The challenge of managing rising neonatal costs

“Micro preemie baby beats the odds.”¹

“‘Miracle’ baby born less than 1 lb saved.”

Recent headlines have revealed incredible advances in neonatal intensive care that are helping fragile newborns survive and thrive. While inspiring, these stories are part of a trend that U.S. health experts have watched with growing alarm: an elevated preterm birth rate that shows no signs of falling.

In the United States, about 1 in 10 infants are born preterm, or before 37 weeks of pregnancy.³ Since rising from 9.6% in 2013 to 10.4% in 2021,⁴ the preterm rate has remained virtually the same. Last year, the March of Dimes gave the U.S. a D+ for a third consecutive year in its annual maternal and infant health report card.⁵

The causes of preterm births are complex and include chronic health conditions, inadequate prenatal care and environmental factors such as extreme heat and poor air quality.

For payers, one clear consequence of the high premature birth rate is a rising tide of complex infant claims. Nearly 1 in 5 (18%) newborn admissions involved NICU care in 2021, the Health Care Cost Institute notes.⁷ 

The challenge for payers grappling with a steady stream of costly claims related to NICU hospitalizations is urgent: They need to rein in costs while also helping to improve outcomes. Thankfully there are solutions that go well beyond negotiations with providers.

A comprehensive strategy to manage NICU- and neonatal-related benefits and costs includes focused claims reviews to improve billing accuracy through charge reviews, audits and other practices. At the same time, targeted utilization and case management programs can help employers and other payers ensure that members get the best possible care to reduce the length of NICU stays and likelihood of readmission.

Before diving into NICU and neonatal cost management specifics, it’s important to understand why neonatal costs are rising and the range of strategies available to payers to reduce complex infant claims. 

There are 3 primary reasons payers have seen NICU/neonatal care become increasingly expensive in recent years:

Spiking preterm birth rate

The reasons are complex but include rising average maternal ages and more pregnant women managing chronic conditions (e.g., diabetes, hypertension). Both of these factors raise the risks of pregnancy complications and preterm birth.^9,10

Importantly, data in the U.S. shows significant and persistent racial disparities relative to both preterm births⁹ and maternal mortality.¹⁰ These disparities are in part due to variations in quality of prenatal care.

Improved survival rates

Advances in medical technologies and practices used in NICUs have improved the survival rates of premature births. One study of newborns 24 weeks or younger found the survival rate jumped from 18% to 31% between 2007 and 2018.¹¹

Longer NICU stays

Improved survival rates mean more infants requiring care in the NICU setting. There can be a workforce component at play here as well. Shortages in skilled home nurses can mean infants stay longer in the NICU to receive ventilator support and other specialized care.

To help turn the tide on complex and costly neonatal claims, payers can focus on strategies such as:

Effective prenatal care

A healthy mom is more likely to give birth to a healthy baby. Targeted high-risk pregnancy support programs such as Optum OB Homecare — which provides 24/7 nurse support (virtual and in-home) to mothers with diabetes and preeclampsia, and those experiencing nausea and vomiting — can deliver a range of benefits.

Optum program has led to a 56% reduction in antepartum hospital admission.¹²

Neonatal care support programs

When infants are admitted to the NICU, the right treatment at the right time helps to improve outcomes and reduce costs. Such programs offer specialized care, including utilization management and case management to guide newborns to better care.

Optum Neonatal and NICU Support Programs provide families with an expert team, including board-certified neonatologists, registered NICU nurses and specialized case managers. This can result in an 8% to 10% reduction in the average length of NICU stays, and a 27% reduction in readmissions.¹³

Focused claims reviews

Large, complex claims involving NICU care can contain errors that, if caught, can result in big savings for payers. Often these relate to facility claims, the largest category of health care claims.

But some facility claim mistakes only become obvious when related professional claims (relative to surgeries and other procedures) are reviewed hand-in-hand. A medical review or audit spanning both facility and professional services claims can make all the difference.

More and more, payers are turning to automation tools to support billing, payments and claims. Automation would seem to be a win-win for payers and providers, allowing for more efficient reviews and processing and expedited payments.

The reality is more complicated. The complexity of many neonatal claims — especially claims in excess of $1 million — means that automated tools and traditional claims review programs often miss errors and opportunities to add value. With NICU and the preterm birth rate likely to stay elevated in the U.S., it pays to take a targeted, in-depth approach that harnesses clinical expertise and analytical know-how to review billing accuracy.

Physician reviewers with the experience to identify complex neonatal claims can identify errors that traditional automated review systems miss. For example, expert eyes can notice that a billed dosage level is improbable for a given procedure. Or that a facility claim for Level 4 NICU care doesn’t align with the corresponding professional services billed for the same patient.

When you know where to look, the savings can be significant. A majority of claims (55% to 65%) reviewed through Optum Focused Claims Review show errors. Clients ended up saving about 20% of the total claims dollars reviewed.*

Importantly, Focused Claims Review is targeted for success, focusing on very expensive (greater than $100,000 payable) facility claims and high-cost procedures and surgeries. The approach targets claims with the greatest potential yield, such as those from providers with atypical billing patterns. Its selective method minimizes abrasion by focusing on claims from providers most likely to submit inaccurate information, as well as all large claims for specified high-yield procedures.

A post-service, prepay program, our Focused Claims Review solution has been around for more than 20 years. It’s built around the expertise of more than 70 doctors who know how to hunt for savings not found through automated claims review programs.

Payers benefit from itemized charge reviews, complete medical record audits and support pursuing claim closure with providers. Billing errors, coding, adverse events and room and board acuity levels — it’s all in the mix. Although Focused Claims Review puts payers in a strong negotiating position, they don't need to worry about harming provider relationships. The targeted claims review approach means uphold rates average 97%.

Optimal prenatal and neonatal care are essential parts of any holistic NICU cost management strategy. But so are targeted claims reviews. With the costs of premature/complex newborns now about 12 times higher than normal newborns in terms of direct health plan costs, payers need to go beyond off-the-shelf claims review automation tools as they grapple with the high costs of NICU care.