By Ryan Mooney, general manager, Source Division, HealthEdge.
In our healthcare ecosystem, waste, fraud and abuse run rampant: in 2020 alone, healthcare spending in the U.S. exceeded $4 trillion, and estimates suggest about a quarter of that was attributed to waste. What this tells us is that an increased focus on payment integrity – and in particular, fixing its traditionally disparate practices – has the potential to greatly benefit payers, providers, and ultimately members.
At its core, payment integrity is the process by which stakeholders ensure healthcare claims are paid properly, both pre- and post-pay. It encompasses determining the correct party, membership eligibility, contractual adherence, and fraud, waste and abuse detection and prevention. In recent years, as healthcare spending continues to skyrocket, payment integrity has received more attention – and investment – than ever. And yet, it leaves much to be desired.
The Current State of Payment Integrity
A comprehensive payment integrity strategy is key to lowering costs and achieving higher quality of care for members, but the systems in place are far from perfect. With over 24 years working in payment integrity, throughout this experience I’ve found it nearly impossible not to run into issues within the system. As it stands, many parties focus on enriching the contingency model versus solving the problem. Structurally, the contingency model is flawed: when the vendor gets paid according to the quantity of errors they find, the core problem will continue, as these parties are incentivized to identify what is incorrect rather than why.
Our 2021 Voice of the Market survey of over 200 health insurance executives found that payment accuracy would help reduce administrative costs at their organization, directly impacting savings that can be reallocated for other business priorities such as considering partnerships, acquisitions, or investing in a new geography or line of business. This represents a substantial shift from the past, demonstrating how stakeholders today want to take advantage of all available resources to expand in the current landscape.
Overall, payers are getting more savvy about data management and analytics as they demand greater visibility throughout the payment process. This allows payers to identify flaws within their own systems and in turn, become less reliant on that dysfunctional contingency model. The more insights payers have into their data, the more they understand the perverse cycles of contingency and realize that many of the issues at hand are simple, quick fixes.
How simple? Many of the issues at hand can come down to administrative oversights or basic miscommunications. I remember recovering over $10 million on a contract that was paid out-of-network, because the PIN was 30 digits and the system could only accommodate 28 digits. Just silly things like that could be fixed in seconds.
This shift moves our industry as a whole away from the mindset that our healthcare system is unfixable. Really, when you pull back the curtain, you’re able to see that the why behind so many of the incorrect claims is not catastrophic, but very simple. As we move forward, it is our continued goal to empower payers to utilize data, analytics and AI to reap the benefits of understanding the why.
Improving our payment integrity system does not come without substantial challenges. First and foremost, the contingency model is deeply ingrained in our industry and will take time to uproot. In fact, the majority of payers still depend on it. This option at first seems like a low-risk model, but over time it becomes less beneficial to payers, especially if a steady stream of recurring issues crop up.
The contingency model often perpetuates the overpayment by payers who get trapped in standing agreements that don’t serve them. For example, if a lab, durable medical equipment provider or home health company gets acquired by a larger company with a standing agreement with a national health plan, the health plan almost always continues paying at the regional rate. As such, the payer isn’t capturing the lower national rate – putting them at a major disadvantage. Those overpayments get scooped up, hundreds of claims at a time, by payment integrity vendors who have an incentive to continue the status quo. Ultimately, the vendor never raises their hand to let the payer know that making a small, easy adjustment in their processing would correct an ongoing error that is costing them money.
Inefficient payment integrity practices can also breed provider abrasion. When payers continually chase providers over completely fixable oversights, abrasion is inevitable. The nature of relationships between payers and providers is one of the most integral within our industry, and yet, the idea that many payers must dial back their aggressiveness when exacting their recoveries is commonplace. In this realm, transparency means a lot, consistency means a lot, and communication means a lot.
Realizing the potential of payment integrity will be especially important as payers face financial headwinds and members face increased needs as COVID-19 persists. The time for payers to act is now – yes, this is a complex issue within an even more complex system, but it’s time for stakeholders to buy into the idea that this is solvable. Far too many leaders have succumbed to the notion that the problems at hand are gargantuan and unfixable.
We must recognize that we are all in this together and waste hurts everyone. We need to demand that things are done the right way, for all of us. I believe most errors are just that – errors. Let’s work toward greater transparency and accuracy with data management, smart communication, and reimbursement structures. There’s always going to be change and there are always going to be new problems, so an ongoing investment in modern, sound payment integrity needs to be made.
At the end of the day, if you’re identifying all these problems, but you’re not fixing them, you’re not getting it right.