Picture a patient who suffers from lower back pain after an injury. A physician recommends physical therapy, for which the health plan will cover 12 visits. However, a 13th visit is scheduled after several months. The health plan’s claim processing system doesn’t recognize that this visit shouldn’t be covered, and the claim is paid.
One year later, a retrospective review identifies the overpayment, and the health plan notifies the provider that it must repay the plan. It’s a situation fraught with abrasion.
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Emad Rizk M.D. Emad Rizk, M.D. is Chairman, President and CEO of Cotiviti. He joined Cotiviti (formerly Verscend Technologies) in August 2016 as President and Chief Executive Officer, bringing a 30-year, well-documented track record of delivering improved quality and financial performance to healthcare organizations through forward-thinking leadership, business acumen, and clinical expertise.
Scenarios like this are common and carry a high cost, both in administrative expense and fractured relationships. The Council for Affordable Quality Healthcare (CAQH) estimates that breakdowns in coordination of benefits result in $800 million in unnecessary administrative costs per year. Meanwhile, a 2018 Gartner Research report estimates that 3 to 7 percent of commercial claims are overpaid.
The data points to the need for health plans to tighten payment integrity on the front end, moving from recovery to prevention.
Pivoting from Reaction to Action
Payment integrity—ensuring that the right care is provided to the right member for the right price, based on the contract—has long been an area of concern for health plans. However, in recent years, leaders have become hyper-focused on payment integrity as healthcare costs and instances of fraud and abuse reach record levels.
Most payers are beginning to focus on tackling the root causes before claims are paid—and the business case for shifting to a prospective payment integrity approach is strong:
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- The success rate in recapturing dollars lost through incorrectly paid claims is generally below 70 percent.
- The administrative cost of retrospective recovery is high: $25 or more per claim.
- Health plans can save 1.5 times more through prepayment integrity efforts than through retrospective review and recovery.
How can health plans significantly improve payment integrity before claims are paid? Here are three actions to consider.
Strengthen the policy playbook—and treat providers as team members. Ambiguous payer policies are one of the biggest contributors to breakdowns in payment integrity. Ensure the right policies are in place and that they are enforced by the claim processing system. Use data analysis to uncover opportunities for provider-specific feedback.
Health plans can bolster providers’ compliance with payment rules by:
- Heightening transparency. Make sure payer policies, as well as coding and billing requirements, are clear, timely, accurate, and highly actionable. When claims are denied, ensure that reason codes highlight the specific medical policy that prompted the decision.
- Educating providers. Examine how well the health plan disseminates detailed information about its policies and make adjustments based on provider feedback.
- Technology integration: Automate and integrate data across the entire payment process to make decisions as early as possible.
Shine a light on electronic eligibility data access. Today, leading providers rely on tools that deliver real-time eligibility data to verify patient coverage at the point of service. But the success of these tools depends on the health plan’s ability to provide real-time data. Meanwhile, health plans struggle with lack of visibility into other insurance coverage members have, hindering coordination of benefits management.
Automating eligibility and benefits verification presents a $3.92 savings per transaction for health plans, according to a 2018 CAQH report. But there are challenges to delivering the right information to providers electronically prior to service delivery—typically related to ineffective processes and technologies. And even as adoption of electronic benefits verification increases, it has not led to fewer customer service calls, CAQH found.
Health plans can reduce the impact of eligibility and coordination of benefits misfires on payment integrity by:
- Investing in tools that quickly identify members with dual coverage and articulate primacy of benefits
- Ensuring benefits information is up-to-date and accessible in real time
- Elevating their ability to support same-day enrollment processing
Implement “near-time” clinical claim validation. While most claim editing systems are proficient in addressing black-and-white coding situations, some claims are too complex to be auto-adjudicated. These include claims in which situation-dependent coding rules, such as the use of modifiers to override typical edits, have been deployed.
One way leading health plans are driving increased payment integrity is through tools that support pre-pay clinical validation, protecting health plans against costly overpayments and recoveries without holding up the payment process. They apply clinical and coding algorithms that identify questionable claims, which are then reviewed by coding experts and nurses before final adjudication. The right solution and infrastructure will support accurate payment determination immediately, avoiding payment delays.
Building a Front-Line Defense
Supercharging payment integrity on the front end adds immediate savings for health plans while limiting abrasion among providers and members. The key is transparency. By sharing the “how” and the “why” behind your approach, providers and members will better understand the impetus for action and how changes may impact them. Ultimately, a prospective approach improves the member and provider experience while significantly decreasing not only overpayments, but also administrative expense.
Emad Rizk, M.D. is Chairman, President and CEO of Cotiviti. He joined Cotiviti (formerly Verscend Technologies) in August 2016 as President and Chief Executive Officer, bringing a 30-year, well-documented track record of delivering improved quality and financial performance to healthcare organizations through forward-thinking leadership, business acumen, and clinical expertise.
