An opportunity to drive healthcare cost savings
Healthcare spending in the U.S. continues to rise at a significant pace. In 2021 alone, national health expenditures grew by 2.7% to $4.3 trillion, or nearly one-fifth (18.3%) of U.S. gross domestic product. That translates to healthcare spending of $12,914 per person; other wealthy countries have historically averaged half that amount.1
The statistics, while daunting, also represent a significant opportunity for every segment of the healthcare system, including health plans: a chance to invent — and reinvent — solutions for controlling costs while maintaining quality of care. Fortunately, one of the most effective cost-containment strategies for health plans is also ripe for transformation: payment integrity.
A surprising portion of the nation’s overall healthcare costs are driven by claims that are paid incorrectly due to fraud, waste, or abuse. The U.S. General Accounting Office has estimated that healthcare fraud, waste, and abuse may account for as much as 10% of all healthcare expenditures each year.2 In 2021, the U.S. Department of Health and Human Services identified nearly $154 billion in improper payments across federal healthcare programs, including Medicare Fee-For-Service, Medicare Parts C and D, Medicaid, and the Children’s Health Insurance Program.3
Fraud, waste, and abuse impose an enormous cost on our nation’s economy and compromise the cost and quality of healthcare provided to individual patients.
What is payment integrity?
Simply put, payment integrity is the process of ensuring a health claim is paid appropriately. Payment integrity can help plans manage cost of care by finding and addressing unnecessary medical expenses resulting from fraud, waste, and abuse, including:
- Providers’ non-adherence to their contractual terms.
- Duplicate claims payments.
- Coding inaccuracies and unbundling of services.
- Payment of claims other parties may be ultimately responsible for, either wholly or partially.
Payment integrity solutions generally focus on two parts of the claim’s lifecycle: pre-payment or post-payment strategies. Pre-payment solutions help plans eliminate errors before they happen, minimizing providers’ administrative work and avoiding the time-consuming process of identifying and collecting overpayments (also known as “pay and chase” work). Post-payment strategies recover funds that were paid incorrectly.
One important post-payment strategy is subrogation, the recovery of money from another party who is liable for a claim. For example, if a plan member pays a claim for a car accident, but the responsibility belongs to the auto insurer, subrogation should take place. Subrogation identifies these incorrect claim payments and helps plans recover lost funds from the responsible third parties.
Reinventing payment integrity
Today’s technology innovations and workforce challenges are prompting health plans to take a closer look at payment integrity. Plans with an eye toward strategic reinvention can reduce their own wasted costs while also improving the healthcare system and care affordability for all.
Carelon’s Brady, Deagle, and Browder share five ways that health plans can maximize the power of payment integrity.
1. Focus on an end-to-end strategy
Payment integrity is a crucial tool for managing healthcare costs — but it wasn’t always that way. Over the past few decades, those involved in the industry have seen payment integrity evolve from an under-sourced operational niche to a strategic tool that health plans use to manage medical expense. “In the past, payment integrity was built on what most people referred to as ‘point solutions,’” Deagle said. “Vendors would have a good idea about how to find a particular type of claim overpayment and they would implement it, repeating that same approach over and over to build a payment integrity program. That was how they approached it then, just trying to cover as much area as possible one concept at a time.”
Today, rather than point solutions, plans understand that a big picture approach will make their programs stronger. “From a programmatic standpoint, it is necessary to be strategic about payment integrity efforts when talking with clients,” Brady shared. “Plans have moved beyond point solutions and are seeking an end-to-end approach to claim payment accuracy because it is so much more effective and efficient,” he said.
Data analysis tools like artificial intelligence, which includes machine learning, can bring together disconnected programs for better program return on investment, making the solutions more effective individually. “Carelon was born from one of our country’s largest health plans,” Deagle adds. “That means we have access to deep data sets and world-class tech tools as well as a really unique perspective on the industry. We offer solutions that can improve efficiencies across an entire system, not just in one focused area.”
As the lines between point solutions blur, health plans embrace big-picture, end-to-end thinking. “With the piecemeal approach behind us, together with our plan partners,” said Brady, “we fixed our objectives on this more comprehensive and three-dimensional approach. Its focus on delivering transparency, cost efficiency, and value will enable mature plans that are using sophisticated analytical tools to work on all three of these areas in tandem. That gives their payment integrity program a much more sustainable structure and allows them to maximize on efficiencies.”
Plans can then start to ask questions that drive greater transparency and better decision-making, Brady said. “For example, how do you determine which type of payment integrity strategy should be implemented for maximum recovery of an improperly paid claim? What’s the best approach for your program? Is it better to work with different service providers or move to an enterprise platform approach, where you're looking for solutions that integrate lead generation, workflow, automation, and programmatic management?” Answering these types of strategic questions can create a cycle of continuous improvement as new insights and possible uses for analytics tools arise.
2. Take a proactive, data-driven approach
Aaron Browder recommends health plans move to more comprehensive, end-to-end solutions and embrace a more proactive, data driven approach. “A lot of smaller to midsize health plans, especially if they're managing their subrogation internally, typically don’t have the financial backing or IT expertise to do more than the bare minimum,” he said. “As a result, they’re often very reliant on others — providers, members, or people representing those members — to provide them information so that they can recover money.” Plans that take a more passive approach to payment integrity not only limit their program’s potential value but also risk alienating providers and members.
Data analytics tools like Carelon’s Coordination of Benefits Consensus solution allow plans to go on the offensive when it comes to payment integrity. “Our solution uses a primacy-rules engine and select eligibility details to identify payer responsibilities accurately, automatically, and earlier in the member journey,” Deagle said.
