Payment integrity evolves into a more strategic function for health plans in order to reduce overall healthcare expense. Prepay drives greater cost savings but can be difficult to achieve. Here, we share strategies that can enable prospective cost avoidance programs at health plans in 2021.
The proverbial pressures of 2020 may eventually yield diamonds to health plans. Payers needing to reduce healthcare costs are turning to innovative strategies that promise to upend traditional approaches to claims cost containment. But increasingly slim budgets can make an aggressive payment integrity strategy challenging. Will prospective payment integrity, or prepay, save the day?
The Drive for Prepay: Why Now?
Health plans experienced better-than-expected financial returns throughout most of 2020 due to lower care utilization. But all of that changed in Q4. And though industry experts expect the uncertainty to continue throughout 2021 at least, revenue goals remain intact.
As a result, many health plans have enacted budget cuts or spending freezes. With fewer or the same number of resources in place, the drive to mitigate improper payments is stronger than ever. Payers look to shed outdated processes and close the gap on wasted dollars. Payment accuracy, or the focus on ensuring a healthcare claim is paid correctly the first time, has emerged as an area ripe with potential savings.
The traditional approach to recouping improperly paid claims is for health plans to “pay and chase,” or recover incorrectly paid dollars. But this process is costly. Prospective cost avoidance offers 1.5x the savings of post-pay claims recovery. So why haven’t more health plans focused their strategies on paying claims correctly the first time?
What it Takes to Pay a Healthcare Claim Correctly
Simply speaking, ensuring claims payment accuracy is a complex prospect. On the provider side, submitting clean claims isn’t always straightforward. And, for payers, they need advanced technology, internal resources and integration in place to make strides in prospective payment integrity.
Prepay claims validation is a time-sensitive effort and strategically impossible to implement or scale without technology that can streamline – or even automate – parts of the process. Advanced technology platforms can provide visibility into the lifecycle of a claim. With greater insights into claims trends, health plan leaders can identify gaps and opportunities to shift more claims work prospective.
At the same time, artificial intelligence can aid in detection and decisioning to help health plan resources (or third-party vendors) work smarter. Other functionality like real-time data access, integrated communication and the ability to attach multiple audits to a claim further speed efforts.
Some third-party services vendors have the full range of capabilities to successfully perform prepay claims validation. And, to some extent, these suppliers may always hold a role in your prospective strategy. But many health plans aim to conduct audits with their own internal resources. Either way, data mining and – for complex clinical audits – nurse coder expertise is critical for timely, accurate validations. And, again, enabling technology will ensure these teams operate at their most efficient and effective.
Centralized payment integrity and FWA
It takes the entirety of the payment integrity and FWA function combined to successfully enact prospective claims validation. Using advanced technology to centralize the collective effort drives better data quality, improved reporting and increased efficiency. Your health plan may also choose to align these functions culturally based on shared goals for a single point of accountability. This structural integration will eliminate department silos to ensure all of your payment integrity bases are covered – both prospective and retrospective.
Challenges to Implementing Prospective Payment Integrity Strategies
Proven technology platforms promise to demonstrate quick ROI for health plans. But budget constraints still can make technology decisions difficult. While that challenge holds true for most organizations, executing on prepay goals will present varying difficulty based on your health plan’s specific situation.
Data and process complexity
Data feed ingestion and standardization to unify claims systems can be a time-consuming process, and it requires a degree of expertise to support. You may have a large volume of suppliers and claims inventory that requires a great deal of data mapping as well as a complex ecosystem of payment integrity and FWA operations. Or, you may have largely paper-based data sources and few standardized processes. Either way, it’s worth investing in this step as it will provide the foundation for your prepay function.
Lack of specialized resources
Specialized resources may also be necessary to run or augment prepay operations if limited expertise exists internally. If you have already implemented a prepay solution, you need to be able to maintain it at a high level to stay competitive. You may need data science resources and artificial intelligence models. Or, you may be starting out with a less sophisticated payment integrity operation. A partner and a platform that allows you the flexibility to decide whether to outsource or insource based on your unique needs will better poise your health plan to scale effectively.
Solutions that Enable Prepay for Health Plans
No matter your health plan’s unique challenges, you can find a perfect-fit solution to execute on prepay strategies. Break your process down into immediate steps and longer-term strategies you can goal towards.
5 steps to take now
1. Start by identifying the key decision makers who can advocate for this strategic shift alongside the payment accuracy department heads. Depending on your organization’s structure, this initiative might be led by a C-level executive like the CIO. Because technology plays such a big role in prospective claims validation, a CIO or other technology leader is often in the best position to champion the technology adoption roadmap. No matter what, this role requires the authority and visibility to unify teams and build business cases for required resources.
2. Gain visibility into the entire claims lifecycle by working cross-functionally across the payment integrity and FWA teams. This activity will toggle a culture shift as plans begin to think of end-to-end claims cost-containment and avoidance.
3. Audit your current pre- and post-pay capabilities, automation opportunities, reporting and business insight capabilities. Seek to benchmark performance in these areas.
4. If you use third-party suppliers, audit their performance and look at opportunities to maximize value.
5. Develop a business case for advanced technology, including an ROI analysis of any opportunities for improvement you have identified.
4 strategies to implement over time
1. Based on your business case you develop for projected savings from shifting more work prepay, continue to build out your technology ecosystem. Increased investment in a scalable and sophisticated payment integrity and FWA environment will continue to yield opportunities.
2. Use business insights gleaned from advanced technology to continue building an agile payment integrity function that integrates the FWA function. Add expertise where it makes sense to shift more work internally.
3. Leverage prepay detection capabilities enabled by A.I. to detect anomalies, spot claims errors before claims are paid and to flag aberrances. Having likely leads “pushed” to you will allow internal resources to act more proactively.
4. Integrate providers into the process. Because prepay signals a significant policy shift, gaining your providers’ buy-in is essential. Provider communication programs should go beyond lettering and extend to stewardship of a clean claims process. Also consider how this change might impact the claims process all the way through the member. Particularly with the forthcoming price transparency rules.
Fulfill the Promise of Prospective Payment Integrity
The goal of payment accuracy programs is to ensure that a claim is correctly paid – the first time. But, traditionally, supporting prepay claims validation has proven difficult for health plans. Especially those that lack the resources and technology to drive proactive claims integrity efforts. In 2021, despite budget constraints, health plans can build a strong business case for shifting more claims work prepay by demonstrating the average savings this move would bring.
As a strategic initiative that involves cross-functional teams, plans should consider the knowledge and expertise of the technology partner they choose to enable pre- and post-pay payment integrity operations. Look for understanding of the complexities around payment integrity, familiarity with data standardization needs, and effective workflow automations. Taken together with your own expertise, you can execute on even your most ambitious cost containment strategies.