Now is the time to consider pre-payment integrity services

The healthcare industry is in the middle of a dramatic shift in their operations, from care delivery to records management, to billing and fraud prevention. These changes are being driven by a combination of consumer expectations, new regulations, and, most importantly, advances in healthcare technology.

For those managing payment integrity programs, digital transformation has finally made the work of pre-payment audits a reality. While most audits are still conducted retrospective to payment, technologies and practices now are available make pre-payment audits a significant and cost-effective part of a payment integrity program.

There are several compelling reasons why now is the time for health plans to consider adding pre-payment audits to their payment integrity program by using new digital capabilities. To act on those reasons, health plans must understand when to use the pre-payment approach and what to consider when selecting a payment integrity service partner.

Major shifts in consumer behavior in the healthcare marketplace

The COVID-19 pandemic has brought major societal shifts, but none more so than how U.S. consumers are managing their health and engaging with healthcare providers. As we enter the post-pandemic world, these changes are proving to be permanent.

Consumers are rethinking how they receive their healthcare and their expectations in doing business with healthcare companies. In particular, the adoption and acceptance of using telehealth services has skyrocketed. According to consumer research conducted by McKinsey & Company, nearly 40 percent of surveyed consumers stated they believe they will continue to use telehealth going forward— up from 11 percent of consumers using telehealth prior to COVID-19.¹

While telehealth offers many benefits and conveniences to patients, the delivery of healthcare through this service also brings complexity and concerns regarding fraud for payers. This explosive and continued growth in telehealth and remote care is but one sizeable example that requires payers to seek innovative approaches to payment integrity.

Legislative changes bring more coverage and regulations

While most consumers still get their health insurance through their place of employment, more people than ever before have coverage through the Affordable Care Act. According to the U.S. Department of Health and Human Services, a record 31 million Americans have health coverage through the ACA. This includes 11.3 million people enrolled in ACA Marketplace plans as of February 2021, and 14.8 million newly eligible people enrolled in Medicaid through expanded eligibility to adults as of December 2020.²

Moreover, two recent pieces of federal legislation adds complexity to claims processing, both pre- and post-service. The Transparency in Coverage Rule, published in October 2020, gives consumers greater insight into the cost of services before obtaining care and receiving a bill. The No Surprises Act went into effect as of January 2022, establishing new federal protection for consumers regarding surprise medical bills. The No Surprise Act will require private health plans to cover surprise out-of-network claims and apply in-network cost sharing.³

Ongoing issues of fraud, waste and abuse

All of these societal and regulatory changes will affect how payers address fraud, waste and abuse. With costs nearing 18 percent of the gross domestic product, the United States has and continues to spend more on healthcare than any other country. Approximately 30 percent of that spend is considered to be waste, according to studies published by the Journal of the American Medical Association.⁴ Moreover, the commercial healthcare industry is averaging a 3-7 percent improper payment rate, and Medicare at a 6.3 percent error rate between 2019 and 2022.⁵

Today most improper payments are found and recovered after claims are submitted and paid. This work is time- and resource-intensive, taking 12 to 18 months to recover funds that have already gone out the door. Pre-payment audits would not only prevent those monies from leaving but would significantly reduce the administrative cost of recouping overpayment.

Focusing on prevention instead of correction

Today, the vast majority of clinical and coding audits are conducted post-payment. Many Payment Integrity companies provide post-payment audits by analyzing large complex data files that represent healthcare claims and payments made against those healthcare claims. Using analytics, rules, and algorithms, a payment integrity program will work to find claims that were inappropriately paid.

A decade ago, the industry pushed to add more pre-payment audits to payment integrity programs, but the technology could not meet the demands that a pre-payment audit requires. While post-payment investigations have the luxury of time, pre-payment reviews need be conducted quickly and have a high rate of accuracy. Even as recent as five years ago, payer platforms had not yet advanced far enough to have the ability to stop, audit, and adjust a claim within their own system and do so while remaining compliant with regulations and contractual service level agreements. The technology was not there for the industry to achieve either of these requirements; but today it is.

Today’s pre-payment audit benefits

Now pre-payment audits can be conducted at a rapid pace, relying on advanced technology. By running extremely complex algorithms, what used to take hours to produce a result now is finished in mere seconds. As a claim is being processed and paid, it also is being analyzed to determine the likelihood that the claim is being adjudicated and paid appropriately. When an anomaly is found, the situation either can be corrected automatically using scripts and bots or by having an audit professional conduct a live review.

For pre-payment audits, accuracy is just as important as speed because pre-payment review has the potential to interrupt the revenue cycle or the cash flow of the healthcare provider. Previously, pre-paid audit programs were not that precise, with only one in five claims being successful. With today’s technological speed and algorithm accuracy rate, EXL Health is finding slightly more than one out of every two claims selected are identified as having an error that leads to improper payments.

Prepay audit programs also provide value to providers, who are facing their own challenges – from staffing shortages to capacity constraints. These programs limit administrative and financial burdens of denial management and post-payment audit appeals.

Features of a payment integrity provider

A solution provider, offering either preor post-payment review, should offer a 360-degree view that integrates the claim, the provider, the payer, and the member or patient. Most solution providers offer a black box service to perform audit and recovery, shipping those results back to the payers. While this work does produce savings, it does not offer any insights or ability for the payer to leverage the intellectual property created.

As the healthcare industry has shifted, the accompanying programs have shifted too. Payment integrity programs are no longer as simplistic as hiring an auditor to review claims. The need for a traditional black box model has evolved. Currently, payers see the best results when working with an audit vendor who provides the right expertise, technology, and capacity to drive long-term success while acting as a true partner through the ebbs and flows of the payment integrity landscape.

By comparison, EXL Health offers an innovative white box solution, giving payers deeper insights into their payment integrity program through transparent and accessible information. The solution can be decoupled so other issues besides audit functionality can be addressed. If a health plan needed people resources, for example, EXL Health can provide our best-in-class resources to support payment, integrity, or claims adjudication activities. For example, payers are often overwhelmed by the volume of claim adjustments resulting from audit activity. EXL Health can provide our best-in-class resources to ensure backlogs are cleared and adjustments stay current. EXL Health will also provide its analytics to the payer, allowing them to run the algorithms and help them find internally more savings, as well as EXL Health’s audit workflow tools to automate the payer’s Payment Integrity operation.

Today’s algorithms and machine learning solutions make pre-payment audits possible by delivering intelligence to identify issues before inaccurate payments are processed. While this shift to pre-payment reviews will allow payers to reduce administrative expense and keep more money in-house, all revenue management plans will need to include both pre- and post-payment functionalities. The work of both types of services should give the payer both immediate cost savings but also business intelligence to recognize trends to prevent and correct improper claims payments more efficiently. At EXL Health, we are constantly innovating and work with our clients to address their unique and complex business challenges.