Vol. 1. No. 5

Claims backlogs are insidious. These unpaid claims present cash flow problems for providers awaiting the "check in the mail." But for the MCO, they spell real trouble. As the backlog increases in volume and over time, associated problems worsen.

Providers become disenchanted and, at a minimum, begin to "bad mouth" the MCO to other providers and members. Providers submit duplicate claims, exacerbating the backlog. With sustained backlogs they may refuse to treat members, require payment by members prior to treatment, and disenroll from the network..

Members are "caught in the middle." They are exposed to providers' negative attitudes and in some cases, face access problems as providers refuse care, forcing them to seek out-of-network providers, resulting in increased medical expense or increased appeals (denied care outside of the network).

Regulators quickly become aware of claims backlogs through member and provider complaints and incomplete

data submission. They turn up the pressure, requiring greater accountability and corrective action plans. Based on sustained backlogs, regulators may place the MCO under state supervision.

MCOs suffer financially, administratively and competitively. Administrative costs escalate (e.g., overtime, temporary staff, interest payments, fines). Calculating IBNRs is more difficult; reporting is delayed; changes in medical expense and financial trends are incompletely reported. The costs and stresses associated with increased inquiries, complaints and appeals are felt in Claims, Provider Relations, Member Services and Utilization Management. Overall morale declines. The quality of claims adjudication is sacrificed to expedite payment. Competitors eagerly begin to recruit disenchanted providers and enroll distressed members.

ADDRESSING A CLAIMS BACKLOG: WHAT TO DO WHEN THE BUG BITES

The obvious solution is to avoid claims backlogs through preemptive planning. This requires a management plan to forecast enrollment increases, new product development, business acquisitions, surges in utilization and system conversions, and, to translate this into projected claims volumes, appropriate adjustments in staffing and systems. In spite of good planning, sometimes the backlog bug still creeps up on you. Here are five steps to eradicate it:

1. Take a Physical Inventory. Count everything, including all units of work on hand: paper, electronic or tape submissions, encounters, suspended or pending claims, requests for adjustments, precertifications, referrals, other transactions such as member-submitted claims, laboratory billings that are sent via computer printouts, telephone and written inquiries. Categorize work/transactions and their status; verify the validity of ongoing counting.

2. Determine Your Goal, Your Acceptable Inventory Level. There is no magic formula to determine acceptable inventory levels. Consider applicable state legislation or regulations, Medicare/ Medicaid requirements, provider or group contract requirements or service guarantees.

3. Develop & Document Your Inventory Reduction Plan. Include sources of the backlog and their relative impact, considerations in addressing the backlog, prioritization of the issues, definition (quantity, cost, over what time period) of the resources needed, task allocation, system availability, process to identify and handle duplicate claims, planned work flow improvements, any "short cuts" and their impact, "what if" scenarios and contingency plans, final and interim inventory goals, inventory reduction plan management techniques and reporting.

4. Seek Support & Approval of Your Plan. Look for support and approval from board and senior management, mid-level managers and employees, especially in Member Service, Provider Relations, Sales & Marketing, Information Systems and Medical Management. Seek their assistance. Provide routine progress reports.

5. Implement & Monitor. Measure progress daily. Reevaluate and adjust if you're off the mark. Use contingency planning. Stick to your goals. Monitor quality; don't relax quality control as problems will haunt you in the future. Look for short term successes and celebrate them. Give continuous feedback. When goals are met, wind down and evaluate. Produce a final report and give recognition to all. Use the information and experience to avoid future backlogs.

A final note. Don't underestimate the need for debriefing. Review the following areas: