Mr. Chairman, members of the Committee, I’d like to thank you for the opportunity to testify before you today.  My name is Jack McGarry and I am the Senior Vice President of Benefits and Chief Risk Officer at Unum.

I am here today to discuss how our technology facilitates claim management (case management) decisions at Unum.  

We process approximately 400,000 disability claims per year and pay about $4 billion in benefits directly to our insureds and their families.  Most of Unum’s claims are governed by ERISA, the federal law which generally requires insurance companies to make disability claim decisions within 45 days.   Unum’s experience shows that it is possible to manage high volumes of claims in a timely and accurate manner while achieving high levels of customer satisfaction.  In fact, 93% of our customers report that they are satisfied with the overall quality of contact with Unum.  96% are satisfied with our timeliness and ability to respond to their questions.  And 97% find us courteous and respectful.

Technology is an important component of the solution to managing the volumes and timeframes, as well as our customer service.   However, the decision about a person’s ability to work is also informed by in-depth analysis of pertinent documents and discussions with claimants, their employers and their physicians in order to assess their ability and motivation to work. 

In the end, the disability determination is a judgment call that needs to be made by people.

In order to assure that the right people are reviewing the right claims at the right time, a combination of Unum’s technology and people is necessary.  For example, a routine claim may be automatically sent by the system to one person while a complex claim with multiple diagnoses may go to another based on a combination of systems and management decision making.   As robust as our systems are, a person does look at every claim we pay.

Our technology, operated by our people, does the following:

• Manages documents
• Facilitates workflow
• Ensures a complete administrative record, and
• Monitors and measures quality and service results

1. First, our system manages documents.   Our files can grow to hundreds - if not thousands - of pages.  With our image-based system:  All files are paperless, multiple people can access the same claim at the same time, and documents are organized and stored in an efficient manner.  This reduces redundancies in workload management.  For example a nurse, a claim payer and a vocational rehabilitation specialist can all be working on the same file at the same time – even if these people are located in different parts of the country.

Another efficiency of the system is that our paperless files can be viewed all at once or electronically “tabbed” in different ways – for example, all the medical data can be viewed using a medical view of the file.  This creates efficiency in that if a doctor needs to review a file, she is able to view the relevant medical data, and does not have to review data unrelated to the medical condition unless necessary.  The file can be viewed using multiple other tabs – for example, the letters can be viewed, financial data, or vocational information.   Thus, the technology frees our people to view only the data pertaining to the issue they are working on – allowing each claim payer to focus on critical case management activities.

2. Second, our system facilitates workflow.   All information is electronically scanned into our system upon receipt.  The act of scanning documents as they are received creates an on-line activity for the claim payer to review.   In our system, every action a person completes creates another action or follow-up activity.  The system can also trigger an action for someone to review claims and/or contact customers at key times during the claim management process. 

This technology allows for activities and discussion to be focused on ongoing claim management.   With real time access to information, our team focuses on the document review and discussion needed to facilitate next steps on the claim instead of recapping redundant data or gathering additional information that may not add value to the process.  Real time access involves multiple users being able to access and update the claim file at the same time (parallel claim processing).  It also means that as documents are received via mail or fax and scanned into the system, they are immediately viewable by all involved in the claim.  For example, a doctor may be writing a report at the same time a claim payer is checking whether the claimant is contractually eligible for benefits – the moment the doctor completes her report, the claim payer would be able to see it in the image based system and begin working on the medical case as well.

The image based claim management system also contains a letter-writing function and a letter library so that a claim payer can write to claimants and their doctors.  Addresses populate automatically, saving the claim payer time.  Also, the claim payer can set follow-up activities so the claims stay on track.  An example of a follow up activity may be that the claim payer sets an automatic reminder for the system to let the claim payer know whether requested data has arrived after a certain number of days.

3. Third, our system ensures a complete administrative record.   An administrative record is important for ERISA purposes as well as sound claim management.   When a claim changes hands between claim payers, all of the management activities associated with that claim - including future activities - stay with the claim and are automatically assigned to the new claim payer.  The technology keeps the file together in one place and minimizes any disruption in service due to a personnel change.  Thus, if a file does change hands, many redundant steps in getting a new person up to speed on the file and setting direction are eliminated.

4. Fourth, our system enables us to monitor and measure quality and service results.  Management and our Quality Assurance process require the ability to review files “real time” --- at the same time that the claim payer is working on the files.  The system automatically tracks and reports our service times and outcomes.

Because each one of the activities the claim payer does is scheduled and tracked, we can ensure that the right resources are applied to the right claims at the right time.   Thus, our management and Quality Assurance teams can provide feedback as the claims are being managed – as opposed to days, weeks or months later.

We separate levels of disability into those which have shorter durations – what we call Short Term Disability (STD – 6 months or less in duration) - and those which may be longer term – what we call Long Term Disability (LTD – may last greater than 6 months) - based on a number of factors – including experience of the claim payer and diagnosis.

At the initial level, for the shorter terms claims:  Our in-take department reviews each new claim and assigns an ICD-9 (International Code of Diagnostics 9) diagnosis code.   We use the ICD-9 system because it is a standardized system within the medical community.  Using a standardized system avoids confusion and makes it easy and efficient to communicate with the claimant’s medical team about the condition and treatment recommendations. 

