How to Evaluate Payment Integrity Solutions: The Ultimate Guide for Health Plans

How to Evaluate Payment Integrity Solutions: The Ultimate Guide for Health Plans

Payment integrity solutions vendors make many claims. Here are the top 14 areas of evaluation to ensure a perfect fit for your health plan.

Virtually every health plan is looking to address shrinking margins by moving their medical savings from a typical 1-2% today to something above 5% over the next few years. At the same time, the amount of healthcare data is only expanding, making that goal more difficult to address with current solutions. Are you prepared to thrive in this increasingly complex environment? You may find it’s time to evaluate payment integrity vendors and solutions.

Most of the health plans and payers we talk with are in one of two camps: a few self-developed solutions for claims audit and recovery, or scores of piecemeal applications used by the assorted departments dedicated to different areas of cost containment.

No matter your current approach, health plans have an increasing number of advanced technology choices in front of them, all promising “the answer.” New solutions emerge every day to address your interoperability, data and analytics challenges. As your options expand, so do your chances of finding the right fit for your organization – or the wrong one.

What’s at stake? Your rate of recovery.

Choosing the right payment integrity solution for your health plan holds arguably the greatest potential impact on your bottom line. When ClarisHealth conducted a survey examining payment integrity returns on claim spend at the leading national and regional health plans, we discovered a key difference. Those payers who had a scalable technology solution in place more than tripled their rate of recovery. Those that depended on outdated applications that require a great deal of manual intervention just couldn’t compete.

As your health plan looks to evaluate payment integrity solutions emerging on the market, three questions will guide you in your search:

  • What are the most important elements of functionality to consider to address your needs – now and into the future?
  • Is the goal a single, integrative platform to replace manual and piecemeal tools, or an assortment of upgraded solutions?
  • How do the different options – payment integrity platforms, self-developed technology, claims editors, fraud tools, third-party services providers – stack up against each other?

In this guide, we will examine the most important areas of consideration to offer a comprehensive payment integrity checklist for your health plan’s needs.

Functionality is the Top Consideration

When you start to evaluate payment integrity options (and consequently, the tech companies and services providers that develop these solutions), functionality should be the top consideration. Nested under functionality are several areas of evaluation that make up a powerful payment integrity checklist:

1. Supplier Optimization

Services vendors are a big part of most cost containment strategies. So, the ideal payment integrity solution should optimize the value you receive from third-party suppliers. Look for functions like overlap control, contract management and performance reporting all integrated through a single platform. Onboarding a new payment integrity supplier should also be quick and easy. With this functionality in place, you should expect to realize, on average, a 30% increase in supplier efficiency.

2. Audit Workflow and Analytics

If you want to internalize more payment accuracy efforts, you should prioritize functionality that assists in maximizing advanced analytics and hit rates. Look for access to insights needed to create internalization strategies around cost optimization in both pre- and post-pay environments. Because workflows differ greatly between payers, ensure configurability in this area to integrate vendor and internal recovery management efforts. Full visibility on auditor throughput and automation to eliminate routine administrative tasks that bog down valuable staff hours are also key. Altogether, this functionality could boost your internal analyst activity 3x.

3. Clinical Workflow and Analytics

Concerns about increasing provider friction keep health plans from taking full advantage of the skilled clinical coders and nurse auditors on staff. The ability to coordinate seamlessly between vendors and internal resources on provider outreach to prevent overlap, internalize the best analytics from all sources, and fully reconcile each audit removes that limitation. In addition, look for A.I.-powered solutions that unlock unstructured text in the medical record to prioritize claims for review. This advanced functionality could decrease your medical expenditures by 2-4% and reduce the chance of errors.

4. Prepay Workflow and Analytics

With as few as 15 days to make a pay/deny decision on a claim, many health plans choose to “pay and chase.” But with time and quality improvements, health plans can move more audit work prepay. Seamless integrations with data sources, post-pay and service vendors will allow for comprehensive audit management. As will automated workflows and clear visibility into timelines and hit rates. Also look for the ability to extend the most successful post-pay concepts to prepay and take advantage of multiple detection sources. With comprehensive payment integrity technology in place, your health plan can put greater focus on internal prepay avoidance, and a 10% improvement is common.

5. Fraud Detection and Case Management

Relying solely on rules-based detection and fragmented case and allegation management tools that silo data unnecessarily stifle the effectiveness of SIU teams. Consider a comprehensive solution that bridges the audit and investigation divisions of your health plan while maximizing efficiencies with case tracking, investigations, and federal and state reporting. Also look for detection capabilities powered by artificial intelligence to dramatically reduce false positives, focus efforts on most likely leads, and surface novel schemes.

Annual spending on artificial intelligence in healthcare estimated to reach be more than $34 billion in 2025. A recent survey of healthcare organizations found 98% have implemented an A.I. strategy or plan to develop one. And 59% of healthcare leaders expect to achieve a full return on their investment within three years. “Will Artificial Intelligence Finally Make Good on Its Promise to Healthcare?”

6. Reporting and Business Intelligence

Actionable business intelligence allows health plans to drive maximum efficiency and effectiveness. Seek out real-time metrics that can be leveraged for accurate reporting on-demand and configurable role-based dashboards to scale business intelligence solutions system-wide.

7. Provider Engagement

Your payment integrity processes have the potential to damage or improve the payer-provider relationship. Features like electronic overpayment notifications, engagement tools, underpayment management and provider self-reporting can streamline your operations, improve provider relations and reduce costs for both parties.

If this functionality checklist covers more than what your health plan currently needs, that’s exactly the point. You should evaluate payment integrity advanced technology based on its ability to scale. It should grow as you grow. That doesn’t mean you have to take on all areas of functionality at once; a modular approach to implementation brings many benefits to health plans.

