Health IT, Hospitals, Payers

How tech can help solve the overpayments problem in healthcare RCM

When CMS overpays for services, providers and commercial payers are responsible for paying the agency back, and at times, they are on the hook for millions of dollars. But technology can help healthcare stakeholders catch the mistakes that lead to overpayments, thereby reducing unnecessary costs.

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Overpayments from the Centers for Medicare & Medicaid Services can prove to be a huge cost burden for providers and commercial payers, as they are then on the hook for paying the government back and in some cases are facing legal jeopardy. But avoiding this situation is not all that complicated. It calls for a diligent review of revenue cycle management processes and new tech is here to help.

CMS’ overpayments can reach the millions. In a report issued in August, the Department of Health and Human Services’ Office of the Inspector General found that CMS paid providers $1.9 million more than they needed to for chronic care management services rendered in 2017 and 2018.

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A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.

Not only that, but the scrutiny around overpayments is also heating up. Last month, an appeals court ordered UnitedHealth and other Medicare Advantage insurance providers to report CMS overpayments for treatments not supported by a patient’s medical record.

Overpayments typically occur as a result of processes that are not streamlined. For example, duplicate billing has been a problem for providers and payers for decades.

Some payers take a “pay and chase” approach, which means they first focus on paying the claim and review it later, which can result in duplicate billing, said Rebecca Barnes, a product line manager at revenue cycle management company Availity, in a phone interview.

Ideally, payers would review and update any systems they have in place, including the claims editing process, which involves verifying that provider-submitted claims are coded correctly. This can help increase payment accuracy the first time a claim comes through their system, Barnes said.

Similarly, providers need to be scrupulous when documenting patient visits.

They need to document what occurred in the office visit, the condition the patient has and whether the patient has multiple conditions, among other details, said Lynn Carroll, COO of HSBlox, a healthcare finance technology company.

Then, before the claims are submitted, they need to undergo a scrubbing and auditing process to determine if the claim is being billed accurately and if it is a service reimbursed by CMS.

“[But] it is not humanly possible to account for all the permutations, variations and anomalies that result in overpayment [or] underpayment,” said Carroll in a phone interview.

And this is where technology can make a huge difference.

On the provider side, automation can help capture mistakes on the front-end of the process, and for commercial payers that offer government plans, it can help streamline the backend.

Machine learning, especially, can make transform the claims review process, Carroll said. HSBlox, for example, applies a machine learning approach to validate patient eligibility and confirm the accuracy of CPT codes used, which indicates what CMS will pay for any given service.

Another type of technology that can be useful for providers and payers alike are claims editing tools.

“[These tools] can help with compliance as they will check for errors prior to the claims submission,” said Availity’s Barnes. “This can include not just government standards, which are important, but industry standards for billing and reporting practices.”

Overpayments are not simply the result of errors made by provider or payer systems.

In many cases, overpayments occur after a contract between providers and payers and the government is renegotiated.

This could result in a situation where providers are paid for services outlined in a previous contract, but not in the most recent one, leading to an overpayment, explained Terry Blessing, senior vice president of client development at VisiQuate, a provider of healthcare revenue cycle analytics and automation.

Efficient contract management software can help prevent this situation from arising.

“[This software] will specifically tell you which date of service is associated with which contract, and once that contract is identified, it will tell what the reimbursement should be for services based on that date,” said Blessing, in a phone interview.

Above all else, avoiding the overpayments issue takes precise auditing and reviews as well as an ability to keep pace with the ever-changing guidelines governing healthcare reimbursement.

“There are so many guidelines and rules in the coding and billing world today, and I don’t know a single person that can keep up with all of them,” said Availity’s Barnes. “People can make mistakes, and technology can help reduce that.”

Photo: adventtr, Getty Images