Thus, when a claim is filed, we use a quick assessment – a triage-type process – to assess the case based on the employee’s diagnosis and other relevant criteria.  Our operating standard for short term claims is that at least 95% of our claims have been paid, denied or pended -- with the status and reason communicated to the claimant -- within 5 days of our receipt of a complete claim.  

Long term claims are more complex and as a result require more extensive investigation and skilled resources.  Most of these claims take longer than 5 days to assess.  Thus, the system assigns claims to a manager based on certain criteria and the manager gives different numbers of claims to people based on data elements including diagnosis and the expertise of the claim payer.  

For all claims, we may gather information from multiple sources including the claimant, the employer, the claimant’s medical team and our own medical and vocational resources.  There is continuous communication throughout this process. 

After the initial assignment, our technology initiates reports based on key measures – including diagnosis, generally accepted medical duration guidelines, and our Unum database information.  These reports can identify claims that need additional work or follow-up, and help each claim payer to determine what steps to take next.

Let’s take a look at how a hypothetical claim may work through the process.   As news reports have widely documented that many veterans suffer from behavioral health issues, I will use an example involving a claimant with depression.

In the behavioral health context, our experience shows it is critical for the well-being of the insured that the benefit specialist/case manager be proactive and get involved in helping the claimant return to functionality quickly.  Speed, accuracy and quality are critical, not only for the health and well being of the claimant, but, as previously mentioned, because most of our claims are governed by ERISA, which among other things requires private sector insurance companies to make disability claim decisions within 45 days.  While there are some provisions which do grant additional time under specific circumstances, generally speaking we must make our decisions within 45 days.

On the complex behavioral health claim example, on Day One our Intake Department would set up the claim on the image based system and scan the documents into the electronic file. 

On Day Two the system assigns the claim to a claim payer based on the ICD-9 code and other criteria.  

On days three through five, having access to the file, the claim payer reviews the specific facts of the claim, including checking contractual eligibility and determining whether a decision can be made.  A decision to pay could be made, for example, if the person is hospitalized in an in-patient setting.

If more data is needed, the claim is pended and the claimant is kept informed of the status.  A claim may be pended if relevant medical information has not been received yet.  When that information is received, a decision is reached by the claim payer or by the claim payer working with the appropriate clinician or resources through what we call our “roundtable process,” which would include physicians, managers, and vocational rehabilitation consultants.

In our example, after payment has begun, our system is designed to proactively identify claims for further attention based on a number of triggers.  If the system identifies these triggers – for example it may identify a claimant with depression that is either approaching or passing the timeframe in which recovery would be expected – it schedules a claim management activity so the right person reviews the file on the date specified and can initiate or delegate the appropriate activity.   The triggers may be identified based on this claimant’s diagnosis and our own duration management database.   The activity may be for a Unum nurse to call and work with the claimant, for example, ensuring the claimant is getting the appropriate treatment needed for recovery. 

If the claimant’s symptoms are still acute at the six week mark, we would continue to pay and work with the claimant and the insured’s medical team.  On an ongoing basis we would stay in regular contact with the insured and make sure we understand the continued nature and severity of the condition. 

At around the 60-day mark, the claim would be transitioned to a different claim payer with more in-depth expertise and training in managing complex claims.  This claim payer would again keep in regular contact with the insured, and would continue to work closely with medical and vocational resources.  If the claimant were hospitalized or had suffered a severe injury – the claim may be sent to an extended duration unit, where follow up would be less frequent.

During this phase the following steps could occur:

• continued evaluation of the claimant’s functional ability, which could include setting up an independent medical examination;
• in depth assessment of the physical and cognitive occupational demands of the insured’s occupation or other occupations they may be suited to perform;
• vocational assistance, determining any possible accommodations that could be made so the person can return to work; and
• continued partnership with in-house medical, vocational and management resources as needed.

In summary, the critical data elements associated with specific claims are identified in short and long term situations and our benefit specialists and/or nurses are able to focus on the right activity at the critical time. 

Ultimately, technology can facilitate claims handling processes and decision-making by helping ensure that the documents are being reviewed by the right people at the right time. It can also provide cost savings.  We estimate that since we implemented this system we have saved 10-20 per cent over the previous system.   More importantly, it has increased claim management effectiveness and allowed us to pay claims more accurately.

In the end, however, it is the skill of the management and the people handling the claims, supported by those working with them, who are responsible for the claim and service to our customers.  Through the time savings and other efficiencies created by technology, each claim handler is freed to devote more time to interact directly with claimants and their physicians in building a plan and assessing a person’s ability to return to work.  

Disabilities present a complex management challenge because they are logistically difficult, judgment based and can be emotionally charged.  Technology can help facilitate judgment based decision making but we don’t see it as ever being able to replace people in the claim management process.

I would  like to end by extending an invitation to all of you and for VA staff to visit Unum and would welcome the opportunity to continue to be a resource for sharing best practices between the public and private sectors as you continue to evaluate the disability adjudication/case management process.  Thank you for the opportunity to testify before the Committee.