Browder agrees: “Any payment integrity program that is mature and that's really meeting a health plan’s needs is going to be more proactive about finding opportunities and continuously reassessing and prioritizing those opportunities. Our clients routinely praise us for being highly proactive. That's one of the areas we've focused on for several years now: proactive outreach around sharing information and successes, and even sharing when there are issues, too.”
3. Aim for optimization and efficiency
Today, payment integrity programs at the highest level of maturity are looking beyond the advances already made to full optimization. “They’re focused on three key elements: capturing as much value as possible, delivering high return on investment, and managing member and provider relationships,” Brady said.
Optimization isn’t just valuable for health plans. “We spent several years intentionally investing in our people, our technology, and our processes,” Browder said. “We didn't grow during that time but, in the years since, we've almost doubled in size. We’ve retained most of our people, which is remarkable for an industry that can experience a fair amount of turnover. By looking closely at how we do things, we were able to optimize our efforts so that we can be even more effective for our clients.”
From a plan perspective, this kind of optimization can produce big payoffs. “Expertise grows with experience. And you really want that expertise when it comes to payment integrity,” Browder stated. “Take the negotiation stage of subrogation. Negotiation isn't an ability most people are born with, it’s truly a learned skill. At Carelon, we focus a lot of our training on negotiation techniques and strategies, ensuring that our associates are good stewards of our clients’ money. The longer we retain those associates, the more valuable their experience and training become.”
4. Improve member and provider experiences
Payment integrity isn’t just about stopping financial loss. It’s also increasingly about improving experiences for both members and providers. In the past, particularly during the subrogation process, members had to be far more involved than many would have liked. This sometimes took the form of time-consuming phone calls or lengthy written questionnaires. However, as Browder explains, “over the past four to five years, the trend has been to get away from reliance on members.” This is a trend he believes will continue to be a focus in the future. “Health plans are realizing that their members are very busy, and they already receive a lot of communication, from direct mail to phone calls to texts. The last thing they want is to receive another piece of correspondence from their plan about a claim. What this means is that payment integrity as an industry is going to move away from letters and calls to solutions like database mining and direct subrogation that completely remove the member from the process.”
There’s also an increasing recognition among plans that payment integrity can be a tool for building stronger relationships between payers and providers. “Everyone wants to eliminate that waste in the system. The providers want to eliminate that waste, the payers want to eliminate the waste,” Brady said. “The way to do that is to work together to increase the transparency around payments.”
The significant ability to recover funds from already-paid claims can cloud payment integrity’s potential to ensure claims are submitted correctly the first time, every time. Brady was emphatic on this point. “When we're thinking about payment integrity, the overall intention has to be to pay the claim right from the beginning. The goal should be building a program that has the right controls to prevent rework and to drive the best possible experiences for members through their providers,” he stated. “If we can stop improper payments before they happen by helping providers understand how to submit claims properly, that’s where we want to be. In payment integrity, we say post-payment is good, prepayment is better, but prevention is the best. And a lot of that starts with provider education.”
5. Innovate with technology — but don’t forget the human element
Like many industries, healthcare is accelerating its use of cutting-edge tools such as automation and artificial intelligence to increase operational efficiency and effectiveness and to manage costs. These evolving technologies offer a real advantage throughout the payment integrity process. For example, these tools can help plans more quickly realize the value of overpayment leads through automated validation rules and expanded lead generation.
Plans can’t rely solely on technology to meet their payment integrity goals. Human expertise is vital. “In this business, there are lots of things we can do technologically,” Browder said. “But when it comes to recovering money and case management, it's still very much a people business, and it will always be a people business. A really cohesive and effective payment integrity program is going to have all the technology and highly skilled, trained people.”
Deagle concurred: “If you can fully automate a payment integrity solution, great. But many of the newest tech solutions we’ve been leveraging recently aren’t fully automated; they're enabling tools. There’s a big gray area between fully automated and fully manual solutions, and a lot of great, elevating capabilities exist in that space. These are the tool sets that allow a workforce to do what they need to do faster and more accurately, a productivity lift that can boost your payment integrity program significantly.”
A world of possibility
Brady, Browder, and Deagle are enthusiastic about the future of payment integrity. “I’ve had opportunities to do other work, but I always seem to find my way back to payment integrity and subrogation,” Browder said. “I love knowing that the decisions we make every day can lead to millions of dollars of recoveries for our clients and improve the healthcare system.”
For Brady and Deagle, payment integrity is a puzzle that’s never fully solved. “Every year I've been involved in it, there's been another move, another way to make it better, another possibility to make improvements. And to me, that world of possibility is very exciting,” Brady said. “I would add that as claim volumes continue to grow and claim payment complexities continue to increase, it becomes easier for inappropriate claims to slip through the cracks and get paid,” Deagle confessed. “That means we need to continuously improve our payment integrity capabilities to ensure we are doing everything we can to keep healthcare as affordable as possible.”
Transformation often takes longer in healthcare than in other sectors. The industry’s many diverse stakeholders, regulatory hurdles, privacy concerns, and myriad other complexities can all stymie change. There are, however, examples of what is possible. “I believe that in the future, there will be many more elevated ways of exchanging data that will allow payers and providers to partner better on sharing information and managing programs,” Brady said. “When you think about banking and all the transactions of data and money that people complete every day, healthcare can get there.”
In fact, the industry is well on its way. “We’re already familiar with the concepts of value-based contracting and value-based incentives in healthcare,” Deagle said. “There's no reason we can't expand those ideas to include how we partner so that it's easier to understand how to pay accurately and correctly. You're not going to achieve perfection every time, but if we simplify our processes and work together, we can make payment integrity easier and more effective for everyone.”