my socrates_v10 - SCIO Health Analytics

White Paper
Subrogation & MY SOCRATES®
A Story of Innovation
| T ABLE OF CONTENTS
Executive Summary
Introduction
Subrogation - Challenges of the Industry & the Realm of Outsourcing
Innovation in the Subrogation Process
MY SOCRATES® - Unique and Salient Features
The SOCRATES WEB Viewer® - Sample Screen
MY SOCRATES® - Proven Methodology, Robust Technology
A Sample Generated Report
Software Deployment Models
Business Benefits
A Note on Return on Investment (ROI)
MY SOCRATES® ROI
Some Specific Concerns
Conclusion
© 2011 SCIOinspire Corp. All rights reserved.
The story of subrogation/reimbursement is
that the right and responsible party is held
closely and organically tied to the heightened
financially accountable for recovery in a health
cognizance amongst healthcare payers in
claim. We explain and examine the concept of
today's competitive scenario, of the
subrogation briefly, followed by detailing the
importance of investigating the daunting world
challenges that the players in the field
of third-party liability in claims received.
experience in today's competitive market. We
Traditionally, the investigative management of
introduce business outsourcing in relation to
health claims receives less attention as a
subrogation and the benefits of outsourcing, to
potential cost savings area. We know it costs
all parties concerned in the complex world of
health plans money to investigate a claim.
healthcare insurance finance, especially those
Until recently, it was unclear how sharply
companies who are experiencing the
health plans were able to recognize health-
challenges of in-house subrogation. We
related claims that may have been the
introduce the MY SOCRATES® software, which
responsibility of say, an auto insurance,
aids the subrogation/reimbursement process
personal injury coverage, workers'
in a unique, almost completely automated
compensation policy or on account of other
fashion, and describe its many features. This
third party related liabilities (TPL). This white
paper dwells on the software's business
paper explores subrogation/reimbursement as
benefits, with a brief note on the return on
a legal and business process opportunity to
investment (ROI), supplemented with
address the issues concerning TPL, to ensure
appropriate statistics.
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Executive Summary
1% to 2% of the total paid claims value. For a
Introduction
100,000-member health plan, the bottom line
It is emerging, through several studies into the
impact could be as much as $700,000 to
area of claims recovery, that the amount spent
$1,000,000 per year.
on investigating a claim may pale to the amount
gained by recovering money paid out on a health
A related right exercised by insurance
insurance claim that was another person's or
companies has been the right to
insured's liability. That is, identifying the
reimbursement from their insureds/members,
responsible payer and either recovering or
in those instances where the member have
preventing the health plan's payment leads to
already recovered from the responsible
significant financial savings. Thus, one enters the
wrongdoers. This prevents the member
legal realm of recourse referred to as
accessing a double recovery at the expense of
subrogation, to address this issue.
their insurance company.
Subrogation - Challenges of the
Industry & the Realm of
Outsourcing
Simply put, in situations where damages appear
to have been caused by the negligence or fault
of third parties, insurance companies have
exercised their right of subrogation to pursue
A) Challenges to Subrogation
claims against the responsible parties.
“Subrogation is legally defined as the
claims that could potentially be the liability of
substitution of one person in the place of
third parties. This can be a challenging task
another with respect to a lawful claim, demand
given the millions of claims health plans
or right against a third party, so that the
receive daily. Most claims require several days
substituted party succeeds to the rights of the
of processing even without taking time to
other with respect to the claim against the third
search for a possible connection to an
party.”
accident. State laws and the insurance
companies' desire to stay competitive have
Industry studies show that by utilizing effective
inspired faster turnaround times, which,
subrogation techniques, companies can recover
indeed, have improved in recent years thanks
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Subrogation requires identification of health
to the streamlining of processes with
view it as a trivial exercise
electronic assistance. Some health plans rely

In the realm of claims investigation,
on their own staff to recover paid claims that
subrogating other-party liability is often
were later discovered to be the responsibility
given least priority. That is, companies tend
of another carrier.
to not have a dedicated in-house focus