Get the Checklist

This evaluation criteria is available as a handy download so you can be confident in your payment integrity solution choice.

Additional Considerations to Evaluate Payment Integrity Solutions

A search for payment integrity technology doesn’t stop at functionality questions, particularly as a health plan evaluates various solutions and/or a more comprehensive platform. The feature set alone will not paint the whole picture. To ensure a technology solution meets your needs today and into the future – and fits within the budget – we recommend you look a little deeper.

After evaluating payment integrity vendors based on functionality, the following areas should also be reviewed:

1. Flexibility

Not all payment integrity solutions offer flexibility, which is why some health plans choose to build their own solution. That path, while offering full customization, also comes with some inherent challenges. Read an analysis on the build vs. buy argument here. Flexible, configurable solutions can mitigate the need for a custom build.

2. Total Cost of Ownership

Factor in maintenance, annual licensing and setup costs. Also consider how much investment and effort it will take to improve the technology and its adoption. Combined with any potential financial improvements, how will ROI be impacted?

3. Integration and Ease of System Implementation

What training and support does the solution provider in question offer? How often do they update their platform, and how well will it integrate with current and future suppliers and providers? Look for integrations that can be easily accomplished with low-code tools or simple API connections. This integration standard enables real-time data flow (unlike batch FTP) and can help health plans build a scalable technology stack.

Total payment integrity platforms turn projects that would usually require dozens of integrations into straightforward one-time connections. Integrating accounting platforms, CRMs, service vendor systems, provider systems, claims editors and more with a payment integrity platform provides unique synergies without overtaxing IT. “Why Health Plans Should Choose a Scalable Technology Platform?”

4. User Friendliness

How intuitive is the technology’s user interface and user experience? Evaluate this aspect from the end user perspective as well as managers and decision-makers. Also consider that cloud-based solutions will differ from on-premise in terms of stakeholder engagement, efficiencies and data accessibility. The healthcare industry is increasingly moving all electronic systems to “the cloud” to reduce capital investments in quickly obsolete hardware.

5. Security

Health plans are rightly concerned about data privacy and security. Your technology vendor should have protocols in place to mitigate these concerns. How easy is it to control users’ access and permissions? Look for technologies that allow for controlling access and permissions at object/table-level, at feature-level, and at field-level as well as an audit trail to track changes. Features like single-sign-on, two-factor-authentication, and the ability to insist on password requirements are also ideal.

6. Working with the Technology Vendor

Whether your health plan decides to build its own solution, buy one or subscribe to one, you will be working with this group for years to come. How responsive, reliable and overall customer-oriented are they?

How Does Comprehensive Payment Integrity Stack Up Against Other Solutions?

When we speak with health plans and payers, we find that there’s some confusion surrounding the elements of a robust payment integrity program. Often, they see a claims editor or a FWA tool as a complete payment integrity solution. These tools offer great value but are limited in scope. We regularly uncover gaps and hidden revenue for plans that rely solely on these siloed approaches.

However, a comprehensive payment accuracy platform should seamlessly integrate with these tools to prevent further gaps. Pareo was created to connect external solutions, data streams and third-party services vendors. We recommend you set your benchmark at total payment integrity. But you can use this checklist to evaluate other elements of a payment integrity program.

How to evaluate payment integrity solutions compared to Pareo

Self-developed technology: Self-built payment integrity solutions incur large, ongoing costs for health plans. A self-built solution will require a longer lead time before you can realize ROI. Additional considerations for those considering building an in-house solution are functions that need to be included, expertise, and needed integrations. Pareo can be implemented quickly and offers many immediate benefits to a health plan.

Claims editors: Pareo works in tandem with claims editing solutions by improving their scope and automating much of the workflow.

Fraud tools: FWA solutions, like claims editing solutions, are limited in scope and therefore not comprehensive. They should not be a health plan’s only line of defense in preventing improper payments. If you already use a rules-based tool, you can integrate its data into Pareo.

Third-party services suppliers: A health plan considering third-party vendors doesn’t have to choose between Pareo and their business partners’ solutions. Pareo offers supplier optimization tools that allow for platform integration, improving a payment integrity system’s performance and workflow.



See the ClarisHealth 360-degree solution for total payment integrity in action:

5 Steps to Reducing Fraud, Waste and Abuse

5 Steps to Reducing Fraud, Waste and Abuse

Use these tech-enabled tips to comprehensively reduce FWA.

States require MCOs to take proactive measures that reduce not just fraud, but also waste and abuse. But how can you ensure your efforts not only meet compliance requirements but also help secure a competitive advantage? Through the lens of a total payment integrity solution like Pareo, successful comprehensive FWA management is achievable. Let’s dive in a little deeper and look at the most innovative steps that payers and health plans can take to reduce fraud, waste and abuse and maximize plan savings in 2020 and beyond.

1. Analyze your post-adjudicated and post-pay claims data.

Because Medicaid MCOs are administered at the state level, federally governed program integrity tactics and guidelines remain a challenge, says this 2019 report to Congress. But health plans and payers seeking to establish payment integrity in their program can look to this clue, provided by the referenced report, where the Commission recommends payers implement technology and processes appropriate to assessing their payment integrity performance. Specifically, “data systems capable of storing and analyzing patterns of claims data but also personnel with statistical, medical, and investigative expertise.”

This indicates that the Federal government will become increasingly interested in the analytics of claims data, including how financial responsibility was determined (post-adjudicated) and paid for (termed post-pay). Therefore, health plans, providers and MCOs must affix data-driven insights to the success of their FWA programs. Pareo makes available post-adjudicated and post-pay claims data for analysis and reporting efforts, and you can automate the mandated reporting of the effectiveness of your anti-fraud measures specifically.

