By: John Hoffman, Director, Application Managed Services Operations — Payment Integrity Software — Payment Integrity, OptumIT
This is the 1st blog in a 3-part series “Optimizing Payment Integrity software to avoid payment pitfalls”
In the dynamic health insurance industry, the claims operations organization within a payer is committed to paying a provider’s claims as quickly and accurately as possible. To do this, various software solutions are deployed and utilized to electronically process those claims with no human intervention.
While most erroneous claims submitted can be corrected by software, some do slip through the cracks resulting in incorrect payment — a 7% incorrect payment rate is not uncommon across the industry. A few reasons behind incorrect payments are:
- Complex provider contracts
- Legacy technology
- Incomplete, complex or missing medical and reimbursement policies at a payer level
- The growing size and complexity of regulatory content
- Emerging categories of medical spend that have not yet been formally addressed by CMS guidelines
To combat these challenges, most health plans have adopted the use of claims editing and pricing software solutions that work in conjunction with health plans’ adjudication systems to process claims in a timely and accurate manner.
This blog series explores how these ever-growing payment integrity challenges can be addressed through established payment integrity software solutions.
How do payment integrity software solutions combat the rising complexity of provider contracts and reimbursement policies?
Most health plan adjudication systems are capable of performing very basic claims editing functions. However, a robust, flexible claims editing software enables you to catch claims errors, omissions and questionable coding relationships. With claims editing software, you can create exceptions for providers that should not be receiving certain edits. It also allows for the adoption of complex provider and reimbursement policies that can actually be operationalized through a flexible editing tool.
With all the power and potential that claims editing software offers, it can be tempting to think of it as an automatic tool that you can “set and forget.” That is not the case in today’s dynamic environment. Every day, something changes: new guidelines are issued, current guidelines are updated and new provider contracts are negotiated. It takes a team and constant diligence to ensure your claims editing is current.
How do regulatory changes impact the use of payment integrity software solutions?
ICD-10 originally had 18,000 codes when it was introduced in 1990. After the addition of Clinical Modification, ICD-10 has over 93,000 codes today. As with ICD-10, the Current Procedure Terminology (CPT) codes also change frequently. This increasing volume and frequency of content changes requires payers to stay on top of this content or they risk non-compliance and incorrectly paid claims.
It is important that a health plan’s claims editing solution is testing claims against an expansive database of government and industry rules, regulations and policies governing health care claims. A claims editing tool can only be effective if the content beyond it is comprehensive, accurate and constantly kept up to date. It is vital to understand that not all claims editing solutions on the market are created equal: the content behind them differs greatly, especially when it comes to state Medicaid content.
The same can be said of content related to managing prospective payment systems. The technology — driven by the ever-changing content behind it (DRGs, APCs, APGs, etc.) — allowing health plans to effectively maintain, update and negotiate hospital and physician contracts related to federal and state reimbursements is a vital tool within health plan operations and must be up to date with current CMS guidelines.
How will the continued growth of new spend categories and regulatory changes impact a health plan’s operations?
It is vital that health plan executives are constantly analyzing their medical spend at the code level to ensure any incorrect leakage can be analyzed and stopped if appropriate. This is an extremely difficult task with the frequent regulatory content changes and emerging categories of medical spend, the burden of which often falls on a small staff at the health plan with limited technology and resources at their disposal.
For example, specialty pharmacy prescriptions generally represent approximately 1% to 2% of a payer’s prescription volume, while the prescription dollar spend for these specialty drugs can be as high as 40% to 50%. This category has been growing 5% annually. (Factoring 5% on $100 billion results in a growth of $5 billion a year.) The growth in a category like specialty pharmacy, in addition to all of the existing editing and pricing guidelines, can make staying on top of the changes feel impossible for even the most sophisticated health plan operations leaders. Utilizing flexible editing and pricing software solutions that are supported by up-to-date regulatory content is key to tackling these challenges.
At Optum we realize payment integrity software best practices do not involve installing a software solution and then walking away. The challenges payers face are ever changing and dynamic and cannot be solved by software alone. Optum combines best-in-class software, solution experts and a partnership mentality to ensure that our payment integrity solutions are utilized and maximized appropriately. Future blogs will discuss specific steps we recommend within both payment integrity editing and pricing software in order to help you maximize savings, increase regulatory compliance, improve provider relations and lower administration costs.
Learn more about the value payment integrity software can deliver for your health plan.
Watch the video: Vital steps to optimizing payment integrity
Connect with Optum to explore the value of a comprehensive payment integrity strategy
About the Author:
John Hoffman is a health care operations leader with 10+ years of experience across multiple health care companies and operations functions.
John leads our Payment Integrity Software Application Managed Services (AMS) Operations team, which partners with our payer clients to maximize their CES solution. He is responsible for leading a large team, overall client service delivery and savings targets.
Prior to joining Optum, John served as a director in the Operational Excellence organization at EmblemHealth.