$600k in cost savings on CMS-1500 automation for a care coordination company

The Customer

Our Customer is a leading Insurance claims clearing house focused on workers compensation, automobile liability and bodily injury claims, employing roughly 300 FTE.

Initially, the Customer was present in three U.S. states: New Jersey, New York, and Florida. As the organization grew, they expanded into three additional states, Maryland, Virginia, and Michigan.

The Situation

Our customer processes medical claims related to workers comp and auto bodily injury claims. The most common claim form for this organization was the CMS-1500, or healthcare claim form (HCFA).

As the company doubled the number of states it serves, the team quickly saw an increase in claims received – and, consequently, their employees’ workloads. The Customer had a team of 8 people who were managing the claims data entry. This team was processing data from 200 to 250 claims a day, and struggled to meet end-of-month deadlines.

However, the Customer was laser-focused on sustainable, scaled growth, and wanted to explore other options before relying on additional headcount.

The Challenge

The Customer was concerned about their employees’ workloads, as the increase in claims coupled with tight turnaround timeframes could quickly lead to burnout. The executive team knew that hiring additional FTE would be too costly to meet their targets.

The existing team of 8 people were managing the data entry as claims entered their queue. The team received roughly 200 to 250 claims each day, and it typically took 3 days to process one day’s worth of claims. As a result, their end of month goals for processing data were consistently missed, impacting employee morale and the company’s targets. End of month data entry was a particular concern for the Customer, as the team is dependent on mail delivery and often couldn’t work past 5 pm. Additionally, the Customer was experiencing poor levels of accuracy as a result of high workloads and time limitations.

To scale alongside their growing workload, the Customer would have had to hire an additional 8 FTE at roughly $70,000 to $75,000 average payroll cost for each.

The Solution

The Customer adopted a Digital Coworker to read CMS-1500 health claim forms, extract data and then enter all data into the Customer’s claims system. Given the data in the CMS-1500 forms are often handwritten, inconsistent, lacking information and poorly (sometimes inaccurately) completed, Roots Automation worked closely with the Customer to design and implement an effective solution – leveraging Intelligent Document Processing, AI and Process Automation to read these digital documents.

Although CMS-1500 forms are a standard healthcare form, many providers are “creative” in the way they fill them out. While human readers adjust for text offsets and/or inconsistent placements, we needed to train the Digital Coworker to do the same.

We started scoping the electronic forms and quickly implemented a claims entry Digital Coworker. We then shifted focus to paper claims. Our team combined Digital Vision with pre- and post-processing techniques iterated over a period to ultimately return highly accurate data. This advanced data extraction allows us to process claims directly in the customer’s system for paper bills.

Finally, the Roots Automation team focused on improving processing times and reducing the 24-hour turnaround. Over a period of several months, the team worked towards the goal and of processing all forms received on the last day of the month within the day. This was a very clear requirement from the Customer soon after we implemented working solutions.

Today, the Customer is able to process paper claims directly within their system. If any exceptions are found, the Digital Coworker notifies a human reviewer. The learnings from the exception are then captured back in the system for the next time that the Digital Coworker encounters the issue. This allows the Digital Coworker to learn from exception cases in the same way that their human team would.

This Customer was very clear that the Digital Coworker was expected to process 100% of the forms received by midnight on month-end. For the past quarter, the Digital Coworker has processed 100% of the forms received at month-end by midnight, accomplishing the Customer’s goal. Because the Digital Coworker has significantly lowered the FTE workload on data processing, those 8 employees now focus on other more impactful and more engaging tasks.

In addition to meeting the Customer’s most important expectation, the Digital Coworker handled 80% of the claim forms on Day 1. Today, that number is higher, thanks to the Digital Coworkers ability to learn from exception cases. The Digital Coworker is uninhibited by paper forms, completing 90% of received electronic forms and 70% of received paper bills. Now that their business process has been streamlined, the Customer is receiving better quality data entry, resulting in better outcomes and output. Additionally, the Digital Coworker supports the Customer’s data entry across all 6 states.

Ultimately, this Customer achieved breakeven within only 7 months, and saved an estimated $600,000 from their payroll.  So far, the return-on-investment is 256%, and expected to increase steadily over time.