2. Intelligently flag potential fraud, waste and abuse claims.

Does your FWA solution have the ability to flag potentially problematic claims in real-time? Does it autonomously flag potential fraud, waste and abuse claims at all, which prevents them from escalating into million-dollar mistakes? Pareo offers real-time flagging to assist health plans and payers in identifying and deterring claims that signal waste as well as multi-tiered provider scoring that indicates potentially fraudulent or abusive billing patterns.

Preventive measures allow a plan to take immediate proactive steps to reduce fraud, waste and abuse, which are a large portion of the improper payment rates reported by CMS (last year averaging about 10%). A 2019 study published in JAMA found that approximately 25% of U.S. healthcare spending is waste. Of that, conservatively, clinical waste totaled 27% and fraud and abuse 7.6%. Total payment integrity solutions like Pareo provide a powerful platform for health plans looking to prevent and recoup these costs.

3. Automate auditing workflow.

There are several regulatory steps for claims auditing procedures, many of which can be automated with an advanced technology platform. Among the most useful provided by total payment integrity solution Pareo include:

  • Initialization of medical records requests which triggers a nurse audit review
  • Medical records details included for nurse audit review process
  • Aggregation of insurance claims data
  • Overpayment tracking
  • Overlap control – both preventing suppliers from working claims outside of their assignments and excluding active fraud cases from audits

These streamlined workflows increase auditor productivity 3x and contribute to 5% lower administrative costs for Pareo clients. Reducing the administrative burden for a health plan or payer allows for staff to focus on other higher-value tasks associated with cost containment goals. Also, a health plan can avoid the negative consequences seen by older payment integrity solutions that introduce unnecessary friction into the payer-provider relationship.

4. Integrate program integrity efforts end-to-end.

As the industry moves away from “pay and chase” activities into more proactive measures, program integrity processes that emphasize a 360-degree approach to cost containment and reducing fraud, waste and abuse should be the goal for health plans. This comprehensive model should integrate prepay to post-pay, internal to external, audits to provider, recoveries to posting, and payment integrity to the SIU for an end-to-end solution.

Technology platforms like Pareo offer intuitive processes and integrations for all stakeholders within the common framework:

  • Configure timelines appropriate to prospective or retrospective provider audits and easily apply successful post-pay concepts to the prepay process.
  • Increase transparency in the payer-vendor relationship to improve the audit assignment, concepts approval and invoicing process while maximizing effectiveness of internal and external resources.
  • Automate the refund letter request process, including supporting clinical information; streamline the provider communication and education feedback channel; and close the loop on recoveries and posting to reduce provider abrasion.
  • Share valuable provider and claims auditing information between payment integrity and the SIU.

Optimizing your avoidance and recovery efforts is just one of many ways to reduce fraud, waste and abuse.

5. Optimize with predictive analytics and A.I. capabilities.

“It is important to note that while all payments made as a result of fraud are considered ‘improper payments,’ not all improper payments constitute fraud,” writes CMS in an annual report for Congress dated from 2015. Distinguishing between the two is essential to reducing provider abrasion and false positives that can overwhelm the SIU, and integrating multiple relevant data sources can help with this distinction.

In their most recent report, dated November of 2019, CMS announced an initiative to keep unscrupulous providers out of federal insurance programs (known as Program Integrity Enhancements to the Provider Enrollment Process). Combined with the collaborative Healthcare Fraud Prevention Partnership already in place, it’s clear that information sharing designed to create an environment unfriendly to fraud schemes and support predictive analytics is the goal.

Health plans looking to minimize improper payments due to fraud, waste, and abuse should also take advantage of the power of predictive analytics. Pareo is an accessible platform that offers health plans and payers predictive analytics and applications of A.I. like deep learning capabilities designed to prevent and reduce FWA. In fact, many of the outstanding qualities of Pareo are in line with the proactive measures CMS is taking to prevent improper payments.

Pareo Meets You Where You Are So You Can Quickly Reduce FWA

If you think a comprehensive payment integrity and FWA technology platform that leverages the power of A.I. is only available to health plans heavily resourced with time, money and personnel, think again. Pareo offers unparalleled configurability and a unique outsource-to-insource model that allows you to take advantage of proprietary concepts and tech-enabled services to maximize your internal resources over time.

ClarisHealth designed Pareo as a total payment integrity platform unlike any other available on the market. By leveraging innovative technologies with a singular, user-friendly interface, our clients have seen dramatic improvements in their ability to reduce fraud, waste and abuse



See the ClarisHealth 360-degree solution for total payment integrity in action:

Increase Agility Around These 3 Hot Button Issues to Minimize Risk in Healthcare and Politics

Increase Agility Around These 3 Hot Button Issues to Minimize Risk in Healthcare and Politics

The 2020 presidential election is upon us, and the debate surrounding healthcare and politics is more contentious than ever. How can your health plan stay ahead of the game, no matter the outcome?

Every 4 years, the cross section of healthcare and politics is put on the national stage. What – if any – impact will the different possible outcomes have on health plans? The uncertainty can bring risk, but potential instability doesn’t necessarily threaten your plans for growth and innovation. Consider your options and keep agile around these 3 hot button healthcare issues to ensure your health plan succeeds in any political climate.

1. Healthcare Coverage

The politics of healthcare are most evident in an issue that signals the greatest threat to the industry: healthcare coverage. Over the past 10 years, the number of people in this country without health insurance has decreased significantly. And, with greater access to affordable healthcare, we tend to see improved outcomes and costs. But the future and structure of major programs that provide healthcare coverage – the Affordable Care Act, Medicare and Medicaid – are all up for debate.

