How Insurance Companies Benefit From Professionally Summarized Attending Physician Statements (APS)

June 1, 2006

Attending Physician Statements (APS) have long been an industry paradox.  On the one hand they are an important source of information about an applicant’s insurability, but they are also inconsistent, duplicative, voluminous, and expensive to procure.  Why do companies use an APS?  Simply defined, an APS contains information from medical records to inform proper pricing of mortality or morbidity risk according to company guidelines. The goal of every insurer is to cut down on their reliance/volume of APS’ - and innovations in risk management such as tele-underwriting, rules based engines, and pharmacological databases have contributed significantly to that end.  None the less, the APS is an indispensable tool that will continue to play a role in the risk evaluation process for the foreseeable future. 

Underwriting departments are back logged with more trial apps and higher case volumes than ever before.  Simultaneously, they are understaffed and as a result, high-value resources (senior level underwriters) are being asked to perform non-core, administratively driven functions.  The result of diverting the time of experienced underwriters in this way is:

• Decreases in productivity and case review cycle times
• Opportunity and real costs per case are on the rise
• A measurable decline in moral permeates the industry

As the saying goes, "you get out of something what you put into it", and in the case of an APS, certain companies are getting more value and return on investment from how they handle an APS as compared to others.  As the population ages and becomes more affluent, the volume and complexity of the typical APS has risen considerably.  This simple fact has placed an increased burden on already over taxed underwriting departments and has added to the friction between producers and underwriters.  The question is:  How does one balance the desire for expeditious decision making with the need for prudent risk management?

What is an APS Summary?

An APS that is summarized by a trained and experienced risk management expert can be the difference between dealing with a frustrating burden and working with an important productivity tool.  The components of a well constructed APS summary include a health history synopsis that chronologically details tobacco use, medications, prior conditions, lab tests, BP, Cholesterol, HDL, LDL and Cholesterol/HDL Ratio. 

But how should companies use their internal, high value resources when it comes to the APS - to perform the laborious administrative task of deciphering and summarizing the medical information or focus on using the medical information to underwrite and make decisions?

A high level underwriter is not required to summarize an APS.  Junior level underwriters and medical professionals can be trained (and are often better qualified) to dissect an APS and create a composite of the applicants medical history.  A high level underwriter is required to interpret that medical summary against a company’s guidelines and procedures to evaluate the insurability of the applicant and then issue a risk based decision.  An underwriters’ focus should be on underwriting and not on sorting records to begin that process.

Consider a visit to a doctor’s office

Think about your last check up.  When you arrived at the office the reception area took care of your paper work.  When you went in to the exam room an intern or nurse measured your vitals and "summarized" basic medical elements such as height, weight, blood pressure, heart rate, etc. in advance of the doctor’s arrival.  The doctor’s time and value is maximized by having a patient composite prepared in advance by trained professionals who know how to deliver a "summary" that allows the doctor to focus on core functions: diagnosis, treatment, and prescriptions.

Henry Ford had it right when he devised the assembly line to manufacture automobiles:  it is the most time and cost effective way to bring a group of trained professionals together to focus on delivering their area of expertise as part of a collective effort to produce the desired end product.

Just like in the doctor’s visit, the components of an APS summary are very specific and play a similarly important role as part of the underwriting process.  Specialists with underwriting and medical backgrounds are trained and have experience in the specifics of medical terminology, chronological sorting, reviewing, note taking, annotating gaps and indecipherable entries, and double checking for duplicative entries/records, inconsistencies, and spotting patterns.  To ensure quality and reliability of data, very strict quality standards, training regimens, and audit schedules must be in place.

Underwriters supported by this type of "information triage" will be more productive and can underwrite more cases per hour - and therefore become a more profitable contributor to the bottom line.

What should a company look for when obtaining APS summaries?