Not enough scale
With a steady flow of incoming claims that

No proper workflow
need to be processed and paid, recovery isn't

A lack of standardization
the best use of the adjusters' time, which may

Leakages due to lack of controls
be why they often do not bother. According to

Many companies follow a 'legacy system'
available statistics, there are more than 20,000
for subrogation that came into existence in
injury and disease classification codes, or ICD-9
a vaguely defined 'cause and effect'
codes. As many as 3700 of them suggest a
manner, with a lack of investigation/
connection to an accident. Health plans may
research into the intricacies of subrogation
pay those claims without necessarily knowing

A system that follows a step-wise, heavily
automated workflow process to increase
whether they truly are responsible.
efficiency, returns and reduce timeframes is
To summate, here are some of the current
usually lacking in these in-house systems
challenges in dealing with subrogation from an

in-house perspective:

There are many legal aspects that add to
the challenges of subrogation. These have
Manual process is often used in claims
been detailed in the later section.

example, internal claims department often
B) Business Process Outsourcing
use the codes and exceptions noted in
Hence, many health plans are now turning to
HCFA and UB forms to pend third-party
business process outsourcing. Vendors with
liability claims such as Workers
advanced analytics systems can relieve
Compensation, Auto and Coordination of
pressure on plan adjusters by sifting through
Benefits
the claims and then the flagging those with
The claims departments simply have not
potential third-party responsibility.
heard of subrogation as a separate and
Vendors that can address the need for an
significant business process opportunity or
integrated data management system that is
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processing, which if often inefficient. For
almost totally automated, from claims
in the realm of healthcare cost containment in
management to financial recovery, offered as a
mind, that a team of entrepreneurs founded
holistic package, would service a niche area that
SCIOinspire.
would be mutually beneficial to both the payers
and third party Associates (TPAs), as well as the
Ever-increasing competition has become a
mentioned vendors.
permanent feature of the global healthcare
In subrogation BPO services, there are two
demands, shorter product lifecycles and a
potential targets:
surge in healthcare costs. It has become
1.
Companies who internally subrogate, but
increasingly difficult for businesses to
have no dedicated software or process in
differentiate themselves to become
place
competitive. Innovation helps create a distinct
Companies with third-party vendors for
competitive advantage in the healthcare
subrogation, the latter whose services are
market. The principles of this very tenet is
not satisfactory for the client, with the
what propels SCIOinspire to push the envelope
company wishing to return to in-house
in an already competitive, time-bound
subrogation with a customizable software.
insurance market.
2.
Subrogation software and services, especially
SCIOinspire Corp., based in Hartford, CT,
designed to address to the needs of the
acquired SOCRATES, INC., a subrogation
aforementioned, is a strong focus for SCIOinspire.
services company, and Solucia, a leader in
The software's unique and customer friendly
analytics, actuarial and disease management
features have been described in detail further on
support consulting.
in the white paper
With these two acquisitions, SCIOinspire is
Innovation in the Subrogation
Process
uniquely positioning itself to be the only
company to offer the entire range of services
in the healthcare insurance sector, from cost
It is keeping this precise notion of innovating
containment services with software support to
business processes with a first-mover advantage
outsourced services in a gamut of related areas
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industry, with rapidly changing customer
such as actuarial services, advanced data analytics,
accounting, legal, computer science and
disease management consulting and legal process
healthcare domains, MY SOCRATES® is the
outsourcing services.
one of the few applications specific to
health payer subrogation that combines
This holistic vantage point is indeed reflected in
Data Mining, Workflow Management and
SCIOinspire's flagship software product, MY
Business Rules Management into a single
SOCRATES®, which offers many unique features in
system
healthcare subrogation services.

Continuous quality improvement is
facilitated by the daily use of MY
The success of the product is reflected in
SOCRATES® by TPL (Third-party Liability)
SCIOinspire's ever-expanding client list which
recovery and information technology staff
includes over 40 health plans, TPAs, CDH plans and
in support of their recovery activities
government plans, many of them leaders in the

industry.
Rapid, efficient implementation and
constant, onsite customer assistance
through a step-wise, proven
MY SOCRATES® - Unique and Salient
Features
implementation process

Recovery for both medical (DX) claims as
well as pharmacy (RX) claims
The fact that MY SOCRATES® is the one of the

Compatibility with multiple claims
most widely used software to support healthcare
platforms allowing simple data imports and
subrogation services is a testament to its
exports
popularity amongst clients.