Affordable Care Act

The Affordable Care Act – and the protections it provides – continues to come under fire. The Supreme Court will hear the case shortly and the legislation currently has no replacement if it is struck down entirely. However, many experts find that outcome unlikely, and some parts of it may survive the challenge under “severability.” In particular, it includes several provisions that are popular with the American public and generally increase the number of insured citizens, which is advantageous for health plans:

  • Protections for pre-existing conditions
  • Federal subsidies for deductibles and premiums
  • Children staying on their parents’ plan until age 26
  • Minimum coverage requirements

In fact, in recent years, the marketplace created by the ACA has proved resilient with premiums dropping and more insurers entering or re-entering the markets. And states have stepped in to prevent the complete unraveling of progress made under the ACA, no matter how it fares in the courts. In 14 states, these provisions promise to fully cover potential gaps. Otherwise, 47 states have extended cost sharing reductions tied to silver plans, 36 have ensured young adults can stay on their parents’ plan, and 21 have allowed for a full or partial ACA exchange.

Medicare and the public option

While the so-called “Medicare for All” seems to be off the table for the time being, changes to Medicare itself are still a distinct possibility. Some policies, such as extended telehealth and supplemental health benefits, have bipartisan support and are expected to continue. However, falling tax revenues have accelerated the program’s insolvency timeline to 2024, and the aging population means Medicare spending will rise from 15% of federal spending in 2018 to 18% in 2029.

But while there are no plans currently on the table to shore up Medicare, it’s politically risky to alienate the senior voting bloc. And one proposal actually plans to extend eligibility for the program to those age 60-64, though it would be financed separately from Medicare. Many insurers have seen significant success with their Medicare Advantage lines of business, so this expansion could prove lucrative.

Could the related “public option” be equally advantageous for health plans? According to a Times/Siena College poll, more than 65% of U.S. voters favor a government health-insurance plan anyone can buy. Private insurance would continue under this program. Deployment could look like a public-private choice model, a targeted choice option that strengthens the ACA, or applying Medicare-based rates to certain private insurance claims. As an executive for one of the major insurers explains, “We've had public options and done well in public options. So history says that's fine.”

Medicaid cuts and expansion

At present, 38 states have expanded Medicaid under provisions allowed for by the ACA. The current administration’s efforts to cut Medicaid – namely block grants and work requirements – have proved unpopular and have faced legal challenges. We can expect proposals that increase Medicaid funding for home- and community-based services. And, under the public option mentioned above, individuals not covered by expansion would automatically be enrolled under that program.

Under our healthcare system, individuals, providers and payers tend to fare worse when there isn’t a broad base of people with access to affordable healthcare. Patients tend to defer or delay care due to cost, which makes their conditions more expensive to manage later on. And hospitals struggle with financial stress resulting from an increase in uncompensated care.

Stay agile around shifting healthcare coverage: Leverage data insights to predict long-term changes in stakeholder behavior and pursue targeted member outreach. Automate processes and workflows to reduce administrative complexity that can arise in the fallout of healthcare and politics.

2. Value-Based Care

With the fate of the ACA in question, what happens to the Center for Medicare and Medicaid Innovation? The CMMI is the innovation arm of CMS that has led many of the payment models for value-based care. Value-based care has received support across the political spectrum, so we can expect it to remain in some form. How it's structured and administered, however, could change.

Current CMS administrator Seema Verma indicated value-based models in the future will incent providers to take on more risk. This evolution comes as data from these models show that while they improve outcomes and quality, not all save money. But some payers have reported significant cost savings from value-based care. And with providers participating in alternative payment models faring better during the pandemic, progress in this area could accelerate.

Stay agile in value-based care: Payers should improve their two-way data sharing with providers to increase trust and ensure mutual success under these arrangements.

3. Healthcare Costs

One bipartisan issue in healthcare and politics is both parties want to reduce costs. Policy records and proposals focus on prescription drug costs, price transparency and healthcare affordability. But approaches to this hot topic vary, and the novel coronavirus pandemic has further complicated the matter.

Prescription drug costs

Of Medicare beneficiaries that have reported struggling to pay for healthcare, for 59% of them that bill was for prescription drugs. There is broad support for bringing down drug prices, but the road to realization can be long, largely due to legal challenges and long implementation timelines. Early in 2020, makers announced price hikes on almost 450 drugs.

Both candidates support capping Medicare Part D spending, importing certain drugs, establishing international reference pricing, allowing pharmacists to counsel on cost saving opportunities, and encouraging earlier availability of generics and biosimilars. But they disagree on whether the government should negotiate drug prices directly and how or if rebates and discounts can be passed along to patients.

Price transparency

As healthcare costs rise, patient consumerism is rising in tandem to ensure they can afford the care they need to receive. Two initiatives promise to support this activity: price transparency and ending surprise billing. These issues have broader bipartisan support than some of the other topics we have discussed here, but the industry disagrees on how these should play out, which has stymied progress.

The Price Transparency Rule requires that hospitals publish payer-negotiated rates for 300 shoppable services, 70 of which are mandated by CMS, by early 2021. Payers can do their part by moving early on the corresponding rule. With an emphasis on the member experience, health plans can comply with data sharing mandates and satisfy demands for consumer-driven cost management.

Surprise billing bans require legislation, which stalled in favor of the coronavirus response. Both parties support eliminating out-of-network charges from certain providers that patients have little say in choosing. Payers and providers will likely need to collaborate on this issue to ensure an outcome that best benefits consumers.

Healthcare and coverage affordability

COVID-19 has dramatically affected the finances of many employers, consumers and providers. As a result, the affordability of care and insurance coverage is top of mind even more than usual. Senior consumers report issues paying for premiums and other out-of-pocket costs. And younger consumers aren’t exempt, with over a third of those under 40 reporting an impact to their health insurance.

