5 things a claims review program does that you might not realize

To maximize savings, lower administrative and medical costs, and improve relationships with providers, health plans must have an effective payment integrity plan. A comprehensive approach — one that ensures a health plan pays the correct provider the correct amount at the correct time — centers around a robust claims review program.

Today, this multifaceted process is more important than ever, as improper payments due to incorrect coding, medical waste, fraud and processing errors pose increasing financial risk. In fact, payment accuracy problems are growing at about the same rate as medical inflation — a hearty 5% to 8% of all claims are paid inaccurately. And an estimated $100 billion may be lost to medical fraud, waste and abuse each year.¹

An all-in, centralized claims review can contain costs while boosting the consumer and provider experiences.

Historically, payment integrity strategies have focused on post-payment reviews to ensure appropriate reimbursement was issued to providers. These reviews are time- and resource-intensive, and they fail to take a proactive approach to prevent inappropriate payments in the first place.

While a post-payment element remains important, truly comprehensive payment integrity strategies need to embrace preventive reviews that apply predictive analytics and human clinical review before a claim is paid. A strong pre-payment program can improve claim accuracy, leading to a reduction in physician abrasion and improved provider relations. It can also help reduce administrative burden from both the payer and provider perspective.

This prevention approach begins with pre-pay analytics, machine learning and predictive scoring models that produce quantified payment risk scores.

Automated tools can effectively integrate with claims platforms to identify errors, omissions and questionable coding — saving time while optimizing health plans’ savings and accuracy.

However, as with any advanced technology, these automated claims systems are meant to augment — not replace — human effort. The reality is that many claims, particularly high-dollar ones, are complex, and an automated system simply can’t match the keen and experienced eye of a doctor.

To yield better results, programs must bring physicians into the review process, targeting procedural and surgical claims with the greatest potential yield, as well as targeted providers with atypical billing patterns.

Shifting more of the claims review process to pre-pay improves health plans’ control in more ways than one. Beyond increasing the accuracy of claims reimbursement, a pre-pay approach also introduces the opportunity to educate providers early, reinforcing appropriate practices before bills are submitted. This shift to proactive collaboration can prevent the need to recover money long after payment has been issued — a time-consuming process that risks disrupting provider relationships.

Moreover, this approach also opens the door for health plans to be fully transparent with providers regarding potential problems. A claims review process with a robust pre-pay element can also offer on-site provider peer conversations to build rapport with providers and help a health plan understand how and why billing errors occur. By partnering in a peer-to-peer fashion with providers, a health plan can improve the process and reduce future inaccurate charges.

Hospital stays represent an important pillar of healthcare — and also an increasingly expensive one. Hospitals have increasingly billed for inpatient stays at the highest severity (and most expensive) level.²

Accordingly, many health plans focus on primary facility charges when reviewing claims related to a hospital stay. But overpayment risk extends to other services that may stem from an inpatient claim, including:

• Specialist follow-ups
• Pharmacy visits
• Durable medical equipment charges
• Diagnostic tests

A holistic claims review approach captures data related to not just primary facility charges, but also to these peripheral claims and can use professional claims to validate and corroborate the services billed on an inpatient claim.

The right claims review program examines claims stemming from all types of reimbursement models, including:

• Diagnosis-related groups (DRG): Health plans need to ensure that DRGs are correctly validated for inpatient stays.
• Percentage of billed charges: Inpatient claims are often paid under percent-of-charge reimbursement contracts — so billing errors can be costly. Health plans should undertake a thorough review of an itemized bill. 
• Per diems: Reviews need to carefully examine contracts that provide a fixed payment for each patient day in the hospital, especially when the fee declines with each subsequent day. 
• Hybrid models: Reviews should include reimbursement models that combine elements of value-based care with traditional fee-for-service models, introducing incentive-based reimbursements. 
• Carve-outs: Carve-outs customize coverage by eliminating specific categories and are often applied to specialty pharmacy and prior authorizations, which can dramatically impact inpatient claims. 
• Ancillary services: Ancillary benefits, or secondary insurance coverage, often covers ambulance rides, drugs and other medical supplies, and must be considered during the claims review process.

Focusing on multiple claims reimbursement models can increase payment accuracy while minimizing health plans’ vulnerability.

As health insurance claims grow more complex and expensive, health plans must respond with a more nuanced and innovative review process. The stakes are high: every inappropriate payment represents money slipping through the cracks. It also risks an inefficient and contentious recovery effort that erodes the relationship between payers, providers and members.

By embracing a holistic approach that combines pre- and post-payment and automated and human clinical elements, health plans can transform their claims review process. This approach enables payers to thoroughly review every facet of each claim across a spectrum of reimbursement models. By ensuring improved payment accuracy, all parties involved have a better experience.

At Optum, our analytics leverage years of evaluating millions of claims, resulting in highly accurate methodologies that zero in on errors and potential fraud, waste and abuse upfront to minimize pay-and-chase later. The result? Up to 75% of claims reviewed through this program uncover errors, saving clients as much as 24% of total reviewed claims dollars.