Diving Deeper into Healthcare Claims Audits: Part 1 – Auditor Workflow

The first installment in a multi-part series aimed at clinical auditors. Part 1 takes a closer look at 5 trends impacting how health plans manage claims auditing today.

Claims auditing. It’s the core function of any health plan payment integrity operation. Ensuring healthcare claims are paid accurately, both prepay and post-pay, requires claims auditors to determine the correct party, membership eligibility and contractual adherence, as well as detect and prevent fraud, waste and abuse. It’s a tall order, and numerous obstacles stand in the way of performing this task efficiently and effectively.

In this first installment of a three-part series, we explore the landscape of a claims auditor’s day-to-day, including new challenges and opportunities and how current solutions stand up to these changes.

Here are the top 5 trends we have identified that impact payment integrity claims review and validation.

Moving Prepay

Long an unattainable goal, health plans are now making significant moves to transition claims recovery to an internal prepay model. Claims auto-adjudication systems are a good first step to achieving this goal, but lack of data visibility throws up major barriers to health plans endeavoring to make real progress.

Too many health plans lack dedicated data science resources to develop and test sufficient prepay concepts. And, even if they have insights on their most successful post-pay concepts, there may be no ability to store those and apply them prepay. For health plans that have implemented technology, unless those systems seamlessly integrate, achieving significant cost avoidance is difficult.

Altogether, these manual processes and tight turnaround times add up to pay-and-chase, a prevalent and unsustainable way of processing claims that auditors alone have little power to impact.

Working Strategically with Vendors

While some health plans completely outsource their claims recovery efforts to service vendors, and others aspire to internalize 100% of those activities, a blended approach likely yields maximum recoveries at the most optimized cost. Provided your health plan has efficient and transparent methods for communicating, preventing overlap, and evaluating results with vendors.

Unfortunately, managing suppliers with spreadsheets, status emails and quarterly business reviews keep vendors and internal auditors at odds. To get the most out of your vendor partnerships for claims audits, health plans need to find effective ways to ensure mutual value:

• Share goals
• Communicate clearly and consistently 
• Set expectations on service level agreements, contract terms, etc. 
• Pay on time 
• Train vendors on your processes and seek to understand their business, too  
• Ensure accountability on– both sides  
• Hold meaningful strategy sessions rather than status updates

Types of Claims Audits

Claim edits focus on service dates, revenue codes, procedure codes, modifiers, type of bill, units of service, diagnosis, member eligibility, historical claims data, medical necessity, and more:

• Non-Covered Services According to Plan Policy
• Authorization (Days, Level of Care, etc.) 
• Procedures/Charges 
• Duplicative Procedures/Charges 
• Coordination of Benefits 
• Insurance Liability and Recovery (Subrogation) 
• CMS National Coding Correct Initiative (NCCI)
• Medicare Procedure-to-Procedure (PTP)
• Medicare Add-on Code Edits
• CMS Professional Component/Technical Component (PC/TC)
• CMS Global Surgery

Minimizing Provider Abrasion

Health plans are increasingly focused on their provider relationships, not least because members demand a healthy and satisfied provider network. At the same time, claims recovery processes tend to be structured to achieve the opposite, despite auditor best efforts.

It is hard to link specific language from a provider contract within the claims process if plans are not using OCR technology. And, activities like overlapping medical record requests or requesting full records, just in case, and sending generic letter denials that require significant lift from provider claim departments can undermine these valuable provider relationships by dramatically increasing cost and abrasion.

In fact, a recent study found that nearly 1 in 5 providers spend over $500,000 annually on the post-payment audit process, and almost 40% of providers can’t or haven’t calculated the cost.

The breakdowns in communication that prove costly to providers wreak havoc on health plan bottom lines, too, by minimizing auditor effectiveness and productivity.

Breaking Down Work Silos

Many of the issues preventing health plans from achieving goals in relation to the trends outlined in this article come down to one simple operations issue: work silos. Some of these silos are cultural: multiple departments in a health plan responsible for different areas of claims payment integrity don’t work together towards their common goal. Others are structural: claims auditors using different systems that don’t talk to each other, which can complicate good faith agreements and fail to align teams more closely.

No matter the source, work silos make it difficult for auditors to get true insights into where inventory is and what claims are being worked, as well as the status of those claims. In this environment, it’s also near impossible to share relevant insights across the organization.

Transparency is the new business paradigm, especially when designed to empower each stakeholder to offer their maximum value.

Reducing Administrative Burden

How much time do your auditors spend working claims versus updating spreadsheets and tracking down status updates? For many health plans, working with claims, suppliers, providers and other departments, are all juggled with a collection of vendor, internal and offline systems.

Manual workarounds that increase administrative complexity prevent auditors from focusing on core jobs. Moreover, these activities can’t be easily reported on, making it difficult for health plans to smartly staff internal departments and confidently evaluate vendor performance.

Your health plan is not alone. About $330 billion is wasted every year on administrative complexity, or 10% of annual healthcare spending in the U.S. A significant portion of this waste could be addressed with integrative technology to break down data silos, robotic process automation to automate repetitive tasks, and visual reporting to gain a clearer picture of what’s working and where improvements need to be made.

Next Steps

In part two of our series on healthcare claims audits we will look at new solutions that have emerged to address these trends head-on, solutions that promise to increase auditor productivity exponentially.