But will the cost proposals outlined above make healthcare and coverage more affordable for consumers? Reducing prices should increase affordability, but much depends on how they are implemented. So far, according to a recent analysis, insurers believe healthcare costs will remain lower than usual into 2021, which could offset increased costs for COVID-19. As a result, premiums have increased only modestly. Additional proposals that increase competition, extend subsidies or cost-sharing assistance, and cap premiums at a percentage of income would also help on this front.

Stay agile around healthcare costs: Consider adopting advanced technology that puts you in control of your claim spend and reduces your administrative burden. Integrative platforms that harness the power of A.I. allow you to scale payment integrity efforts.

Minimize the Risks of Healthcare and Politics with Pareo

In this environment of a shifting member population, increasingly complex value-based care models, and instability on the COVID-19 and cost fronts, how will you minimize your risks in healthcare and politics?

Solutions that emphasize innovation and agility will win, no matter the political landscape. Advanced technology that provides real-time insights and harnesses the power of A.I. will better position you to maximize avoidance and recoveries at the most optimized cost. Payment accuracy technology platforms like Pareo enable you to focus on your health plan’s strengths and lean into your competitive advantages.




See the ClarisHealth 360-degree solution for total payment integrity in action:

The Strategy Nearly Every Health Plan Considers: Outsource vs. Insource

The Strategy Nearly Every Health Plan Considers: Outsource vs. Insource

Slim margins, fewer resources, and consolidation have made it harder for health plans to compete. Could balancing outsource vs insource efforts accelerate their goals?

With shrinking margins, fewer and fewer internal experts, and increasing consolidation, health plans may find it harder than ever to compete. These limitations give rise to unique challenges, however unique solutions have emerged to overcome even the most insurmountable hurdles. To ensure your health plan thrives in the current healthcare climate, you may have considered the relative benefits of outsource vs. insource strategies in their potential to transform your payment integrity results.

Health Plans Face Challenges with Scaling

We hear regularly how legacy technology, “less is more” mentalities and lack of resources are top of mind for many health plans. The enormity of these struggles seemed to accelerate alongside the influx of millions of newly insured Americans that accompanied the passing of the Affordable Care Act. In its wake, many health plans discovered their largely manual processes could not scale to meet the growing concern around improper payments and wasteful healthcare spending.

Time has shown that the pace of change hasn’t stopped since. Even before the COVID-19 crisis hit, a stream of regulations continued to overwhelm the limited resources at most health plans. Compliance with the information blocking rules, for instance, can distract from other high-value activities – no matter the potential long-term benefits of both initiatives. Increased consolidation makes it more difficult to compete, while heightening the necessity to do so. Perhaps now more than ever, lack of resources continues to be a major barrier for many health plans.

Altogether, the writing is on the wall: the future of healthcare requires claims processing modernization, data aggregation, information security and the ability to lead the transition to alternative payment models and gains in population health improvements – all with great urgency, says Healthcare Finance. Health plans understand these directives and acutely feel the need to catch up, but inadequate technology, staffing shortages, competing capital projects, and combinations of these and other factors hold them back from progressing at the desired rate.

Weighing Outsource vs. Insource

Whether it’s transitioning more efforts prepay, going beyond compliance to proactively address FWA, or streamlining workflows to reduce administrative complexity, scalable processes that hold the potential to transform results are accessible to all payers – not just heavily-resourced health plans. But what offers the best path to maximizing your health plan’s cost containment goals? Let’s explore outsourcing vs. insourcing your payment integrity efforts.

How does payer outsourcing work?

Payer outsourcing involves a health plan contracting with a third-party vendor for claims processing and other functions. In this model, an outside group of focused experts perform what otherwise would be an “overhead expense” in the form of technology investiture and staffing/resources. As the pressure to optimize has increased, payer outsourcing has expanded beyond business process outsourcing (BPO) to include innovative technology and real-time resources that don’t require an up-front capital investment.

Health plans are increasingly outsourcing some or all parts of their payment integrity program, including FWA, coordination of benefits, itemized bill review and more – for prepay and post-pay. Just look at Oscar Health, a startup health insurance company that made news relying on an insourced/outsourced model (along with advanced technology) to provide a more efficient healthcare experience.

“The end goal is to process claims efficiently so doctors spend less time hunting down payments for the care they already gave, and reduce errors so consumers never have to deal with denied claims or paying for services they never received,” writes Oscar Health.

Impressively, if your health plan is significantly under-resourced, an outsource to insource model can help you achieve serious traction in revenue gains without hiring additional personnel, adding expertise or immediately acquiring technology on your own. It’s a strategy that many innovative startups rely on, and one that also works well for health plans at all stages of maturity.

How can I effectively insource?

Insourcing in this case, simply put, involves conducting payment integrity processes with your health plan’s own resources. If your health plan has pursued an internalization strategy in the past without much success or with limited gains, you aren’t alone. Legacy business models that rely largely on manual processes hinder innovation. But acquiring an advanced technology platform designed specifically for health plans can help you scale your internal resources.

Starting with foundational functionality that addresses your most pressing need first ensures ROI, smooths user adoption and makes the most of limited resources. Dramatically reducing manual processes and achieving mutual value with suppliers allow you to reduce your administrative overhead and tackle payment integrity in the most cost-effective manner.

Especially if you can acquire technology that works out-of-the-box for your needs and accommodates configurability without development, you can accelerate your speed to value. No matter your motivations, the potential for doubling or tripling your recoveries creates a solid case for insourcing.

Under-resourced health plans face unique challenges but benefit from unique solutions that transcend the outsource vs. insource argument.

The Smart Solution: Start Wherever You Are

Now that we have taken some time to weigh the outsource vs. insource argument, you might start to realize that elements of both strategies hold potential for your health plan. And that’s not surprising. Even the big national plans only started formalizing centralized payment integrity functions 10 years ago, so there’s still time to catch up and multiple ways to get there.

The vast majority of our clients find their path lies down a hybrid model of outsource-to-insource or pursuing both concurrently in an optimized combination of the two. For instance, you may find it easier to internalize data mining with the right enabling technology that helps you streamline workflows and realize efficiencies. On the other hand, your health plan may decide to always outsource complex medical records reviews because of the specialized resources it requires.

Statistics back up our experience with this hybrid approach to payment integrity; claims management – including payer services and product development – holds the largest market share of healthcare BPO. Fortunately, no matter your choice, the first step is the same. “For the same reason you outsource claims processing, find a trusted partner with expertise and advanced technology to ease your payment integrity burden,” says Jason Medlin, vice president of strategy and marketing at ClarisHealth.

A partner and a platform that allows you the flexibility to decide – service by service – whether to outsource or insource based on your cost-benefit analysis will better poise your health plan to scale effectively. Contingency-based relationships, like we use at ClarisHealth, are helpful for under-resourced health plans because they don’t require a large capital investment, which makes payment integrity outsourcing far more turn-key and affordable than you may realize. It also is worth noting that many plans will find it beneficial to move quickly on technology implementation as a way to speed overall time to value.

Get a No-Risk Proof of Concept for Pareo

At ClarisHealth, we don’t believe the outcome of the outsource vs. insource debate is necessarily binary. Rather, health plans can strategically outsource and insource select payment integrity efforts based on current resources while making a plan to adjust that mix over time to attain crucial internalization goals. We offer flexible delivery models, including an outsource to insource path, to meet health plans where they are.

Talk to ClarisHealth about Pareo®, our comprehensive payment integrity solution, which makes for a seamless transition to an optimized blend of outsourced and insourced payment integrity.

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Talk to ClarisHealth about how Pareo® can transform your health plan’s payment integrity operations.

3 Ways MCOs Can Prevent Fraud, Waste and Abuse

3 Ways MCOs Can Prevent Fraud, Waste and Abuse

A robust fraud, waste and abuse program at MCOs and MAOs includes three key areas: Technology, Clinical Audit and Investigative capability.

As your health plan grows its fraud, waste and abuse initiatives, there are three areas a strong prevention plan should address. Rather than relying on piecemeal components to combat Medicare and Medicaid fraud, as many health plans do, a comprehensive approach is best practice.

To truly be successful with a fraud, waste and abuse program, you must have three key pieces of the puzzle in place: Technology, Clinical Audits and Investigative capabilities.

With all three of these tactics in place, health plans are more likely to increase their recoveries as a percentage of total claim spend. Pareo®, a total payment integrity solution, supports each of these fraud, waste and abuse capabilities.

Risks of Overlooking Fraud, Waste and Abuse

Fraud, waste and abuse are three classifications of improper payments, which is a payment made or received in error in a government healthcare assistance program (like Medicare and Medicaid). Improper payments are more broadly combated by a comprehensive payment integrity and FWA program, as simply addressing fraud, waste or abuse alone will still miss some areas of fraudulent or wasteful activity.

According to this article, fraud, waste and abuse investigators typically focus on “two general areas: corruption and asset misappropriation.” They do this by analyzing the large amounts of big data generated by healthcare transactions. But are MCOs and MAOs doing enough in this area?

A recent report found that Medicaid insurer efforts to root out fraud, waste and abuse were disappointing. The major oversights found in their report include:

  • Failure to report offending providers to the state (allowing them to defraud other Medicaid insurers).
  • Failure to recover millions of dollars in overpayments, which could lead to increases in Medicaid rates that are based on fraudulent numbers.
Meridith Seife, a co-author of the report, said, “We are concerned anytime we see evidence that managed-care organizations are not [finding fraud and abuse and sharing it with states] in a rigorous way.

And a 2020 GAO watchdog report found that at least 63% of MAOs’ encounter data is missing national provider identifiers, data essential to tracking provider ordering, prescribing and billing habits. As the report states, "Both CMS and OIG rely on NPIs for ordering providers to conduct oversight and pursue fraud investigations."

As stewards of taxpayer dollars, MCOs and MAOs have a duty to thoroughly combat fraud, waste and abuse. To more effectively manage FWA in your organization, you need to be sure your solution has the following three key components:

1. Technology

According to CMS, Medicare improper payment rates have been steadily decreasing while Medicaid’s have been rising. The robust fraud initiatives in the Medicare program have been given the credit for the progress there, and their strategy was recently updated with the aim of further improving the effectiveness through 5 pillars:

1. Stopping bad actors
2. Preventing fraud
3. Mitigating emerging programmatic risks
4. Reducing provider burden
5. Leveraging new technology

Steps to ensure proper payments have been taken in the Medicaid program as well. In 2018, under the third pillar of its reform initiative – integrity and accountability – CMS announced audits of state programs to review Medicaid enrollee eligibility as well as if programs are correctly reporting medical loss ratios. It also promised to leverage increased data sharing and analytics and step up provider education of proper billing practices. In 2019, it released a new rule intended to prevent known fraudulent providers from billing government insurer programs.

The continued focus of CMS on eliminating Medicaid and Medicare fraud, waste and abuse means that health plans need to properly utilize technology to gain transparency into their process. Health plans and managed care organizations have to connect large volumes of data in order to comply with fraud, waste and abuse regulations. Advanced technology – especially a solution that leverages applications of A.I. like deep learning – can integrate and process large amounts of data to identify anomalies and patterns more effectively than people can do alone.

