Executive Summary: Every health plan is intensely focused on the accurate and timely reimbursement to providers for the services delivered to its members. Despite best efforts and investment to avoid errors, CMS reports as much as 10% of claims are paid in error, resulting in hundreds of millions of dollars in excess claim expense. Pre-payment edit rules are established to avoid errors and post-payment overpayment identification programs are put in place to recover lost revenue, yet leakage still occurs.
Equian helps health plans identify ongoing and complex reimbursement errors, quantify overpayment, recover revenue, and address root cause systemic and procedural errors. Equian provides an independent macroscopic perspective of a plan’s claims reimbursement processes, and a microscopic view into the details of the errors and the dollars impacted. Equian’s actionable analytics help plans understand reimbursement accuracy, identify the root cause of any leakage, and take appropriate corrective action to avoid errors in the future—all in conjunction with existing pre- and post-payment initiatives.
Health Plan Challenges and Objectives: A medium sized regional health plan was faced with a strategic initiative to reduce their annual claim expense in response to health reform and competitive market conditions. A review of their medical claim reimbursement accuracy was conducted including adjudication errors, billing and coding errors, overpayment identification, recovery and process improvement opportunities.
The plan’s centralized operations and claims processing was challenged by the decentralized overpayment identification efforts among various internal departments throughout the organization. It was difficult to determine the extent or financial impact of claim-related errors, and the overpayment volume being identified and recovered didn’t seem to match industry-accepted volumes.
Five factors were impacting their review and analysis. First, the plan had limited visibility into their results and no clear benchmarks for overpayment recovery had been established. Second, a highly-sensitive network management department was concerned that undue friction from more or additional overpayment recovery would negatively affect provider relations. Third, there was limited budget dollars for both technology investment and additional resources to identify and recover overpayments. Fourth, the plan had an existing data mining vendor and no way of knowing if anything was being missed. Fifth, the strategic direction was to focus on cost avoidance and accuracy vs. overpayment identification and recovery.
The Equian Solution: “We didn’t know what we didn’t know. It was time for another approach and a different perspective. We needed a collaborative effort with a proven supplier” – Client, Senior VP of Operations. The health plan turned to Equian’s retrospective payment integrity service. Equian addressed several issues that the plan faced. Equian’s solutions also required no investment in technology or additional staffing resources. Existing claim and data extracts were utilized for reimbursement analysis and overpayment identification. Equian auditors conducted validations of suspected errors and categorization of error types—the first step in root cause and corrective action development. Validated overpayments were pursued for recovery, and insights were gathered related to the cause.
Equian didn’t just recover more overpayments, it uncovered the root cause of the errors, quantified the opportunity, and delivered corrective action plans needed to avoid the errors going forward. The result was a significant reduction in overpayment errors, successful identification and implementation of numerous cost avoidance opportunities, and higher overall reimbursement accuracy that further reduced administrative expenses.
The ongoing use of Equian’s Data Mining solution will continue the cycle of root cause identification and corrective action planning and development, while at the same time reducing the volume of overpayments and resources required to manage them.
The Results: This regional health plan identified $20.8M in incremental savings in the first year’s use of Equian’s solution These savings fell into three categories: First, newly identified overpayments previously missed by the plan’s internal efforts and existing vendor; Second, previously unidentified overpayments within an 18 month backlog sweep of claims; Third, estimated future cost avoidance based on the expected volume of similar claims in the subsequent 12 months. While Equian continues to provide root cause insights over time, the health plan is making systematic, procedural and policy changes to avoid the reoccurrence of these errors in the future.