Payment Integrity Leaders Ready For A New Normal

Payment integrity is rapidly elevating in significance at health plans coinciding with technological innovation. If leaders can take advantage of the marriage of the two, greater transparency around payment accuracy and elevated value can result in this new normal.

Payment integrity as a niche industry has existed for nearly 25 years, making a significant impact in the healthcare space in that time. Once considered “found revenue,” payment integrity is now an essential aspect of health plan operations. The evolution is seen by the shift of payment integrity from a single department to a large-scale strategy that involves many key aspects. Areas such as contractual compliance, prepay and post-pay claims auditing, coordination of benefits (COB), and fraud mitigation just to name a few – all growing in importance.

Healthcare payers stand at a crossroad in the journey to a payment integrity new normal. How will they scale their overpayment avoidance efforts in an era of technology enablement and stakeholder engagement?

On the one hand are barriers that historically have prevented them from reaping the full benefits of such a function, including:

• Data shortfalls
• Siloed operational dynamics
• Compliance mandates
• Constantly changing and increasingly complex coding guidelines
• Outdated technology and processes
• Dependence on resource-intensive structures

On the other hand is tremendous opportunity as payment integrity takes the spotlight for its potential to deliver value across health payer operations — all while enhancing, rather than eroding, delicate provider network relationships.

Let’s explore what trends are driving this change, how technology innovations are accommodating, and how they combine to affect the future of payment integrity.

Market Factors Driving Change

There are many factors that play into why the industry is shifting, but it all boils down to innovation. Health plans are seeking efficiency gains and more effective processes. And manual, resource-stretched operations are simply not enough to keep up with the fast-paced changes that the industry is facing.

Vendor Consolidation

Many health plans have long relied on outsourcing claims overpayment identification and recovery. These third-party vendors provide valuable and much needed subject-matter expertise and staffing. But many vendors operate on contingency models where financial incentives may not align with the increasing pressure health plans face to transform old models of doing business to minimize the administrative burden on providers.

And recent trends of vendor consolidation may necessitate a change in strategy – one that takes greater control over these programs and considers internalizing key payment integrity efforts. But the lack of strong, in-house subject-matter expertise, highly specialized workflow technology and robust analytics could be holding plans back from achieving this goal.

To fill these gaps and optimize control of these critical functions, plans have begun adopting an outsource-to-insource approach, enabling them to insource part of their auditing work, and outsource the aspects the plan cannot facilitate. Equipped with analytics and IP in the claim selection process, plans can efficiently identify and work claims internally – saving money on contingency fees and rationalizing the outsourced piece to harness unique subject matter expertise and augment internal resources.

This hybrid approach allows health plans to address the limiting factors that have long-prevented internalizing auditing processes while mitigating the risks of vendor consolidation.

Increased Health Plan Awareness of the Value of Payment Integrity

In an ongoing effort to manage costs and operating margins, health plans have integrated payment integrity as a critical function, seeking opportunities to reduce claims overpayments and associated administrative costs by millions of dollars annually.

Effective and efficient claims auditing is a highly complicated process. Health plans face the need to spend more money and resources recovering more and more overpayments. According to COB Smart, “payment integrity is worth $362 billion to the healthcare industry as a whole, in medical cost savings and decreased overpayments.”

Forward-thinking plans have realized that there is a greater payoff when focusing efforts on prepay cost avoidance, as opposed to recovery. Implementing a payment integrity strategy that prioritizes proactive cost-containment not only puts plans ahead of the easy-to-do-business-with curve, but also presents the opportunity to improve monetary returns beyond industry averages. Ultimately, it becomes a win-win strategy.

Government Regulations

As payment integrity complexity has increased, regulatory pitfalls have intensified. Data privacy and security laws, along with data interoperability mandates, have health plans seeking solutions that are HIPAA compliant, tech-forward and reduce administrative burden to maintain patient privacy and ensure provider and member satisfaction.

With many in the industry trying to keep up with the pace of change, quick integration of numerous data sources has the potential to create vulnerabilities in the system. On the other hand, some health plans are moving too slowly with technology adoption that could lead to irreversible harm.

Those organizations still utilizing outdated approaches to protected health information (PHI) – such as paper faxes and locally stored data – are particularly vulnerable. The time is now to find a solution that complies with government regulations and ensures the safety of valuable information.

ASO Transparency

Self-funded employer groups are increasingly demanding robust and tailored payment integrity initiatives because healthcare costs are one of their biggest budget line items. As a result, health plans have placed greater emphasis on exceeding performance expectations for ASO group clients by paying claims at a high accuracy rate and keeping costs at a reasonable level.

But payers must go beyond performance expectations and fully demonstrate their capabilities and efficiency by being more transparent with clients. That’s why many are looking to increase visibility around data, providing ASO groups access to real-time information on performance and accuracy rates. By having a solution in place, information can be easily shared with these groups, and health plans can further strengthen relationships and trust.

Technology Innovation on the Rise

Looking at the market factors that are driving change, we can see that innovative solutions are needed to keep up with the complexity. And in most cases, technology holds the key.

Platform Integration to Improve Efficiency and Effectiveness

Technology solutions themselves are not a new entrant in payment integrity. However, the way they are currently deployed means some health plans are inefficient and missing out on cost-savings opportunities. These solutions have become siloed, creating tension between departments, as well as internal and third-party resources, due to lack of communication.