Technology-enabled fraud, waste and abuse solutions can quickly turn things around for MCOs – especially if they are plugged into a larger, more integrative payment integrity platform. Documentation, risk identification, lead prioritization, referrals, audit preparation and reporting are all capabilities that a robust fraud, waste and abuse technology solution can provide to MCOs and health plans.

2. Clinical Audits

The second element a preventive fraud, waste and abuse program needs to have is the ability to perform clinical audits. This gives MCOs and other payers and health plans the ability to review claims that have been flagged as potential fraud, waste or abuse cases. Clinical audits determine if diagnoses, prescriptions, encounters, procedures and more are worthy of further investigation or not. An internal audit program is beneficial to a health plan, as it often can be used to prevent improper payments from occurring in the first place.

While retrospective provider audits can unnecessarily stress the payer-provider relationship, that doesn’t have to be the case. By connecting real-time data between providers and payers, streamlining the medical records request process, seamlessly coordinating with vendors to prevent overlap, and transitioning more efforts prepay – all supported by Pareo – you can work to mitigate provider abrasion while satisfying compliance requirements.

Notably, the ability to analyze claims data and use predictive modeling allows a health payer, plan or MCO to effectively safeguard against fraud, waste and abuse. Tech-enabled clinical audits, like those performed within Pareo by a services vendor, can either complement or supplement the internal efforts of a health payer as well as those performed by Recovery Audit Contractors RAC for outlier billers. However, RAC audits have reduced significantly in recent years as payers move away from fee-for-service arrangements.

3. Investigate Capability

Increasingly, health plans, payers and MCOs should arm their FWA programs with a strong investigative arm in order to protect against non-compliance. If fraud is suspected, investigative capabilities allow direct reporting of fraud schemes to the appropriate authorities, providing evidence that supports (and protects) health payers and taxpayer funds. Should a claim be taken to court, both the evidence and a documented FWA process within a health insurance organization prove invaluable.

The amount of big data collected by healthcare organizations presents incredible opportunities to those invested in fraud, waste and abuse prevention. Governmental agencies are now using big data to investigate and prosecute FWA offenders. Mike Cohen, an operations officer with the OIG’s Office of Investigations, explains that “data…creates a pyramid effect, and we can go to the top of that pyramid.” And as fraud schemes grow increasingly sophisticated, the evidence data must evolve along with it.

Pareo® supports investigative activities across a healthcare organization’s data ecosystem, and ClarisHealth staffs a team of expert-level investigators, a benefit which also supports cyber threat intelligence efforts. As with clinical auditing, the investigative component of a fraud, waste and abuse program can be partially or completely outsourced to ClarisHealth.

Request a Fraud, Waste and Abuse Presentation

Does your organization have what it takes to effectively prevent Medicaid and Medicare fraud, waste and abuse? Find out by requesting an FWA presentation from ClarisHealth, where a member of our team will discuss your specific needs. Learn more about the ClarisHealth 360-degree solution for payment integrity and FWA, Pareo Fraud: Case Management and Detection powered by A.I. here.

Learn more about the ClarisHealth 360-degree solution for payment integrity and FWA, Pareo Fraud: Case Management and Detection powered by A.I. here.


See the ClarisHealth 360-degree solution for total payment integrity in action:

Coronavirus New Normal: What does it mean for health plan members?

Coronavirus New Normal: What does it mean for health plan members?

25 million Americans projected to lose employer-sponsored healthcare coverage due to the COVID-19 recession. How will this disruption affect the relationship between health plans and consumers?

As of the end of April 2020, about 30 million people in the U.S. are newly unemployed due to the pandemic-fueled economic shutdown, a sharp uptick from the recent historically low unemployment rate. Because, on average, about half of the people in this country receive health insurance through an employer, this situation is threatening healthcare coverage during a healthcare crisis. How is this disruption affecting health plan operations and consumers, and will it create longer-term changes in how the majority of Americans receive health insurance?

The Financial Impact

A variety of government and social policies in the 1940s and 50s led to the current state of healthcare coverage in the U.S. where most individuals receive insurance through an employer-sponsored health plan. While that structure functions fairly well during periods of low unemployment and underemployment, it can leave a gap during a climate of economic and job uncertainty.

In the 6-week period between mid-March and the end of April, the unemployment rate soared from sub-5% to over 16% as efforts to stem the spread of the novel coronavirus ravaged the economy and led to widespread furloughs and layoffs of workers. By some estimates, that massive job loss has resulted in 12.7 million Americans losing their healthcare coverage at the same time they can least afford to replace that coverage.

Health plans started to see the fallout of this rapidly changing situation almost immediately. One of the largest health plans in the nation reported that the number of its premium base requesting grace periods and payment plans increased from 0.4% to over 3% by mid-April. However, this standard practice of 60- or 90-day grace periods is expected to be not nearly enough relief for many members, leading one to offer premium credits and other financial assistance.

Recognizing the potential impact to cash-strapped consumers, assorted medical and insurance groups are lobbying for assorted financial and healthcare coverage support measures:

  • Offer employer subsidies
  • Subsidize or cover COBRA benefits cost
  • Open special enrollment periods
  • Increase subsidies for ACA marketplace plans

Already enacted is a 6.2% increase in federal matching Medicaid funds to help states handle the pandemic for the duration of the national public health emergency. Included in the eligibility requirements for the enhanced funds are provisions that require states to not unduly prevent qualifying individuals from receiving Medicaid coverage.

