Managed Medicaid Plan Finds Technology Partner to Grow Payment Integrity Savings

Kern Health Systems selects Pareo® One technology-enabled payment integrity services to shore up claims accuracy efforts. Using an integrated, provider-first approach, ClarisHealth auditors identify $3M in first 9 months for the Medicaid MCO.

Client Profile: Kern Health Systems

• Headquarters: Bakersfield, Ca.
• Medi-Cal managed care plan covering 400k lives
• Pareo client since September 2022
• Pareo One for Clinical Review, adding Data Mining in 2024
• Interview with Robin Dow-Morales, Senior Claims Director

Kern Health Systems is a growing organization with an eye toward expanding programs in the coming years. Their claims department leadership knew there was an opportunity to reduce improper payments. But previous vendor engagements had missed the mark on providing full value to the team. Could a scalable, technology-first solution better set them up for the future while mitigating provider abrasion?

Learn how they found success with a unique approach to outsourcing complex audits. A model that allows them to work directly in the Pareo® platform – for faster value at a much lower cost than a traditional technology purchase.

Need to Move Beyond Status Quo

When the high-dollar claims review vendor for Kern Family Health Care only surfaced a few audits per year – and even fewer collections – Robin Dow-Morales reached a conclusion.

“It was really status quo,” said the Senior Claims Director. “I knew we were missing savings opportunity. Something needed to be done.”

Dow-Morales, an experienced payment integrity leader, heads up a team of 24 claims processors. Together, they handle at least five million claims per year, auto-adjudicating four out of five claims with an adjustment rate under 1%.

Dow-Morales is rightfully proud of the volume and accuracy the staff maintains for the Medicaid managed care plan, which has been growing significantly.

“We have to be good stewards of the taxpayer funds that we receive. We need to make sure that we are paying claims smartly and effectively. And because I have such a lean staff, it’s important for me to do it right the first time.”

Paying claims accurately the first time isn’t always easy. Particularly when some medical reviews – like itemized bill reviews – require examining hundreds if not thousands of pages. Other reviews require specialized medically trained resources to review medical records. It can be difficult for health plans to find these resources. To overcome these challenges, many health plans work with third-party vendors who specialize in this area.

But Kern’s vendor just wasn’t delivering the needed value. Process standardization and proactive communication were lacking. They also required the Kern team to obtain the records and send them with the claims – all via mail or email.

“It was very cumbersome for us to request the records and then have to get it from the provider. It added 10 days to the process,” said Dow-Morales. “It wasn’t a good partnership.”

At the same time, Kern’s growth was accompanied by an increase in local hospitals being reimbursed on an APR-DRG basis. Diagnoses and procedures, as well as the order of the code, play a part in determining the APR-DRG code and the severity of illness, potentially altering the reimbursement by thousands of dollars.

Additional review of these complex claims was warranted. But it was too much to ask of the existing team.

“It’s very difficult to do all this in-house,” said Dow-Morales. “There’s no way the staff could take on anything else. I knew we had to pursue outside expertise.”

Searching for a Solution

As a growing Medi-Cal plan, no shortage of vendors had approached Dow-Morales over the years, each offering an array of approaches to identify and mitigate improperly paid claims. Based on the current need – and previous vendor experiences – she opted to issue an RFP for high-dollar claims review and incorporate an APR-DRG review component as a level of complexity.

“I wanted to find a vendor with established relationships with the providers to meet tight turnaround times. We can’t wait 30 days for records,” said Dow-Morales. “I also needed reassurance they can deliver on their promises.”

An RFP was published in 2022, and an array of five very qualified vendors responded.

After a nine-month evaluation decision process, Kern selected ClarisHealth and their technology-forward approach.

Why ClarisHealth?

“While all the vendors under consideration offered excellent products and services, ClarisHealth was the best fit for Kern,” shared Dow-Morales.

ClarisHealth brought years of Medi-Cal experience to the table. They offered industry-standard contingency rates but without additional onboarding fees and costs. And their model is structured to offer clients full transparency into the process by providing access to ClarisHealth’s technology platform Pareo.

With access to Pareo, the Kern team could not only review, approve and manage ClarisHealth’s findings but also see provider impact in real-time. Further, Pareo houses error-code information, educating the Kern team on where miscoding was potentially happening. Insights like these put Kern in a proactive position to address potential overpayments before they occur through provider education.

Complete visibility into processes and analytics – instead of a secret “black box” – positions Kern to more easily assume audits in-house in the future. They can:

• Generate reports on-demand to prove ROI
• Extract data for insights into areas where their program can grow
• Look up audit status in real time

Ultimately, what Dow-Morales was looking for was a true sense of partnership. What she found in ClarisHealth was a vendor that valued the long-term relationship more than driving recoveries at any cost.

“The customer service was there. I needed someone who was easily reachable to have productive conversations with.”

Operationalizing Pareo®

ClarisHealth’s experience with Medi-Cal plans paid off immediately with the project team helping Kern navigate the various regulatory needs to help them operate more smoothly. For example, provider lettering templates were put into Pareo to ensure they are included in the documentation and can be easily pulled in the event of a state audit.

Even with a technology platform implementation, standard workflows and a proven methodology requiring only a standard vendor claims data file kept the process lightweight.

“The ClarisHealth team made onboarding very simple with a checklist approach to guide the process,” said Dow-Morales.

As a result, the Kern team was fully operational within just a few months of contract signing. And, less than two weeks after go-live, ClarisHealth auditors had generated more than 1,000 opportunities for audit selection to generate medical records requests.

Generating Audit Results

The Kern team immediately saw the advantages of an outsourced program paired with full transparency into auditors’ progress.

“Access to Pareo really helps us understand our inventory,” said Dow-Morales. “We are able to track at every point where the audits are in the system, so we know how much in recoveries is in the pipeline and when it’s coming through.”

In addition, the use of an A.I. algorithm-based selection process helps ClarisHealth auditors achieve two distinct benefits. Their findings rate significantly exceeds the industry standard while complying with California legislation that limits records requests to less than 5% of claim volume.

In short order, the engagement has exceeded expectations. The teams have focused heavily on collaboration, allowing Kern to feel more confident in findings submitted by ClarisHealth. The ClarisHealth team identified more than $3 million in overpayments within the first nine months and expanded efforts to include IBR reviews.

“From before, not getting any recoveries at all, to where we are today is awesome,” said Dow-Morales. “And it’s continuing to improve as we get better at managing the process.”

What’s Next

Now that Kern has seen success with post-pay claim reviews, Dow-Morales is exploring adding data mining to the engagement and sees potential in exploring prepay cost avoidance. The provider audit data in Pareo can support that effort.

“There’s analysis on which providers we are collecting from and types of coding issues. With the data in-hand, we can start doing targeted education and see pattern changes.”

Down the road, as internal staff capacity and expertise expands, the technology infrastructure is already in place for a smooth transition to insource key audit programs.

“We can expand our use of Pareo to do our own reviews in the future,” said Dow-Morales. “The ClarisHealth solution allows for growth and scalability.”

The Kern team’s success with the engagement has proven a boon to her small team and ensures they are good stewards of public funds. In the end, it all comes down to supporting the organizational mission.

“The more claims we pay appropriately, the more we can devote to community support services,” Dow-Morales concluded. “It’s important for us to be there for the members.”