Processing health insurance claims is a tedious task, fraught with detail. When Medicare and Medicaid are involved, the Department of Health and Human Services mandates that most claims be settled within 28 days. What’s more, a small fraction of claims involving everything from minor claim violations to out-and-out fraud invariably muck up the process by introducing bad transactions and data.

To keep the claims process humming, data capture vendors Captiva Software and the Dakota division of WebMD are turning to business rules and analytic techniques to filter out the bad claims before they enter the system. Capture is the onramp for data-intensive processes that start with paper documents (though the software also handles EDI and XML data streams). Capture software uses recognition technologies such as OCR and barcode reading to extract data from images, and it then applies database lookups and various validations and formatting rules to ensure quality data.

Captiva’s FirstPass Software adds rules-based analysis that checks for claim violations such as inappropriate or unnecessary services, rebundling (billing for two separate treatments that insurers would cover as a single procedure) and unbundling (billing a minor treatment as a larger procedure). Dakota’s Transform Accura Server applies scoring and predictive analysis techniques to spot the same types of infractions, and it’s working on a data warehouse module that will spot patterns of abuse and fraud.

Noridian Administrative Services, which processes some 50,000 Medicare and Medicade claims per day on behalf of 11 states, is testing Dakota’s Accura Server as a way to screen out more than 1,000 claims per day that are now kicked out or demand investigation downstream. The Fargo, N.D.-based company could improve productivity by as much as 10 percent, says LeAnne Edwards, claims control system coordinator, but the bigger benefit will be in improving overall process performance.

“As part of the Medicare Modernization Act now in the works, contracts [for claims processing] will come up for bid,” Edwards says. “We’ll have an opportunity to get new business, and the cost, quality and timeliness of our process will be the difference between winning and losing the contracts.”

—Doug Henschen