to 30 percent on administrative costs. According to Gartner Dataquest, the trend is growing fast and 60 percent of insurance related organizations will spend more on external IT support, consulting and outsourcing services than on internal staff.

 What Functions Can Be Outsourced? – A Health Insurer example.
Health Insurers can outsource some or all of their IT and administrative functions to service providers that have the human capital and advanced technology to perform business functions efficiently and effectively. Outsourcing enrollment and claims data entry, for example, can make a dramatic difference in meeting service level agreements. In addition, BOSS can enforce rigorous quality assurance standards pertaining to data entry, including code and field validation.

The following business processes can be outsourced:

·         Claims imaging, adjudication and payment

·         Customer, group and provider services 

·         Membership/enrollment processing 

·         Billing and collections 

·         Check and explanation of benefits processing

·         Enrollment/eligibility processing

·         Provider reimbursement

·         Call center inbound and outbound services

·         Medical management

BOSS providers can design a custom approach for health insurance needs and offer service level guarantees.  Eliminate paper overload. Health insurers can direct their claims to a service provider for scanning, imaging and data entry through optical character recognition and sophisticated entry-from-image procedures. Some BOSS providers will perform claim archiving and storage and electronic claim management. The integrated claims processing solution can reduce overall paper claims data entry and adjudication processing costs by up to 40 percent.

Keep tabs on quality. When service providers have a quality assurance system in place, they can evaluate data entry personnel and other workers as well as review the processed claims audit trail. This type of system keeps a complete history of every claim processed. The history records exactly what information each worker enters, allowing the quality assurance staff to collect samples of any type of claim processed and any operator’s work. The staff can then compare work performed with the original claim form, mark errors, make corrections and record comments.

Prevent costly claims errors. A BOSS provider can adapt readily to a client’s specific business rules using a comprehensive health care platform and its user-defined workflow parameters. Claims may be routed according to dollar amount, specific diagnosis and other review criteria. BOSS providers that use a fully integrated claims edit system can prevent costly overpayments because medical overpayments attributed to up coding of claims can automatically be detected and corrected. This type of system can help identify surgical, laboratory, radiology and medical procedures that are inappropriately coded. To speed processing, HIPAA-compliant claims and related transactions can be received directly.

Improve service offerings. BOSS providers have a responsibility to ensure that their quality level matches or exceeds the health insurance company’s expectations through pre-determined standards and measures. By continually enhancing service offerings for the health care payer marketplace, BOSS service providers can keep pace with industry trends. Some providers move beyond labor cost savings to pursue long-term operational improvements.

Offshore BOSS
Insurance companies are increasingly looking at off shoring to improve efficiencies and focus resources on core functions of product development and innovation. Off shoring is similar to outsourcing when companies hire overseas subcontractors, but it differs when companies transfer work to the same company in another country.
Offshore BOSS provides businesses with the opportunity to reap the benefits of lower labor costs and enables health plans to develop competitive strategies that will leverage their financial positions in the global marketplace. Some advantages are

·         cost savings,

·         focus on core processes,

·         speed to market,

·         technology risk,

·         specialized services, and

·         Availability of credible service providers.

Factors inhibiting offshore BOSS include cultural differences and a health insurance company’s perceived loss of control over business functions. An estimated 50 percent or more of all claims entry functions currently are performed offshore. Industry reports suggest that there are more than 15,000 people engaged in providing health care administrative services to the U.S. market in India alone. With its vast well-educated labor force, India is becoming the destination of choice for high-end transaction services, such as claims adjudication, membership services, and support for medical management and underwriting services. India offers the following benefits as an offshore BOSS service provider:

·         low-cost advantage;

·         established outsourcing destination;

·         near-shore services;

·         solid relationships with large insurers; and 

·         24-hour availability.

By outsourcing data entry and claims processing to India and other offshore locales in different time zones, work can be completed after health plan organizations in the United States have closed for the day. As a result, providers get paid faster.

Some providers offer health insurance companies a blended onshore/offshore administrative model supported by highly trained, multilingual liaisons who can translate the health plan’s requirements and the type of reporting needed to an assigned BOSS team. Many providers hire only professionals with experience in U.S. and international health insurance administration procedures to guarantee quality in all facets of production. They use explicitly documented hiring, training and testing practices to ensure strict compliance with each health insurance company’s business rules as well as mandated regulations.

Finding the Right Match
when shopping for a service provider, look for best practices and value-added benefits such as continuous quality improvement to achieve accurate, consistent and measurable results. CQI requires grounding in proven methodologies such as Six Sigma, where root-cause analysis and mathematical formulas can be applied to determine the costs for improving quality, eliminating errors and ultimately deriving a greater ROI. 

A BOSS provider should be customer focused and an extension of the health insurance company. When BOSS teams are composed of people who possess knowledge in business operations and technology, health plans can reap twice the benefits thanks to cross-pollination across operational units.

With the right BOSS partner, a strategic alignment will exist between the health plan’s requirements and the service provider’s strategy. Evaluate whether the service provider is delivering cost savings only through labor arbitrage, which might not be sustainable in the long term, or through a combination of technology, process improvements to the claims and administrative application, and selective off shoring to the most appropriate locations.

Whatever the level of outsourcing, perform comprehensive due diligence, including a review of the risks, hidden costs and long-term benefits. Health insurance companies that work with a qualified BOSS provider can achieve long-term savings and quality benchmarks, freeing them to attend to critical issues while back-office functions are placed in capable hands.

The external auditors are coming… New federal regulations and taking on external auditors - By Sudhir Achar

With new federal regulations you will have to deal with external audits… TODAY!!! Are you ready?

The new federal regulation/external audits can be a nightmare and potentially can kill your business overnight if not addressed properly. In this article we have provided information to help you know what these regulations are, how to get your business to the next level and come out ahead of your competition.

1. What is this new bill proposing? First and foremost understand what you are on the hook for as a company with the new regulations. "The Bill"

2. Know your enemy: Know who can request for an audit on your organization. In most cases it can be your prospects, customers, the government (sometimes influenced by your competition) that can request for an audit at any time.

3. What is going to be audited? All audits have only one thing in common. They ask you only three questions,

a. What polices guide your organization? Show a list of your Company Policies (CP)?

b. What are the procedures that help execute these Company Policies. Usually referred to as 'Standard Operating Procedures (SOP)’.

c. Proof that you are in compliance with your Company Policies. This is refered to as ‘Audit traceability’. You have to maintain Execution Logs (EL) to show how you are operating your Company Policies using Standard Operating Procedures. To better understand what happens in an audit, please read this article.

4. The Do’s for an audit: Very simple. You have to have three sets of documents (That are all in sync with each other Company Policies, Standard Operating Procedures, and Execution Logs) for every operation that you conduct in the company! (From your operations, to HR, to proving that your people are trained to do the job that they are doing).

In a static world it is easy to keep these documents in sync. But when internal and external factors of business are changing all the time, keeping our Company Policies in sync with Standard Operating Procedures and Execution Logs is a whole different challenge. This sounds like an insurmountable challenge. You might be thinking “Gasp! Do I run my business or do I take care of these documents. This is impossible and is it going to cost me more money and time just to keep up with these audits!”

Don’t worry. There is a way…

One of the ways to ensure that you are keeping your documentation auditable is by using VA's Enterprise Compliance System, VA Comply. This tool has been built to help you get across the audit hurdle at anytime. Click on the link below to see a demo of VA Comply (NOTE: Please use Internet Explorer) and see how this tool gets your organization audit ready. It takes 2 minutes to load and about 3 minutes to run.

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Implementing strategies to success. Is there a way out at all? - By Arvind Gopalakrishnan

For a long time I have wondered how to effectively manage organizations. I was disgruntled as a manager. While I put on a brave face, I know I was not happy with the way my team and company operated. One problem always escaped me. The problem was simple. We have been told to Manage By Objective(MBO) (Refer to Kaplan’s Balance Score Card, a must read, wonderful book for all managers. The gist of the book is simple. Set out a clear and simple set of objectives at a company level and make sure that every employee in the organization is measured on some of these objectives). Makes perfect sense. But in reality life is not so orderly. While we set out clear objectives how do we ensure that employees are evolving at the changing needs of the organization?

In many regulated industries like insurance, financial, healthcare, & defense there is another major problem of being audited for compliance. These organizations have to prove how they are in compliance with their Company Policies (CPs). Companies spend millions of dollars in trying to provide auditable proof every year. To understand this better, please read “Are you ready to deal with the new federal regulations and take on external auditors?”

Back to my own story… I would get irritated with management gurus when they preached about making sure that people are trained for their jobs as the prime driver for success. I would ask “But HOW????” I would say “Jim, out here in the real world things are different. I have to make my numbers for today and take care of my customers tomorrow”.

Sound familiar?

