Critical Illness Claims Adjudication
Critical Illness claim adjudication is an important part of the risk management process. As such, it is important to recognize the unique skills required to properly adjudicate a Critical Illness claim so that the insurer provides fairly the benefits promised in the contract while protecting the insurer from paying claims for conditions outside of those intended and priced for. For this discussion we’ve worked closely with Patricia Bailer, our Vice President of Claims & Vendor Management, to summarize the important qualifiers for effective Critical Illness claims adjudication.
The claim examiner must first understand the fundamental nature of Critical Illness insurance, which is largely an incidence-based, indemnity product. Contrast this with other life, disability and health insurance products, most of which are tied to an outcome or treatment and may pay on a reimbursement basis. Simply put, Critical Illness pays upon diagnosis of medical events such as Cancer, Heart Attack, Stroke, Kidney Failure, and procedures such as a Major Organ Transplant or coronary bypass surgery. For instance:
- Life Insurance would pay in the event the insured has a heart attack and dies. Disability would pay if the heart attack leads to an inability to work.
- Long Term Care insurance provides benefits if the heart attack results in a functional inability to perform Activities of Daily Living.
- Medical plans or Medicare Supplement plans only pay if the insured has a heart attack and incurs medical expenses.
- Critical Illness insurance pays if the insured has a heart attack meeting the policy definition, regardless of outcome. Period!
This brings us to the next important aspect of Critical Illness claims adjudication - the skill sets required to properly adjudicate this product. Generally speaking, the benefit eligibility triggers of a Critical Illness policy should be objectively defined with clinical evidence - and well-defined, based on clear medical diagnostic criteria. The claims staff must be able to look beyond the diagnosis appearing in the medical records and verify that all requirements for the diagnosis per the policy definition have been met. As such, the claims staff should have a full understanding of the diagnostic criteria for the particular critical illness, specialized tests used for diagnostic purposes, and relevant medical terminology. Also, the staff must possess a strong knowledge of oncology and the cardiovascular systems since cancer, heart attack, and stroke represent roughly 85% of all claims that will be incurred.
Contrast this to the general loss verification skills required to verify a death, assess the extent and reasonableness of a diagnostic or treatment process for a major medical claim, or the complex judgments that are made in administering highly subjective and often ongoing functionality loss for disability or long term care claims. The skills needed to properly adjudicate Critical Illness claims are quite specialized, and lie somewhere between the two extremes stated above in terms of complexity.
Despite the efforts to clearly define the benefit eligibility triggers, and the relative objectivity of the claims criteria, we still find that 5% – 10% of claims submitted do not fall clearly inside or outside of the contractual definition. In these instances, the input of medical staff well-versed in the Critical Illness product is invaluable.
Last, but certainly not least for the effective CI claim adjudicator, are strong written and verbal communication skills, along with a sense of compassion and empathy for the claimants. The delicate nature of these claims requires a sensitivity for those who are critically or even terminally ill, while continuing to maintain appropriate claims risk management protocols.