Easy customization of filtering codes, fields,
The uniqueness of MY SOCRATES® is self-evident
documents, letters, and reporting
from the following summation of features:


As a subrogation/reimbursement software
all incoming scanned correspondences to
product, it offers a single package that deals
the appropriate case file
with end-to-end management of the claims,

from receipt to financial recovery

The ability to associate outgoing files and
Tracking of receipt of a valid HIP compliant
medical release
Developed by in-house experts from

5
The software offers the client continuous
© 2011 SCIOinspire Corp. All rights reserved.
dollar thresholds, questionnaires,
access to the claims files and status
cases
through the SOCRATES Web viewer®, which

Commonly used reports in MY
allows the client to avail of many user-
SOCRATES® include:
friendly features:

Case Tracking Report
The WEB viewer provides paperless

Activity Report
access to questionnaires and accruing,

Closed Case Report
opened, closed, and archived claims

Case Status Report
recovery files with underlying reports

Savings Report
on the Web – all in a secure real-time

Cycle Report

environment

The SOCRATES WEB Viewer® –
Sample Screen
The system allows viewing of the actual
claims recovery case file as well as the
ability to generate activity reports

For appropriately cleared individuals, it
The SOCRATES - WEB Viewer® Activity Report
also permits opening and closing of case
enables a user to print out all of the history
reports on all or any subset of the
event information for the selected cases.
claims recovery cases
Provides 24x7 access to all subrogation
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
in order to minimize costs and maximize
MY SOCRATES® – Proven
Methodology, Robust
Technology
recoveries for the client.
The process has multiple sub-loops and
MY SOCRATES® employs a proven 5-step
protocols backed by time-tested flowcharts to
subrogation process, backed by multiple
ensure no stone has been left unturned in the
algorithms and procedural safety checks, to
daunting and often ambiguous world of
ensure the entire life cycle of the subrogation
subrogation recovery.
process is accounted for in an efficient manner,
1. Identification
• Filter & scrub claims based on over 3000 ICD9, E, V, CPT, Trauma codes
• Client-established dollar threshold
• Identify potential subrogation/reimbursement cases
2. Investigation
• Software generates and mails member letters with a cover letter about SOCRATES
• For claims above threshold, outbound calls to members who have not responded
to the letter
3. Case
Management
• Claims recovery specialist provides Claim Report to appropriate party
• Attorney letter sent to patient’s legal counsel for cases identified for subrogation
• Less than 5% of cases referred to attorney
4. Recovery
• Client receives documentation for all closed cases, including non
-viable
• Payments placed in escrow account
• Electronic transfer of funding with closed reports
5. Credit/R eport
• Assist in crediting claims to members
• Monthly closing packets to clients
• Separate Medical and Pharmacy claims
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This above has been illustrated in the following simple chart:
A Sample Generated Report
Software Deployment Models
MY SOCRATES® is available in multiple

Software Implementation and
configurations – ranging from a highly
Customization – This includes customizing
customized fully-hosted version to a stand-
the software to client specific needs and
alone client-server version that can be hosted
deploying the software. Areas of
within the company's firewalls. In addition,
customization include data mining code
SCIOinspire offers the following services:
analysis, questionnaire template creation
Business Process Assessment – To analyze
and custom reports.
and understand the client's current and


Best practices and continuous
future state of the subrogation process.
improvement – Once implemented, we
Business Process Redesign – After
provide ongoing support and monitoring of
understanding the requirements, we'll help
the results continuously to improve the
redesign the subrogation business
data mining algorithms, reports, etc.
processes.
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
Business Benefits
To articulate from a different perspective, here
follows the best practices standards
are some of the clear benefits from using the
prevalent in the industry
MY SOCRATES® software for subrogation

services:

Enables one to get control of the multistages of the subrogation cycle and reduce
MY SOCRATES® is a unique product
the costs
developed as a result of expertise from the

Implements best practices of the industry
accounting, legal, healthcare, computer

Effective follow-ups through dairying
science and financial areas, which has been

Help clients optimize the factors that are
industry driven, both from the subrogation
under their control
and healthcare facets.

A Note on Return on Investment
(ROI)
Highly customizable, and can be tailormade to accommodate the specific
subjectivities of the client 's requirements.

