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White Paper
Transform The Payment Process for Accuracy & Savings
Summary
Discover how automation and payer-provider collaboration are transforming claims payment to reduce costs and improve payment accuracy.
Whitepaper | Amy Larsson, RN, BSN, MBA
Vice President, Payment Accuracy and Value Based Payment Consulting Services, Change Healthcare
As a leader in healthcare information technology specializing in payment innovation, Ms. Larsson brings clinical and business experience to her role designing solutions for top health plans. Amy has led the Clinical Claims Management business, including the leading claims-editing and payment-policy management solution used by health plans nationwide.
Amy has held a variety of roles, including product management, customer experience, clinical development, and software development, as well as development and design for episode of care solutions. She has a clinical background in pediatric nursing and transplantation services.
Healthcare spending is now $3.8 trillion—almost triple the amount spent in 2000.1
U.S. healthcare spending continues to climb and now totals $3.8 trillion annually, or almost triple the amount spent in 2000.2 On a per capita basis, expenditures reached $11,500 in 2019, up from $4,843 in 2000.3
Fully one-quarter of spending is due to waste and inefficiency, and administrative complexity represents the largest single category of waste at about one quarter of a trillion dollars annually. Much of that misallocation occurs during the payment process, which is riddled with complexities, inefficiencies, and conflicting rules and regulations.
The consequences of this costly, fragmented payment system are far-reaching: Payers experience higher administrative costs, which contribute to higher premium costs; providers become dissatisfied with the administrative burden and suffer financially when payments are delayed or inaccurate; and patients can face unexpected or confusing bills and higher out-of-pocket costs.
Excessive payment costs also contribute to major societal consequences, from making care more unaffordable and threatening employer-sponsored coverage to impairing government budgets and diverting dollars from other critical needs.
A New Approach to Claims Management
Payment innovation is the key to modernizing the payment process to support better care at lower costs, and it culminates in streamlined, timely, and secure provider payments. Clean claims power effective analytics, which can generate the actionable insights required to drive cost reductions and process improvements. And accurate claims paid in a timely manner help support essential provider relationships.
By improving interaction between payers and providers and deploying automated tools at each step of the payment continuum, potential claim errors can be flagged earlier, at a point when they can still be avoided or are still relatively easy to fix. That means faster, more accurate payment and a substantially reduced administrative burden for both you and your network partners.
Incomplete Information Fuels Mistakes
The triggers for payment problems are many and varied, but some of the most common issues that lead to denials, under/over payments, slow-pay, or no-pay include:
- Another provider already billed for the same or similar service
- Services billed separately that should have been billed together
- Charges that exceed the frequency limitation for the service in a specific time period
- A service not being covered based on the patient’s clinical condition or diagnosis
- The wrong billing code being used
- The clinical record not supporting the service that was billed
- The service not being covered based on the employer, payer, or provider contract terms
- Primary insurance being incorrect
- Provider being out-of-network
The list could go on, but generally speaking, the root cause of many payment issues is a lack of provider understanding about payer-specific rules. And it’s no wonder: Rules can vary significantly across payers, lines of business, employers, and provider contracts, and that fragmentation is only increasing as alternative payment methods (APMs) keep expanding.
Pushing Accuracy Closer to the Point of Care
Helping providers quickly access and understand payment information at the point where they need it—while ensuring member data is easily available to help them accurately complete a claim— requires real-time or near real-time payer-provider interaction and automated solutions integrated into both entities’ workflows.
In the simplest terms, payment innovation is about optimizing data and automation to improve collaboration and help push payment accuracy closer to the point of care. Safeguards are established at each successive step along the payment continuum. Here’s how it works:
- Eligibility – Ensuring that payer and plan information is accurate and based on up-to-date data before care is rendered is the most efficient way to establish accuracy. For example, proactively identifying undisclosed coverage by using alternative sources of claim, membership, and eligibility data prior to claim payment helps reduce or eliminate the costs and time associated with retrospective claim analysis and payment recovery.
- Point of Care – Accuracy at the claim’s origin point is likewise critical to avoiding claim errors. That means providers must have access to authorization requirements, formularies, determinants of medical necessity, and the like. Automatically populating the authorization criteria with clinical data can reduce or eliminate manual processes and potential inaccuracies.
- Revenue Cycle – Pre-submission alerts identifying potential coding errors, missing diagnosis codes, or deviations from contractual terms and payer payment policies are needed to support accurate billing. These conditions should reflect the coverage guidelines of government payers (including Medicare and state Medicaid programs), as well as the policies of commercial payers—all delivered within the provider workflow. This helps ensure claims are accurate when entered into the payer system. The level of complexity associated with managing multiple payer terms requires automated capabilities that can help ensure accurate billing.
- Primary Editing – Because payment decisions are made in milliseconds as part of an automated claimsprocessing flow, speed is a critical component of primary editing. That’s why an editing system must be able to access the most accurate and comprehensive information in real time. Millions of combinations of service codes, diagnosis codes, frequency limits, multiple procedure combinations, bundling of services, and provider and payer variables need to be factored in to accurately pay claims.
- Pre-Payment Secondary Editing and Clinical Review – Applying artificial intelligence and machine learning during the secondary edit—or claim review following adjudication—and linking with electronic health records to quickly capture errors helps ensure the claim is properly coded and supported by clinical documentation before payment is made. This helps mitigate the increased costs and provider abrasion associated with post-payment reconciliation.
- Claims Payment – Accurate claims support accurate payments and help make explanations of benefits (EOB) easier to understand. Members want trustworthy documents that will help them quickly determine how much they owe and how much their insurance has paid for a given episode of care. Members also appreciate the opportunity to track their deductibles and view comprehensive, itemized lists of services that are organized by episode instead of by medical codes.
- Post-Payment – Advanced analytics provide a final safeguard at the post-payment phase by reviewing paid claims to identify potential errors. This audit and recovery process can help illuminate problem areas that could lead to systemic overpayments and helps support ongoing process improvements. Patterns found in post-payment review can be corrected in the provider and/or payer workflow.
- Business-to-Business Provider Payments – Automated and secure payments reduce administrative burden and support the payment process, from provider enrollment through funds management to payment distribution. This enables payers to streamline secure payments by combining drawdown, reconciliation, and IRS 1099 processes for all payment types. The automated process delivers the payment methods providers prefer, from Automated Clearing House (ACH) to closed-network ACH and Virtual Credit Card (VCC) payments, while maintaining the highest levels of security and fraud prevention.
Untangling the Knot
Creating a strategic approach to streamlining the payment process is critical to reducing unnecessary expenses and improving both the patient’s and the provider’s experience. By working collaboratively with your network providers, you can deploy advanced technologies to reduce costs, cut administrative burden, and help providers get paid accurately and efficiently.
Change Healthcare helps health leaders nationwide achieve their strategic objectives. We serve 6,000 hospitals and more than 1 million physicians, and we have more than 2,00 payer connections. More than 90% of top U.S. health plans use Change Healthcare to support 190 million covered lives, and one-in-three patient records are touched by our clinical-connectivity solutions. Through our interconnected position at the center of healthcare, we help provide a visible measure of quality and value for all major stakeholders.
1) How Has U.S. Spending on Healthcare Changed Over Time?, Peterson-KFF Health System Tracker, Dec. 23, 2020
2) How Has U.S. Spending on Healthcare Changed Over Time?, Peterson-KFF Health System Tracker, Dec. 23, 2020
3) Ibid.
4) Wasteful Spending in U.S. Healthcare Estimated at $760 Billion to $935 Billion, HealthLeaders, Oct. 7, 2019