My frustration continued till one day one of my partners came into my office and said “I got it!”. I looked up mildly interested and asked “Got what”? He excitedly replied in one long sentence that lasted for 23 minutesJ! The gist of his monolog is that we needed a tool that would measure not just learning commitment at an employee level but provide a snapshot/forecast at a company level. This tool would recalculate the company compliance requirements at a click of button for every changing requirement from the market. This was brilliant! This would improve the PQR (P=productivity, Q=Quality, R=Revenue) of the entire organization and avoid the frustration of people are not performing because they are not trained right. It would also completely eliminate breaking into a cold sweat when your customer said the word “audit”!

We all got so excited about the idea that we did what we knew best. Built a tool and started using it. For the first time we had a simple tool that enabled us to measure and manage employee and company compliance. We started training and assessing our employees on ‘VA Comply’. Once we started using the tool at an organizational level, we could take care of our compliance problems by simply drilling down each department in a proactive manner. This has helped us save hours of effort and has created a more productive organization.

By tying an employee performance to their compliance scores, we realized that there is a strong correlation between employee skill compliance and employee performance. This was positively fantastic! This was exactly what the pundits talked about but we now had a tool to actually implement their strategies to success!

As we went along we realized the far reaching effect this product can have in industries like the retail telecom where the difference between a good and the average retail sales person is nearly 500 times Manage By Objective(MBO) (Reference to book: CRM at the speed of light).

In an down market like we are currently in, we realized that our customers and prospects can further gain from a product like VA Comply to ensure that their employees are optimally trained for the job that they are doing. This compliance mindset has been immensely beneficial to every organization that we have worked with. When we showed VA Comply to one of our partners he told us “This is the product that we have always been looking for”! We quietly smiled in agreement. A smile that comes from realizing that someone perceives value from the work we have done.

Let us look at what this product has helped us achieve:

1. Helped make sure that employees are trained and qualified for the job that they are doing

2. External audits are now a breeze when compared to the alternative

3. Helped us ensure that employees are in-line with the company growth

4. Converted our organization from being reactive to proactive

If you want to learn more about VA Comply, Click on the link below to see a demo of VA Comply (NOTE: Please use Internet Explorer). Further, we can arrange for a 1 on 1 demonstration of how the product can be used to solve your specific problem.

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How do you stay alive in this economy? - Harsha Chaturvedi

We have all heard of the phrase “If you don’t grow you Die”! Seems ominous, but history has proved this statement to be true time and time again. Sadly, it seems to be true even in down markets. Some of you must be saying, “What??!! Are you kidding me? We are trying to survive here and you are telling me that I should grow”.

Well, there is a way out! Some of our customers and prospects (VA partners) are already beginning to take advantage of this process. In this article I am going to talk about three basic steps that VA partners have followed and successfully come out ahead in this soft market. But before we start I must say that for this strategy to succeed one must be ‘consistent to the purpose’, meaning, one must be ready to stay the course in the light of going against the norm that is followed by Wall Street.

1. Increase reaction time: It is a known fact that the probability of the sales keeps diminishing with every moment of delay from the time you get a quote to the time you can respond. Meaning, in the most ideal case we would all like to have an online rating and quoting engine that can dramatically increase our sales. In the absence of this mythical unicorn we would like to be the first to respond back to our prospects. Meaning, we have to become a 24x7 shop! To this you say, “Ah ha! Exactly, but who are you kidding. It is impossible to afford a night shift for my people here”.

2. Sales is a numbers game: It is a known fact that only 20% of all the sales quoted get converted into actual sales. But the irony is the fact that most companies are able to only quote 50% to 60% of the quotes that come their way. All in the saying that, while we need more sales we don’t have the bandwidth to cater new sales. To this you will say, “Yes, I know about this problem. How on earth do we fix this without hiring new staff in this soft economy???”.

3. Grow your top-line by leveraging internal experts: Despite all the hue and cry a large portion of the market is under served. Even if you don’t want to take on new aggressive accounts many company don’t get new agents or new customers because the technical domain experts who understand the customer problems are sitting in the back office and catering to the existing demand. Instead they should be in front of prospective customers and agents talking to them about how our company can provide better value and increasing the sales by working hand in hand with the sale people. This poses the most obvious question, “Great! This sounds like a plan, but, if my back office people start selling who is going to cater to the current demand?”

As we said before VA partners have crossed to all these three hurdles by engaging with Vantage Agora. We have provided these companies with a team of excellent, well trained industry experts that work on their operations from India. With a matter of weeks of engaging with us, VA partners have,

1. Transformed their long standing internal subject matter expert employees into driving sales because their current work was done by the team in India. This gave them a great career path and improved retention.