Speed and efficiency of set-up and
Some relevant subrogation statistics:
implementation, with constant and onsite
1) Up to 2% of total claims paid (dollar value)
are typically TPL-related.
customer support.

2) The recovery per member per year could be
Higher recovery rates than a typical internal
department without optimal business
between $7.00 to $14.00 depending on
processes. Indeed, the recovery rates over
various factors, such as the following:
a minimal period will adequately pay for
A) Under the control of the plan:
The software is compatible with multiple

High-Deductible, Capitated)
claims platforms

Accommodates medical (Dx) as well as Rx

Offers standardization and customization of

Data mining of possible subrogatable
cases
filtering codes with the highest degree of

Sources for Subrogation (WC, MVA, Tort,
Medical Malpractice, Products Liability)
(pharmacy) claims

Type of plan (CDH, ASO, Fully Insured,
screening using various parameters

Response Rates
Reports are highly customizable, and can

Subrogation case follow-up, workflow
management
be generated and accessed 24/7. SOCRATES
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
cost of software purchase and installation

Paid Claims
satisfaction due to accurate targeting of claims

Retracted Claims
for subrogation, higher response rates, better

Compromises, attorney fees
case management, and follow-up.

Blocking of certain codes

Legal knowledge

Threshold Value for subrogation
Some Specific Concerns
There are some specific concerns in the realm of
subrogation today that are worth keeping in
B) External factors:

mind.
State statutes regarding subrogation,
MVA, WC, Tort, Medical Malpractice

Defense Verdict, settlements
For starters, not everyone encourages the

Member attorneys and their fees
subrogation process. Some say it potentially

Employer mandates (for ASO plans)
puts members in the middle of insurance
companies' bickering, or worse, litigation.
MY SOCRATES® ROI
Others say it prevents an insured from
accessing benefits for which he or she paid a
premium.
By deploying a subrogation process
automation software such as MY SOCRATES®,
health plans can maximize the recovery
As an example, auto insurers in Florida are
amounts by streamlining and executing
hoping the state doesn't renew a law requiring
efficiently on the factors that they can control.
motorists to purchase personal injury
The typical return on investment time for MY
the PIP law allows, if not encourages, hospitals
SOCRATES® software is anywhere between 6
and doctors to order unnecessary tests and
months to 12 months. The positive benefits of
treatments, charging full price, as they are not
deploying the software will be felt immediately.
bound by the kind of network contract with
The returns are based on a conservative 30-50%
discounted prices that health plans enjoy.
increase in recovery rates over a typical
Moreover, some other concerns stem from the
manually driven process. The other benefits
way health insurance is accessed by members
include shorter recovery cycle, better client
and the subjective and often complex legal
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protection (PIP). The auto insurers argue that
issues governing the claim.
Finally, the nature of health insurance
For instance, one needs to factor in ERISA
coverage ensures that health payers pay first
preemption clauses, attorney fee
and recover later, because the need for
considerations, Medicare/Medicaid
medical care is often immediate, but the legal
subjectivities, Federal Employees Health
process in resolving a Tort claim is slower. This
Benefits Program, ASO, and other government
is, by nature, un-ideal.
and religious concerns that maybe statespecific.
For these and other reasons, a handful of
states discourage or prohibit subrogation for
Also, as we know, in the best circumstances, it
insured health plans.
is very difficult to determine exactly what
happened, hence what specific legal principles
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apply.
Conclusion
Historically, businesses that have invested their
expanding client base, reflects the
strengths in innovating continuously, have
continuously evolving nature of the
been the most successful and are likely to
challenging field of subrogation/
record higher market share, profitability, and
reimbursement – it is fluid and requires a data
revenues than other competitors.
management system that can also
concomitantly adapt to the sector's many
The fact that MY SOCRATES® is the one of the
caveats, evolving laws and the ambiguous
most widely used software to support
realities of the claims recovery world. MY
healthcare subrogation services is a testament
SOCRATES® competently meets this very same,
to its popularity amongst clients.
adaptive requirement, resulting in the
In conclusion, the relationships that
carved for itself in the health care insurance
SCIOinspire has developed with it's ever-
sector.
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substantial and completely unique niche it has