The Healthcare Impact

Consumers losing their income and reliable health insurance coverage during a healthcare crisis is an untenable situation. A recent survey revealed a potentially precarious financial situation for a segment of the population. When asked if they would seek medical attention if they presented with the signature symptoms of COVID-19, 14% said they would avoid care due to cost. Even when asked specifically to imagine a suspected coronavirus infection, 9% still would avoid treatment. These responses were especially likely for those with lower incomes, a group that has been disproportionately affected by the current economic crisis.

This hesitation to seek care couldn’t come at a worse time as the delays promise to derail chronic condition outcomes as well as public health initiatives related to the pandemic. However, putting off care due to financial constraints isn’t an entirely new experience. An annual poll, most recently conducted in November 2019, showed that a record 33% of Americans put off needed medical care due to costs, a rate that has increased 50% over the past 20 years.

Health plans and the government have stepped in to encourage people to continue to seek healthcare if they need it. Health plans by temporarily waiving cost sharing for coronavirus testing and treatment, as well as other services for vulnerable Medicare members, and the government by compensating providers for uninsured care at Medicare rates so providers don’t unnecessarily burden patients without a safety net.

Health Insurance by the Numbers

The latest healthcare coverage data available is from 2018. After years of improvement in the uninsured rate, starting in 2010 with the enactment of the ACA, the rate has increased for 2 years in a row, particularly in states that haven’t expanded Medicaid.

  • Employer Insurance 55.1%
  • Medicaid 17.9%
  • Medicare 17.8%
  • Individual Market 7.5%
  • ACA Marketplace 3.3%
  • Military 3.6%
  • Uninsured 8.5%

The Future of Healthcare Coverage

With the rising costs of healthcare coverage shouldered by employers, and the opening of the ACA marketplace, some analysts predicted that 90% of employers would have abandoned sponsored health benefits packages by now, in the same way pensions gave way to 401(k) plans. That projected reality hasn’t yet come to fruition, though the rates of “underinsured” individuals with employer plans are increasing.

The number of uninsured employed people is also increasing, according to a recent study. In fact, 70% of the uninsured were employed but not offered an employer-sponsored health plan while 30% didn’t enroll in employer coverage because of high costs. At the same time, high rates of unemployment bring into focus the potential gaps created by tying healthcare to jobs, and we likely have not reached peak unemployment in the COVID-19 recession.

Single Payer Unlikely for Now

Though the past couple of years saw single-payer policies gaining traction, strong lobbying against the structure has prevailed for now. However, much depends on how quickly the economy rebounds and to what degree. Large corporations make up much of the enrollment in employer-sponsored health plans and continue to drive that segment, and many of them have weathered this economic downturn with greater resilience thus far.

Though healthcare independent of the workplace is currently more important than ever before, the current system is still working for many people. Enhancing ACA plans and subsidies and expanding Medicaid to more people are the most cost-effective – and quickest to implement – efforts and stand to benefit those most affected by income hardships.

Higher Medicaid Enrollment

Experts released a new report that projects unemployment will reach 20% by June 2020, which would lead to between 25 million and 43 million individuals dropping out of employer health plans. Of those, 12 million to 21 million will enroll in Medicaid, 6 million to 10 million will receive individual coverage through the ACA marketplace, and 7 million to 12 million will become uninsured. According to a senior policy advisor, “Our safety net is about to be tested, and it’s going to work a lot better in states that expanded Medicaid.”

Data Insights Key to Health Plan Response

Short-term, for health plans this shift means a dramatic change in their lines of business. Health plans that cannot quickly pivot based on data and market changes are at risk. If employer-sponsored coverage changes for the long-term, are health plans positioned to navigate these twists and turns?

Some payers are already making moves specifically focused on expanding their Medicaid and Medicare portfolios. As stated in the announcement of one of these deals, the health plan’s “strengths and capabilities will be critical to successfully serving new populations if a recession increases Medicaid membership.” At the same time, health plans report uncertainty in their 2020 projections, as small group enrollment drops and Medicaid rolls increase. Health plans are having to prepare for all eventualities, and advanced integrative technology – along with the data insights it provides – can provide the edge they need.

Evaluate Consumer Behavior Changes

Health plans are keen to harvest business insights from member behavior during this time. They anticipate the pandemic changing the way care is delivered for at least 1-2 years and likely, forever. Most health plans are anxiously awaiting the emergence from the “first wave” of COVID-19 cases (possibly this Summer) to see how user behavior is affected and try to strategize on long-term effects.

With so many workers furloughed or laid off, we may see a return to insurance after this first emergence, which provides a strong opportunity for health plans to find an early indicator of longer-term behavior change that would impact their bottom line. Data on utilization of care, self-insured rates, changes in plan levels and HSAs, and more will prove valuable.

Reduce Administrative Complexity

Administering Medicaid MCO plans is a more complex operation, especially as CMS has issued waivers to help states be more nimble in responding to coronavirus. Medicaid lines of business also tend to be less profitable than employer-sponsored insurance. Increasingly, health plans and payers are turning to advanced payment integrity technology like Pareo to streamline coordination of benefits and otherwise ensure proper payments to providers.

And, by virtue of being an integrative platform, it helps reduce administrative lift in tangential operations related to traditional payment integrity efforts as well. Pareo supports health plans in seamlessly shifting internal resources to more easily accommodate changes in LOB, and automating communication with suppliers and providers to ensure changes are relayed effectively and efficiently.

Improve Engagement

Leaders of health plans know that the way insurance is delivered may change for many consumers and, particularly for Medicaid enrollees, engagement is paramount. Technology enables them to proactively address at-risk populations, like those with chronic conditions who may be particularly vulnerable to disruptions in care. By delivering broader data insights and supporting communication with internal and external stakeholders, Pareo aligns with a broader strategic effort at health plans to “improve engagement in healthcare.”


See the ClarisHealth 360-degree solution for total payment integrity in action: