The R&D Tax Credit Aspects of Hybrid Call Centers for Health Insurers
There are 313.9 million people in the
United States, of which 48 million people do not have health
insurance as of 2012. With the passing of the Affordable Care
Act, it is estimated that at least an additional 9.5 million
people will be covered as of the closing of the initial
enrollment period. The additional insured further the need for
improvement of the already burdened call centers which the
major healthcare companies operate.
The Research & Development Tax
Credit
Enacted in 1981, the federal Research and
Development (R&D) Tax Credit allows a credit of up to 13%
of eligible spending for new and improved products and
processes. Qualified research must meet the following four
criteria:
- New or improved products,
processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Eligible costs include
employee wages, cost of supplies, cost of testing, contract
research expenses, and costs associated with developing a
patent. On December 18, 2015 President Obama signed the bill
making the R&D Tax Credit permanent. Beginning in
2016, the R&D credit can be used to offset Alternative
Minimum tax and startup businesses can utilize the credit
against $250,000 per year in payroll taxes.
Call Centers
Call centers have moved to the forefront as
the method of communication between the insured and the health
care companies. In the health insurance industry, a common
goal is to answer approximately 80% of all calls within 30
seconds. With the number of people being insured on the rise
and fierce competition, it becomes more important to ensure
positive customer service experiences.
Healthcare insurers employ thousands of employees across
the United States. For example, the table below illustrates
UnitedHealth Group call center employment in select locations:
|
Location
|
Number of
Employees
|
|
Greensboro, NC
|
3,500
|
|
Irving, TX
|
800
|
|
Tonawanda, NY
|
450
|
|
Roanoke, VA
|
450
|
|
Jacksonville, FL
|
350
|
|
St. Louis, MO
|
345
|
|
Miami, FL
|
125
|
|
Raleigh, NC
|
85
|
Note: Data estimates are
used. Greensboro, NC data includes all employees at that
location and not just healthcare call center employees.
According to
Salary.com, after all benefits and bonuses, the entry level
call center representative makes approximately $46,551. Keep
in mind that this is an entry level call center representative
as well as it being an industry average, not specific to
health insurance, whose employees might need more experience
than the average call center. In any event, just considering
those select call centers for UnitedHealth Group given above,
the annual employee cost for the insurer is $284,193,855. This
magnitude of annual costs alone can support increased
investment in artificial intelligence call center technology.
Hybrid Call Centers
Defined
Many call centers are therefore being
transitioned into a hybrid of human interaction with computer
speech recognition. Artificial intelligence enables call
centers to handle calls faster with better quality and at less
cost than human only operated systems.
Industry-Wide Change
as a Result of the Affordable Care Act and Aging Population
The Affordable Care Act has created a large
change in the health care industry. The additional ten million
people obtaining health insurance has created a need for
additional communication with these new insured. As a result,
a move towards smarter communication methods has emerged.
Below is a list of the 2012 number of people insured and
2012 revenue for several major health care organizations:
Number Insured and Revenue Per Company
|
2012 Total Insured
|
2012 Revenue in
Millions of Dollars
|
|
UnitedHealth Group
|
70,000,000
|
$101,862
|
|
WellPoint
|
33,300,000
|
$60,711
|
|
Aetna
|
18,000,000
|
$33,780
|
|
CIGNA
|
11,400,000
|
$21,998
|
|
Humana
|
10,200,000
|
$36,832
|
|
Kaiser
|
8,900,000
|
N/A
|
|
Health Net
|
6,600,000
|
$11,901
|
Data from:
http://www.statisticbrain.com/health-insurance-company-member-statistics/
and
http://archive.fortune.com/magazines/fortune/fortune500/2012/industries/223/
Despite initial well
publicized implementation issues , more and more people are
becoming insured. Aetna added 230,000 insured from the public
exchange with expectations to add 450,000 more by the end of
2014. Similarly, Cigna was optimistic indicating that younger
people have been obtaining more insurance policies. According
to an interview with WellPoint CEO Joe Swedish, the second
largest health care insurer has already added 1,000 people to
staff their call centers just as a result of the Affordable
Care Act. With more of younger people insured, machine systems
can gain faster acceptance.
Aging population
means additional people need to be insured for longer periods.
This also means that an application based website for health
care management by individuals may be too difficult to utilize
because of the lack of technological skills that older
generations stereotypically have. Health care insurers have in
turn looked towards smart call centers as a potential fix.
Although machine systems can handle a wide range of standard
inquiries, there are always issues better handled by humans.
Furthermore, many people prefer dealing with humans as opposed
to automated systems.
Administrative Costs
in Health Care
A significant goal of insurance companies
is to have a majority of premiums paid going to actual health
care and not administrative costs. According to a study
conducted by Harvard Medical School and the Canadian Institute
for Health Information and presented in an article in the New
England Journal of Medicine , administrative costs accounted
for 31% of health care expenditures in the United States.
WellPoint, a major insurance provider, has already indicated
that it will pass on additional costs as a result of the
Affordable Care Act to its customers. One method for reducing
these administrative costs is by implementing a hybrid call
center composed of artificial intelligence and human
operators.
Using Call Centers to
Improve Medical Care
Health insurers are trying to lower costs
to both themselves and the patients by implementing
technologically based methods of care. Although often used in
rural or hard to reach areas, insurers such as WellPoint,
Aetna, and Cigna are increasingly using telemedicine, where a
doctor can consult a patient over a webcam conference or
simply a phone call. WellPoint’s program, LiveHealth Online,
saves an average of $71 per visit. In Cigna’s program, named
MDLive, fully trained medical doctors respond to requests on
average within 11 minutes. This can have great use in
non-urgent care such as having a cold or the flu or asking a
doctor to quickly look at a rash. In conjunction with
telemedicine, healthcare insurers can levy the amount of data
and resources available to them to further cut costs for their
customers.
Increased Usage of
Predictive Analytics and Big Data
In an industry that uses great amounts of
actuarial data in their management of policies, predictive
analytics and big data has played an increased role in
business operations. Factors such as religion and culture can
be used to predict health insurance usage. Analytics can
recommend specific doctors and treatment procedures before
patients need expensive emergency room visits. For example, a
patient with allergies may be encouraged to see an allergist
as a result of correlation testing with certain behavioral
factors before needing emergency care. This is just one of the
many applications for this data. Potential data sources
include genetic data, sleep data, data collected from smart
phones, and other data.
Existing Consumer
Spending Data
To date, many health care insurers have
used already available consumer credit card data. One insurer,
Carolinas HealthCare System, has already implemented such a
program. The table below illustrates how this data may be
used:
|
Data
|
Analysis
|
|
Frequent credit card purchases at
pizza shops and fast-food outlets
|
May need advice on weight control or
diabetes and high blood pressure risks
|
|
Frequent purchases of large amounts
of alcoholic beverages
|
Possibly a sign of depression
|
|
Falloff in the frequency of drug
refills shown on a charge card
|
Might require a reminder call from a
nurse
|
|
Cigarette purchases at grocery
stores by consumers with bronchial problems
|
Increased chance of visiting an
emergency room for an asthma attack
|
|
No vehicle ownership registration on
file
|
Could presage difficulty in reaching
scheduled care appointments
|
Source: All Consumer Data
Suggestions taken from Pettypiece and Robertson, Business Week.
With artificial
intelligence enhanced call centers, health insurers can quote
quicker with more accuracy than when just using the historical
actuarial data. This consent may or may not comply with policy
goals and legal requirements.
Although the
opportunity here is large, there are potential issues that may
come up. For example, credit card spending cannot always be
traced to a particular individual. This is simply a proxy
variable for physical healthiness, and the correlation may not
be that strong in many cases. For example, just because one is
purchasing a fast food meal at midnight doesn’t mean they
are consuming it; the purchase could potentially be for a
spouse, friend, or child. This can be a common occurrence,
causing the data to be unreliable. Nevertheless, more data is
beneficial in statistical analysis, and data engineers can
filter out irrelevant data.
New Sources of
Healthcare Data
Although consumer spending data can be
used, there is an even larger potential to take advantage of
other sources of data available to health insurers. Consider
the following table of potential data indicators and their
interpretations:
As more
and more electronics become prevalent in daily life, it is
just a matter of time until this data is widely available. The
possibilities for sleep or wearable data and the potential
information that can bring are large and widespread.
|
Data
|
Analysis
|
|
Too much sleep
|
Might be depressed
|
|
Wearable technology indicates that
the user has walked over three miles for the day
|
Person might be in good physical
shape
|
|
Lack of sleep for long hours
|
Possibly a sign of stress
|
|
Historical blood results indicate
DNA mutations
|
Disease prevention measures should
be taken
|
|
Social media data indicates a
regular “check-in” at 12:30 am
|
Person might like to party. Discuss
health effects of too much alcohol intake
|
Conclusion
A move towards smart machine systems in
health care is vital to maintain the growth in the number of
insured that has been seen from an aging population and the
Affordable Care Act. In a time where the healthcare industry
is rapidly changing, R&D tax credits both on the federal
and state levels can help support the development and
implementation costs associated with undertaking the
artificial intelligence based call center project. It is more
important than ever for healthcare insurance companies to keep
up with technological improvements in an ever changing
industry.