2. Increased sales on rush quotes as the companies decreased their reaction times from 24 hours down to 10 to 12 hours as the team in India was processing the rush orders during the US nights. This has not only increased their reaction times but has already improved their customer satisfaction from both agents and end customers.

3. Increased capacity: With the extended VA team in India, VA partners have been able to process more quotes. This has again increased their top line in a very short period of time.

We believe you can emulate them and grow your business. Just contact us and we will set you up with a free trial to prove that it works for you!
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Why a Producer’s Understanding of Risk Securitization is Important - Prof Bob Puelz

In today’s insurance market, the wholesaler or agent’s production role has remained traditional: prospect, service and understand the needs of existing clients, and perform the necessary due diligence to verify that the policy issued by the insurer is the one intended originally by the client. These activities are undertaken in an environment that is always being perturbed, from technological advances that permit producers to spend more time to write more business, to the current state of the insurance cycle to changes in the legal environment that alter affect how policy language should be interpreted. A rising wave that we believe will be enduring is risk securitization and its impact on insurance markets is now being forecast. In this note, we call upon the recent work of J. David Cummins of Temple University and the Wharton School along with Philippe Trainar of SCOR in Paris, entitled “Securitization, Insurance and Reinsurance,” published in a September 2009 article in the Journal of Risk and Insurance, and give some background on risk securitization including how we interpret its impact for the insurance production community of MGAs, brokers and independent agents.

What is risk securitization? 

When an insurer agrees to take on a risk from a firm or individual, the insurer simultaneously makes a decision about how to diversity the risk just accepted internally. The traditional form is to pool all risks of similar loss producing characteristics and the ability of the insurer to gain market share is limited by the size of its balance sheet. Enter reinsurance. The reinsurance tool permits the insurer, among other benefits, to share its pools (and perhaps individual risks assumed) on a piecemeal basis or according to treaty. In this fashion, the insurer frees up capital to expand in its primary markets and any primary risk “catastrophes” are shared secondarily with other insurers. Cummins and Trainar view an insurer as a “risk warehouse” and conceptualize risk securitization as the selling of financial instruments to investor (popularized by “CAT Bonds) who agree to share the costs of claims at the risk warehouse, but in exchange are paid a higher rate of return on their bond investment if claims of the insurer are not triggered by certain events, e.g,. catastrophes. The impact on an insurer’s balance sheet of the risk securitization alternative is similar to reinsurance. Losses are shared and an insurer’s capital base is expanded. While Cummins and Trainor detail the costs and benefits of reinsurance and securitization, they make the case that securitization may be a preferred risk-handling substitute for large, catastrophic loss events; however, only larger insurers will utilize securitization directly because of the transaction costs of structuring the issuance of a catastrophic bond offering.

What will be the impact on producers?

As risk securitization expands we think the likely impact on the insurance market will be to moderate any prospective growth in guaranteed cost premiums. In turn, while we expect that a producer’s revenue per premium dollar to remain stable, lower overall premiums will keep firms from tending toward higher retentions. Thus, while prices for insurance are likely not to leap, quantities may indeed increase slightly placing the producer’s income stream in a slow growth mode across existing renewals. One implication for agencies is that overall revenue growth may have to come from a larger market footprint, whether by bringing experienced producers on board with or by acquisition of competitor agencies. The, growth in overall agency valuation per dollar of revenue will be enhanced more likely by expense reductions.

For a full version of the paper Click here,

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Technology and Insurer Operations

"Technology's Effect on Property-Casualty Insurance Operations" by Robert Puelz, forthcoming in "Risk Management and Insurance Review."

Synopsis: 

The post Glass-Steagall era has presented insurers with new opportunities and risks during a time when information flows and business processes are being impacted by changing technology.  In this paper, the author explores how insurers use and perceive current technology to carry out their operations by reporting results from a sample of insurers that includes some of the nation’s largest property & casualty insurers.   Among insurers in the sample an online channel is having a significant impact on customer retention and revenue enhancement, but a lesser impact on cost reduction.  Interestingly, about two-thirds of the research sample has experienced an increase in their overall number of transactions following the adoption on an online channel.  Moreover, while the Internet is perceived as giving marketing benefits it is not being used as a substitute for agents.   The author finds that 65% of respondents have used technology to integrate customer data across functional areas and another 23% plan to do so in the next three years.  Nearly 71% of respondents have or plan to adopt service-oriented architecture in their technology infrastructure.

For a full version of the paper Click here,

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