Cost per Claim (Medical)

Cost per Claim (Medical)

KPI Details

Cost per Claim (Medical) measures the average cost incurred by the organization to handle a single medical claim (i.e., unit cost). Claims processing is a vital function within any health insurance company, as it has a significant impact on profitability (e.g., improper claims processes can increase claims paid out) and customer experience (e.g., extended claims cycle times negatively impact customer satisfaction and increase costs). Relatively high Cost per Claim (Medical) values can be a lagging indicator related to several common inefficiencies within the claims process, including improper claims routing and triage procedures (e.g., claims not assigned to the correct adjusters, etc.), low adjuster productivity (i.e., each adjuster not handling enough claims per week/month), incomplete or missing claims data, subpar adjuster training (e.g., training in proper claim processing procedures, what each policy actually covers, etc.), or a high rate of rework within various claims processes (e.g., adjusters must communicate with providers to clarify inbound data or gather additional information, etc.).

KPI Definition

The total cost (salary, benefits, other overhead) of processing medical claims divided by the number of medical claims processed (includes all incoming claims, regardless of whether or not they are approved) the same period of time.

KPI Best Practices

• Highly electronic and automated processes to minimize rework and error rates
• Send out patient invoices as soon as the explanation of benefits are posted
• Create standardized and validated data inputs to minimize input errors

KPI Calculation Instructions Cost per Claim (Medical)?

Two values are used to calculate this KPI: (1) total medical insurance Claims Department operating expense over a given time period, and (2) the total number of medical claims processed over the same period of time. Total Claims Department expense should include labor, technology and other overhead costs related to claims intake, claims data entry, estimate, coverage assessment, negotiation and final settlement/closure (including disbursement of medical benefits to the appropriate parties). Only claims that are formally settled/closed should be included in the denominator for this calculation. The actual dollar amount of claims benefits paid out to policy beneficiaries should NOT be included in the numerator. Include only medical insurance claims costs and volumes in this formula.

KPI Formula :

Total Medical Insurance Claim Processing Expense / Total Number of Medical Claims Processed