The healthcare industry continues to attract more stakeholders, vendors, payment regulations and oversight, mergers and acquisitions, and innovative revenue cycle management opportunities — and with these come complexity and sometimes unexpected pricing outcomes and incentives that can affect patient care coordination. These make following the policies, edits, program guidelines, and dollars throughout a multifaceted process even more challenging, creating the significant need for payment integrity excellence. This means a great deal more than adding layers of payment integrity vendors during the pre- and post-payment stages to catch a variety of payment mishaps.
Payment integrity audit processes are paramount to improving clinical outcomes, lowering member and provider abrasion, and delivering better access to care. In essence, payment integrity is about aligning incentives and closing gaps, leading to better care and financial rewards, making strategic partnerships for successful payment innovation solutions imperative.
Traditionally, payment integrity is the function that ensures accurate payment for claims, encompassing actions related to elements such as quantity, coverage, and service. This adept framework surrounds the complex healthcare delivery system and the transaction ecosystem with broad-based implications, payment integrity impacts, and is impacted by areas such as clinical policies, coding, fraud/ waste/ abuse, and contracting involving the provider network, care delivery, and how pharmacy (Rx) is architected within the plan design. In its current state, payment integrity is also heavily impacted by compliance requirements from regulatory, fiduciary, and standards vantage points.
With a heightened focus from regulatory and financial perspectives, plan sponsors and health plans must demonstrate accountability and understanding of where every dollar goes; payment integrity is an integral part of that discipline. When executed correctly, payment integrity can positively (indirectly or directly) impact a better member and provider experience, positive clinical outcomes, more equitable access to care, and better stewardship of medical cost dollars that are saved via reduction in fraud/ waste/ abuse. The key to supporting quality care, with the added benefit of increasing financial responsibility, is through the alignment of incentives with payment accuracy and the use and installation of appropriate controls.
Historically, payment integrity has occurred in pre-payment prevention and post-payment recovery environments. The prefixes “pre” and “post” refer to the review stage of medical claims and bills intended to ensure accuracy in billing coding and methodology, providing needed transparency in the claims payment process. According to Cotiviti’s white paper on a managed service model, this process also reveals who is financially responsible for the claim and any patterns that may be occurring in billing and coding methodologies.
In a pre-payment system, coded claims are reviewed before they are paid, and any monies are dispersed to proactively identify and correct any errors or issues. During the “pre-adjudication process” phase, basic coding logic is applied to claims such as whether the correct number of units are utilized and if the codes can be billed together according to an article on the subject of healthcare payment integrity in BenefitsPro. If everything is accurate, the claim then moves along for review and release.
The pre-payment interventions have been seen as an opportunity to reduce provider abrasion and burden in post-recovery efforts; however, these efforts can be limited based on suboptimal data logistics management, lack of a more longitudinal view of claimant, and insufficient technology to assess the complexity of service, procedure, and/ or product.
A post pay methodology has been the common practice in payment integrity; after a claim has been billed and subsequently paid, the claim is reviewed for billing charge and coding accuracy. If errors are discovered, and the health plan’s resources validate these findings, the provider is notified, and the vendor reviewing the claim attempts to recover the overpayment. Once the overpayment is recovered, the vendor charges a contingency fee, and the corrected claim is processed, as outlined in HealthEdge’s blog on An Open Book Approach to Payment Integrity. Also referred to as a “pay and chase approach,” the post payment model is understandably characterized by low efficiency, low recovery rates, expensive administrative costs, and provider abrasion.
As clinical management involves an increase in specialty Rx, behavioral health, home and virtual care, and other more complex aspects of healthcare, having payment integrity solutions equipped to accurately face these changing management needs is critical. Given the growth of high-cost specialty drugs and complex cell and gene therapies with diagnostic-related groups (DRGs), medical benefit drugs now account for over 40% of employers’ total drug spend. The current systems are not consistently designed for the interpretation of medical-based Rx utilization (e.g., J-codes), resulting in these claims presenting unique challenges that require the combination of coding and clinical expertise.
Secondary diagnosis codes are an additional concern with regards to DRGs and are critical in the assignment of DRGs. The secondary diagnosis reflects the severity of the patient’s condition. The more severe the secondary diagnoses, the higher the DRG code and reimbursement level. Alternatively, lower DRG codes and reimbursements may be the result of less complex secondary diagnoses. Accurate coding of secondary diagnoses ensures precise and appropriate reimbursements for providers and facilities. Secondary diagnosis errors are common in the current billing and coding environment. An analysis by U.S. Department of Health and Human Services Office of the Inspector General of Medicare claims from 2014-2019 found that some hospitals are increasingly charging at the highest severity and that over half of these claims contain only one secondary diagnosis code that would qualify for highest severity.
For payment integrity to be meaningful and successful, the “claimant” or patient must be at the center of the evaluation equation as the industry continues to evolve. A paradigm shift is needed for a patient’s care to be viewed as a journey of care rather than an episode of care. Paramount to this journey and the improvement of outcomes is the requirement to take a longitudinal view of the patient with a comprehensive picture of their historical data.
Gain a deeper understanding of payment integrity and its role in managing unnecessary spend in our white paper, Comprehensive Healthcare Auditing: Ensuring Transparency and Responsibility.
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