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Electronic health records have the potential to disrupt and improve the underwriting process

Jeff Huddleston, Jeevan Duggempudi and Chris Stehno

The systematic collection and storing of patient health information electronically has existed in various forms for several decades. Recent developments in technological and regulatory environments have accelerated the development, availability and effectiveness of electronic health records (EHRs)—also referred to as electronic medical records (EMRs)—for use in a variety of insurance use cases. This article will examine the current state of EHRs in the insurance world and explore in detail one specific case study of EHRs in life insurance underwriting.

Incentives for Modernization

The American Reinvestment & Recovery Act (ARRA) was enacted on Feb. 17, 2009, with the purpose and goal of modernizing our nation’s infrastructure. The Act specifically included the intent to modernize our health IT infrastructure in the section titled “Health Information Technology for Economic and Clinical Health (HITECH) Act.” Early in 2010, the Office of the National Coordinator for Health Information Technology (ONC) released its recommendations to the Centers for Medicare and Medicaid Services (CMS) concerning meaningful use of EHRs, and it defined the 25 criteria required for EHRs to become certified.

Performance thresholds were set for each of these 25 criteria, detailing what a health care provider must do to qualify for HITECH incentive payments. These incentives began in 2011 and continued for five years. Today, incentives and penalties continue to encourage EHR compliance through programs like the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which changed the calculated Medicare payments. With the introduction of MACRA, the Medicare EHR Incentive Program, commonly referred to as “meaningful use,” was transitioned to become part of MACRA and is now one of the four components of the new Merit-based Incentive Payment System (MIPS).

To summarize this brief history, if you are a health care provider and you are not meeting the meaningful use certification criteria for EHRs, you are leaving significant money on the table!

Widespread EHR Adoption and Access

At the start of 2016, the ONC reported that more than 99 percent of hospitals (critical and small rural) and more than 60 percent of all office-based physicians had demonstrated meaningful use and/or adopted, implemented or upgraded EHRs.1,2 These adoption rates are excellent news for a wide variety of patient and business applications, including underwriting. However, one issue still exists: How do you get at all of this wonderful data?

That answer is easy. All EHR records have been consolidated at the national level and are being held by the ONC in the National Insurance Library (NIL). And if our sarcasm didn’t register with you, the true answer is that a national or even state-based data set does not exist—or does not exist in a useful or meaningful way.

By definition, health information exchanges (HIEs) are the mobilization of health care information electronically across organizations within a region, community or hospital system. The term HIE may also refer to the organization that facilitates the exchange.

The ONC, through grants legislated by the HITECH Act, had promoted the development of HIEs (often called regional health information organizations, or RHIOs) for the means of electronic exchange of information and for the development and maintenance of HIE standards. However, to date, HIEs and RHIOs continue to struggle to be self-sustaining, and the vast majority are tied to federal, state or independent grant funding to remain operational. The future of these programs is up in the air as the state and federal regulations that define HIEs and the broader health IT landscape are emerging (or stalling).

One thing that does exist, however, is the right of patients to access their EHRs. Going back to 1996 (the year Michael Jordan’s Chicago Bulls set a new NBA season win record), the Health Insurance Portability and Accountability Act (HIPAA) granted individuals access to their own EHRs and defined the providers’ obligation to give them access.

The move to a patient-centered approach to owning and being able to access one’s own medical data appears to be the newest and strongest trend. In fact, the ONC issued a new report, titled Improving the Health Records Request Process for Patients: Insights From User Experience Research,3 which addresses patients’ needs and current issues. The ONC has gone even further to develop a Patient Engagement Playbook. Chapter 2, Section 5, titled “Support Electronic Record Requests,”4 provides actionable tips for health care providers to make the medical record request process more streamlined, transparent and electronic.

EHRs for Individual Life Insurance Underwriting

Many life insurance carriers have implemented some type of accelerated underwriting program for life insurance. As promising as some of these programs are, however, there is still a balance between efficiency and risk management that needs to be maintained to facilitate continued growth. Carriers could implement an automated process with a fully underwritten price by obtaining medical records at the time of application rather than waiting for labs and physician statements (as is current practice). …

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Insurance Applications

EHRs offer opportunities in many different insurance applications. The use of EHRs in traditional group health insurance is well-established and offers numerous benefits to providers, plans and consumers. Additional opportunities to use EHRs in insurance are emerging in nontraditional areas:

  • Individual life insurance underwriting. This opportunity is explored using a real-world case study (see sidebar). EHRs have the potential to significantly disrupt individual life insurance underwriting by reducing the cost, time, complexity and invasiveness required compared to traditional medical underwriting requirements (paramedical exam, lab exam, etc.).
  • Supplemental health insurance underwriting. For specialty supplemental health or voluntary benefit types of insurance, or individual disability income or long-term care type coverage, EHRs offer the ability to improve the underwriting and policy issuance experience for both insurance carriers and consumers. EHRs can simplify, expedite and improve the risk assessment process while reducing the cost and invasiveness to the end consumers.
  • Claims management. For many types of insurance with repeatable claim events linked to consumer health (i.e., disability income, long-term care, etc.), EHRs can improve the risk and costs associated with claims management.

EHRs, primarily gathered through patient portal technology, have the potential to fundamentally disrupt and improve the insurance risk assessment process. In life insurance specifically, EHRs in combination with lab-free and automated underwriting programs can help life insurance companies realize the vision in which two-thirds of applications are issued without manual review, drastically reducing application time and cost while improving the customer experience. However, effectively operationalizing EHRs into existing processes is a journey that requires comprehensive program design, effective communication, integrated planning and stakeholder buy-in from across an organization.

Jeff Huddleston, ASA, CERA, MAAA, is a manager in Deloitte Consulting’s Actuarial & Insurance Solutions practice.
Jeevan Duggempudi is a senior manager at Deloitte Consulting who specializes in data science and digital transformation initiatives at insurance and health care companies.
Chris Stehno is a managing director at Deloitte Consulting who specializes in data analytics and predictive modeling in insurance and health care.

Copyright © 2018 by the Society of Actuaries, Schaumburg, Illinois.