Field Report: Horizon Casualty, Newark, NJ

Implementing BPM has helped an insurance company automate routine decisions while tapping content to clear up exception transactions. At Newark-based Horizon Casualty, a 65-employee workers compensation subsidiary of New Jersey's Horizon Healthcare Services, claims and related bill payment processes required access to policy data, rules on coverage, claim forms and associated data on each claim. Horizon processes roughly 150,000 medical bills per year for clients including its BlueCross/BlueShield-affiliated parent company, the State of New Jersey and The Hartford insurance company, yet it had "five different ways of doing the same thing," according to John Oliveira, director, marketing and operations.

Processes varied depending on whether bills were related to workers comp claims or auto insurance policies, and all transactions required the assistance of medical payment specialists. These specialists were dedicated to specific types of transactions and were responsible for adjudication-the coding step that determines what is and what isn't covered.

From Oliveira's perspective, the underlying work steps were essentially the same. "You get a bill, you evaluate it and you post it for payment," he explains, "yet we had custom workflows and a lot of variation. We had six people processing bills, and we could get six different results on the same bill."

In 2002, Horizon embarked on a BPM initiative that has put in place a consistent core process with various options tailored to specific clients. Adjudication decisions are now determined by business rules wherever possible, and the human intervention is reserved for exception transactions.

Horizon has fully automated at least 60 percent of the more than 35,000 claims it receives each year via EDI using Rules Power BPM software. Roughly 90,000 paper-based claims are still scanned at Horizon and images transmitted to a service bureau for overnight data entry, but the data returned feeds a streamlined process that has cut 10-day to two-week processing backlogs down to two to three hours. Straight-through processing rates aren't as high as those achieved on EDI-based transactions, but the BPM software gives payment specialists a complete rundown on the missing and out-of-tolerance data so they can access databases, claims images and other sources to plug-in or edit the appropriate information.

The software for the two-year project cost about $100,000, according to Oliveira. The next phase will tackle complex automotive personal injury protection claims, which are replete with rules and analytics aimed at uncovering fraud.

Horizon has far outstripped its original goal of lowering processing costs by 10 percent and automating at least 20 percent of transactions. "We've cut our payment specialist staff in half, yet we're handling the same volume of claims and we're prepared to add several new customers and significant increases in volume in 2005," Oliveira says.