The Strategic Approach to Claims Cost Containment

Jan 19, 2021

Competing with other health plan functions for technology priority can lead to missed audit claims cost savings potential. An integrated payment integrity strategy breaks down these internal silos.

With so many moving – and vital – parts within a payer organization, how can we ensure we don’t overlook claims cost containment opportunities? In theory, key departments such as Claim Operations, Provider Audit, SIU and Payment Integrity integrate harmoniously. They have the same goal, after all. Pay claims right the first time. In reality, the division of tasks – and budgets – across multiple payment integrity departments swiftly leads to inefficiency, often in the form of data silos.

These internal silos pose significant challenges to your goals, including accelerating payment integrity results. “Experts believe that healthcare organizations will need to invest in the appropriate tools and infrastructure to effectively manage data,” according to Stanford Medicine’s inaugural Health Trends Report. In an industry that faces ever-changing compliance, regulatory, and technological mandates, warehousing data into inaccessible silos can be crippling.

3 Questions to Diagnose Claims Cost Containment Silos

When considering how to improve returns on claim spend beyond the industry average, health plans often think in terms of their external competitors. Namely, how to access or develop more advanced analytics to root out wasteful spending. Complex concepts offer distinct value, no question. But, if your organization operates with internal technology disparities that perpetuate data silos, meeting increased claims cost savings goals will prove difficult. In fact, this inefficiency and lack of alignment puts 3-7% of paid claims dollars at risk each year.

To root out these fundamental issues that hold you back from real progress on payment integrity, we recommend you ask three questions.

1. Do you have areas of payment integrity responsibility with conflicting goals?

Payment accuracy is multifunctional — from fraud and abuse detection to auditing and quality monitoring. The challenge is that each function’s approach to payment integrity can vary widely. They are incentivized differently. And some areas – data mining and COB, for instance – may even compete against each other.

claims cost

The success or failure of these programs can impact claims cost savings in different ways. But managing these important functions piecemeal isn’t just inefficient. It’s counterproductive to your potential. The ability to quickly and accurately identify billing errors pre- and post-pay – across all claim types and scenarios – depends on payment integrity working in concert.

An effective payment integrity program should incorporate everything from advanced technology to hands-on clinical, fraud and claims experts. Shared goals allow health plans to make the most of limited resources.

2. Does each function have a separate budget for technology development?

Some organizations centralize every technology purchase under IT’s purview. But budgets are often allocated by functional area. Sometimes those functions responsible for compliance take priority. A health plan simply can’t ignore FWA, COB or policy adherence requirements after all. In other organizations, the departments that best show high returns take precedence.

It makes sense for health plans to focus limited resources on core strengths. But, if you want to progress on payment integrity results, look for areas making do with spreadsheets, outdated databases, shared analytics experts, or a few contingency-based services vendors. These under-resourced functions may struggle with administrative complexity that hampers their expertise.

But with equal access to advanced technology and data insights, they could contribute significant value. Including taking on cost-effective internalization strategies around audits – data mining, DRG review, itemized bill reviews and more.

3. Do you have systems that don’t talk to each other?

With these misaligned functions dedicated to various areas of payment integrity, disconnected technology systems naturally arise. A suboptimal mix of cloud-based, on-premise and manual systems breeds disparity. Inefficiency also plagues these teams in the form of repetitive and redundant tasks.

Without even access to data, each function may create similar analytics for the same KPIs. Some may miss out on opportunities surfaced by real-time data. Those without access to automation and A.I. capabilities will find themselves behind on productivity and advanced skills development.

These disconnects have consequences. In a study of organizations’ IT systems strategies, those who had adopted key technologies and scaled those across functions achieved significant value. Those that didn’t had 15% in foregone annual revenue as of 2018. And the projected gap gets worse. “If they don’t change, they could miss out on as much as 46% of their annual revenue by 2023.”

Resolving Inefficiencies Created by Internal Silos

Once you have identified potential silos in your claims cost containment process, it pays to fix them now rather than later. We know minimizing revenue leakage is imperative – and complex – for our industry. It’s difficult to resolve workflow inefficiencies and ascertain the relative success of our efforts if we cannot bridge the gap between various payment integrity functions.

Every department involved in payment accuracy should have the ability to utilize a stream of aggregated data – data distilled from silos. We have seen health plans structurally integrate these departments to achieve alignment. But even then, technology does a lot of the heavy lifting. A single, integrative platform can resolve these inefficiencies more swiftly while conferring additional advantages.

A single platform approach to payment integrity

Ideally, organizations will navigate to a platform that streamlines both internal and third-party data into a single information portal. Obtaining visibility into overall claims cost containment creates significant advantages for payers. The increased transparency between departments provides strategic insights that allow for:

  • Implementing a more robust payment integrity program
  • Determining what to insource vs. what to outsource
  • Increasing recoveries by at least 5% year-over-year
  • Tracking and accounting for all payment integrity inventory
  • Tracking payment integrity projects from ideation through to project completion
  • Creating little to no provider abrasion
Technology ecosystems as a competitive advantage

The benefits also go beyond the obvious upsides of being able to more confidently manage overpayment prevention and recovery efforts. With good data practices and a technology platform in place, a variety of analytics use cases that drive business value for you and your stakeholders can emerge. It also allows you to deploy advanced, best-in-breed tools like robotic process automation and applications of A.I.

This digital-first approach can cement your competitive advantage. According to McKinsey research, these technology ecosystems often display a “winner-takes-all” dynamic. But this ability to convene a digital health ecosystem isn’t limited to technology giants or national payers.

Pareo Helps Realize ROI on Claims Cost Containment Goals

As an integrated platform for all of your payment integrity efforts, Pareo has a proven track record of helping payers achieve their claims cost avoidance and recovery goals.

Consider how increasing access to technology and data visibility transformed the operations at one of our clients. This Medicaid MCO with 2+ million members wanted to move more claims recovery work internal and use vendors for more strategic opportunities.

They started by implementing Pareo Supplier Optimization to gain insights into vendor performance. They quickly added Pareo Audit and Pareo Clinical to support the build-out of their recoveries unit and internalize key analytics. As a result they:

  • Grew vendor footprint 5x
  • Increased recoveries 2.5x within a single year
  • Grew internal recoveries by 50%

Altogether, their return on investment has exceeded 10x, far surpassing their initial targets. Before Pareo, they lacked an internal payment integrity structure and struggled with under-resourced functions. But they understood their ability to scale was key to achieving a competitive advantage. Pareo met them where they were and enabled them to drive a sophisticated technology ecosystem strategy.

Learn how Pareo can enable strategic moves in cost containment

Pareo Audit is a powerhouse solution for health plans that are looking to launch strategic initiatives around cost containment. Learn more about the benefits that Pareo Audit can bring to your health plan's technology stack by accessing our brochure below.

Now’s the time for total payment integrity

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