The high costs of not automating claims reporting

A major study by Accenture spanning 15 years of research compiled across more than 70,000 claims reached a troubling conclusion. Nearly half of an adjuster’s day is lost to low value, non-core administrative work. What makes up a large portion of that waste? In a word, paperwork.

Managing the completion and submission of required forms for each claim—from locating the latest version of a required document, to rekeying claim data into multiple forms and letters—is a key driver. To make matters worse, submitting the wrong forms (or omitting required data) can lead to substantial fines. These fines, however, are not the only costs created by relying on a manual claims reporting process.

The Hidden Costs of a Manual Process

There are three financial impacts from a manual process that are often overlooked:

  • The cost of finding data
  • The cost of bad data
  • The cost of data silos

Together, these hidden costs can be a substantial hit on any claims operation.

The Cost of Finding Data

The amount of time it takes an adjuster to locate the required forms for each claim can be staggering when added up. An Interact report stated that 19.8 percent of business time is wasted by simply searching for the information employees need to do their job. Other studies by IDC and McKinsey show similar results. This is the equivalent of one day per work week being devoted entirely to searching for basic information and documents.

Over the course of a day, an adjuster may be tasked with locating the correct version of dozens of forms. Taking only the first report of injury (FROI) and supplemental forms for all 50 states, there are over 3,500 documents to navigate. A survey by SearchYourCloud revealed that it can take up to eight searches to find the right document. All of that time spent searching is time that the adjuster is not able to spend following up on the claims most in need of immediate attention to prevent escalating costs.

The Cost of Bad Data

Originally developed by George Labovitz and Yu Sang Chang in 1992, the 1-10-100 rule is frequently used to estimate the cost of bad data. A DQ Global article explains the concept:

  • Verifying the quality of a record costs the business $1. This is known as the prevention cost.
  • Cleansing and deduplicating a record costs the business $10. This is the correction cost.
  • Working with a record that’s never cleansed costs $100. This is the failure cost.

So, it is much cheaper to verify data than to correct it. And much cheaper to correct it than to work with bad data. Unfortunately, rekeying data—a frequent byproduct of a manual claims process—adds all three of these costs.

Each time claim data is manually entered into a form, the potential for data errors exposes a company to each of these costs. Assuming the error rate is an often cited 1%, that means for every 100 fields rekeyed, there will be 1 error, which will cost $1 to crosscheck, $10 to correct later, and $100 if the error doesn’t get caught and results in the organization taking some action based on bad data.

The Cost of Creating Data Silos

A data silo occurs whenever data resides in one system but cannot be used in another. As organizations increasingly rely on more specialized applications (Intermedia estimates that smaller organizations deploy an average of 13 different applications), silos are only getting worse. It is a serious enough problem that 69% of CFOs in an Adaptive Insights survey indicated that data silos are one of the biggest mistakes a company can make.

When claim data is siloed from the numerous forms, letters, and other documents that claims adjusters must use, rekeying is required. As a result, the costs associated with bad data are introduced. Search costs are also added as adjusters must use numerous state and federal websites, each with their own unique system for locating forms.

See how Company Nurse automated claims reporting with Origami Compliance

Eliminating the Hidden Costs with Automation

Given the high cost of the manual process, workers’ compensation form automation is a cost-effective solution. To be successful there are three key functions that must be in place:

  • Create an integrated, single-source solution for form management
  • Offload the requirement for locating forms and tracking updates/revisions
  • Use the context of claim data to eliminate the search for required forms

Origami Compliance meets each of these conditions. Access to 5,000 forms is seamless and eliminates the data silos between claims data and state forms. Leveraging Origami Risk’s extensive integrations, data can easily be pulled from other systems such as HR and payroll.

This single source capability also eliminates the need to track and monitor state websites for changes to critical forms. Origami Compliance processes approximately 1,200 revision changes per year, ensuring that each time an adjuster selects a form, they are using the most current version. Submitting the correct form also lowers the potential for incurring fines and penalties, further reducing costs.

Since the form management functionality has access to all the claims data, the correct forms for a specific claim can be easily identified. Automatically prefilling these forms with claims data helps reclaim some of the half-day of time lost performing administrative tasks, while simultaneously eliminating the problems associated with rekeying data. Additionally, the ability to add custom forms and letters to the Origami Compliance library allows your organization to create a comprehensive process that includes additional internal and external communications.

The data shows that the cost of not automating the workers’ compensation form process can be quite high. Origami Compliance allows you to not only reduce that cost but also frees up your adjusters to spend more time focusing on claims for which early intervention can drive efficiency and further cost reductions.

See how Athens Administrators transformed the claim intake process

Use of a customizable claim portal has improved data quality and reduced the amount of time claim specialists spend tracking down incomplete claim details.