We regularly hear from health plans about limitations that prevent them from optimizing their payment integrity operations:

• Legacy, aging systems that are too complex to update and too expensive to support
• Lack of insights into the claim lifecycle – that have been exacerbated by the pandemic
• Over-dependence on vendors for staffing and subject-matter expertise
• Balancing cost recovery incentives with provider network net promoter scores

But luckily, these barriers can be remedied by having an integrative technology platform in place. Creating a unified information stream provides full transparency and visibility into cost containment efforts. Disconnected functions can achieve alignment on current and future goals while reducing unnecessary burden on providers, members and vendors. Payers can confidently take on vendors for additional resources and expertise without adding to administrative lift.

Breaking down silos and offering consolidated insights supports payers in becoming more strategic about payment integrity.

Artificial Intelligence and Advanced Capabilities

In the vein of technology innovation, it’s important to consider advanced capabilities, such as artificial intelligence, for their ability to transform health plan operations. Though it may pose a shift from traditional processes, its rapid uptake by the industry means it will play an outsized role into the future.

We have already seen how applications of A.I. provide health plans with the ability to:

• Process large volumes of disparate data, make connections, and derive actionable insights
• Identify behavior-based patterns and detect outliers
• Detect fraud schemes and gather evidence
• Share information between teams
• Reduce provider abrasion

With these benefits, A.I. has proven to be a large contributor of practical value to cost-containment programs – across multiple functions:

To enhance the value of information exchanged between fraud and payment integrity, A.I. has developed into a true solution. With deep learning capabilities, payment integrity and the SIU can gain greater visibility into which providers have been flagged, different trends in provider behavior, and who to exclude from audits if they are under investigation.

Claims selection for clinical validation uses machine learning capabilities to select claims for reviews based on clinical rationale, while OCR technology quickly scans bills and puts that information on a digital interface.

Adopting new processes can be a daunting task. But ultimately, a technology solution that is powered by A.I. makes the most of limited resources, providing rationale and details to support decisions made by healthcare leaders accurately and efficiently.

Payment Integrity Innovation Results in Major Gains for Payers

With the future of payment integrity and fraud, waste and abuse (FWA) arriving quickly, some payers have innovated ahead of the curve. And they’re experiencing big gains for their efforts.

Industry Leading ROI for Highmark

As A.I. takes hold across the industry, we’ve seen success on many fronts. When Highmark integrated payment integrity and fraud in 2020, they pursued an AI-based cost containment effort which resulted in $220 million dollars in savings linked to fraud, waste and abuse. This resulted in industry leading ROI, proving that this advanced technology not only increases efficiency, but promotes transparency in finding savings – down to the provider and claims level.

Plans Generate Revenue Offering Payment Integrity Services

As many health plans develop their own payment integrity departments, some may find that they have maximized their claims auditing capabilities. Armed with relevant experience and success, they started offering services to other health plans. Equipped with a full team of auditors and specialized resources, select health plans have come to develop partnerships with other payers, increasing the revenues of their payment integrity department through contingency fees.

Plans Extend Data Visibility

With good data practices and technology in place, a variety of analytics and use cases drive business value across all areas. This value can take shape as new business as well as improved satisfaction. Sharing insights with relevant stakeholders – providers, members, even other health plans – builds trust and the ability to realize the benefits of big data across the healthcare continuum.

The “New Normal” For Payment Integrity

To take best advantage of the payment integrity new normal, health plan leaders should focus on working toward a function that is more strategic, proactive, transparent, and fully integrated across multiple payment integrity initiatives, especially the Special Investigative Unit (SIU).

More Strategic

Outsourcing is a good option for a growing payment integrity department. However, don’t overlook workflows and integrations for optimizing supplier spend when considering an end-to-end payment integrity solution. Vendor management teams can use technology that reduces the administrative lift of vendor management making them more strategic about payment integrity operations. Long-term, increased visibility into a supplier’s performance and across total outsourced efforts allows payers to strategically capitalize on opportunities for innovation.

Proactive

Traditionally, health plans focused on a “pay and chase” structure, recovering incorrectly paid dollars after the damage is already done – which remains a costly endeavor. But with strong analytics and a healthy mix of niche vendors and internal audits, the focus shifts to preventing improper payment from occurring. Prospective cost avoidance offers 1.5X the savings over post-pay recovery. It is the ideal many health plans have and will continue to strive toward.

Transparent

The opportunities for claim overpayments are so vast and varied that even a multi-vendor and multi-pass approach is sometimes not enough to keep ahead. Health plans today need full knowledge of the lifecycle of a claim, whether handled by internal or third-party resources. These obstacles can be overcome with a comprehensive solution. Prioritizing an integrated technology ecosystem bridges any gaps and gives end-to-end insights for full transparency that enables health plan strategies.

Integrated with SIU

Payment integrity teams are more effective when they work closely with the SIU in a closed loop system. To mitigate the barrier of data and work silos between payment integrity and the SIU, many plans are changing their processes by following this practice. With the support of highly practical applications of A.I., health plans can detect previously unknown healthcare fraud schemes, capitalize on intelligence from payment integrity audits, and integrate workflows to maximize the effectiveness of both functions.

Is your health plan ready to embrace the payment integrity new normal?

With the ever-changing outlook of the payment integrity industry, now is the time to get ahead by making strategic investments in change. Based on market changes and technological innovation, a shift in payment integrity processes will allow payers to focus on proactive efforts, especially when it comes to cost containment.

A comprehensive technology platform like Pareo allows health plans to scale and improve processes, extending competitive advantage to surpass trends through the power of A.I., increasing cost-savings, and accelerating ROI. Speak with ClarisHealth to learn how our end-to-end platform will help your health plan differentiate and take on the future.