An APS summary is a very specialized risk management tool.  A minimum requirement to be able to prepare an effective summary is knowledge of medical terminology and pharmacology.  Underwriters and medical professionals are well suited to be trained to apply their knowledge and experience in this direction.  In the case of a third-party provider of APS summaries, look for a company that offers more than a "one size fits all" approach to APS summaries.  Every insurer’s guidelines and workflow demands are different and an APS summary needs to be customized to match the needs of the underwriters. 

Also, look for a company run and staffed by actual underwriters - make sure you are working with people that have been in your shoes and understand the challenges and unique needs you confront every day from hands-on experience. 

Remember - the reason you are looking at an APS in the first place is to give you information about the insurability of an applicant so you can make a sound risk based decision.  An APS summary is a productivity tool to increase the effectiveness of that process.  If you decide to use outside resources to produce APS summaries make sure you are working with an organization that understands your needs from experience and has the appropriate personnel and process in place to deliver a high quality tool that is consistent with your guidelines.

In today’s stressed underwriting environment-- APS summaries are just what the doctor ordered.

Author Biographies

Steven L. Case, FLMI (President and Chief Executive Officer - Global Insurance Resources)

Steve Case is an almost 35 year veteran of the insurance industry holding senior underwriting and underwriting management positions.  He founded S. L. Case & Associates, Inc. (SLC), an underwriting and claims auditing, systems auditing and consulting company in 1994.  He began his career selling insurance for Travelers Life Insurance Company, then held various life and health underwriting and underwriting management positions in Cigna Life Insurance Company.  Next he was a life and disability underwriting Vice President at Unum Life Insurance Company for ten years.  In 1999 he added outsourced medical underwriting services to his company then in 2001 he co-founded Case Professional Resources, LLC to house the growing business of providing just in time risk management resources for the insurance industry.  In 2005, he launched Global Insurance Resources, LLC to provide domestic and international outsourced underwriting, claims, and customer communication solutions to the insurance industry. 

Rowland Ricketts, FLMI, CLU, ChFC, FALU (Executive Vice President and Chief Underwriting Officer - Global Insurance Resources)

Rowland Ricketts is a 40 year insurance veteran and is a co-founder of Case Professional Resources, LLC and is also a co-founder of D&S Concepts, an international insurance consulting firm based in London, England.  His prior experience includes the position of Senior Vice President of General American Life Insurance Company where he was accountable for all functions from new business processing to claims.  Prior to this he had many years of underwriting and underwriting management experience at Connecticut Mutual and National Life of Vermont. 

Christos Orestis III (Executive Vice President and Chief Marketing Officer - Global Insurance Resources)

Chris Orestis held senior positions on a number of political campaigns before working in 1993 and 1994 for both the White House and the Senate Majority Leader on Capitol Hill. From that point, he spent the next seven years representing the health and life insurance industry as Vice President and Senior Vice President respectively for the Health Insurance Association of America (HIAA) and the American Council of Life Insurers (ACLI).  As a part of senior management for both organizations, he was responsible for external affairs and activities related to revenue generation including marketing, business and financial development, industry conferences, and industry-vendor coalitions/partnerships.  In 1999, he was awarded the Robert R. Neal Medal by HIAA for distinction and service to the industry.

About Global Insurance Resources
www.girworld.com

Global Insurance Resources (GIR) provides outsourced, Just-In-Time medical underwriting, claims, back-office operations, and customer communications solutions in support of group and individual insurance products (such as life, disability, long-term care, health, and supplemental insurance) to some of the largest insurers in the world as ranked by the Global Fortune 500. 

GIR’s principals and staff have many years of experience in mortality, morbidity, and health underwriting, risk management and auditing.  In addition to extensive careers as senior and executive level medical underwriters, GIR’s principals have been providing contract services to companies such as AIG, CIGNA, CNA, Manulife/John Hancock, MetLife, National Life of Vermont, Prudential, Safeco, Sun Life, and UnumProvident - for over a decade.