Unveiling the Claim Inaccuracy Causes at Payer Organizations

May 15, 2024
4 min read
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Coverself | How Do You Look for Symptoms of Issues in Your Health Plan?

In an article earlier this year (https://www.coverself.com/blog/how-do-you-look-for-symptoms-of-issues-in-your-health-plan), we began a crucial discussion on the symptoms of issues in health plans. Continuing this series, we now delve into the underlying problems or causes that hinder health plans from effectively addressing those symptoms. Inaccurate claims are a significant part of US healthcare's $1.2 Trillion in waste and abuse. Typically, health plans have used traditional payment integrity solutions to address claims inaccuracies. However, in the intricate and complex health insurance ecosystem, payer companies face many challenges that can significantly disrupt the smooth flow of operations and the assurance of claims accuracy, which must be addressed effectively. Let's dissect the seven critical issues faced by payer organizations and propose essential questions for them to consider to illuminate these challenges further.

1. Lack of Transparency in Claims Processing: Transparency is not just a desirable quality but a fundamental necessity for efficient claims processing. Yet, many payer companies struggle to achieve this crucial aspect. The opacity surrounding the intricate web of health claims often leads to inaccuracies going unnoticed or unaddressed. Furthermore, without a clear view of the entire claims' lifecycle, identifying root causes becomes daunting, hindering effective resolution and resulting in repeated inaccurate claims. Below are some questions that health plans can consider deeper dwell into the lack of transparency in claim processing:

  • How does your organization ensure transparency throughout the claims processing lifecycle?
  • What mechanisms are in place to proactively detect and address inaccuracies in claims processing?
  • How do you empower your teams to uncover hidden inaccuracies within claims data?

2. Misaligned Incentives with Traditional External Vendors: The reliance on traditional external payment integrity vendors introduces a fundamental misalignment of interests within payer companies. Consequently, payer companies find themselves locked in a paradoxical situation where the entities entrusted with ensuring payment accuracy may inadvertently perpetuate the problem. Such misaligned incentives underscore the pressing need for payer companies to realign their strategies towards solutions prioritizing genuine cost savings and accuracy. Here are a few questions that health plans can think about to see if they have misaligned incentives with payment integrity vendors:

  • How does your organization ensure that external vendors' incentives align with genuine cost savings and accuracy goals?
  • What strategies are in place to mitigate conflicts of interest between external vendors and payer organizations?
  • How do you monitor and evaluate the performance of external vendors to ensure alignment with organizational objectives?

3. Lack of Control of Revenue and Payment Integrity Teams: Payment and revenue integrity teams are pivotal in safeguarding financial health and ensuring compliance within payer and provider companies. However, the lack of robust tools and insights disempowers these teams, relegating them to passive participants in the resolution process. This disempowerment or lack of control urgently highlights the need for solutions that empower these teams to drive meaningful change. Below are the questions to consider to dig deeper into the lack of control & level of possible friction between payers' payment integrity and providers' revenue integrity teams:

  • What measures does your organization implement to empower payment integrity teams to drive meaningful change?
  • How do you provide your teams with the necessary tools and resources to identify and resolve payment inaccuracies autonomously?
  • What strategies are in place to ensure collaboration and alignment between your payment integrity teams and provider organizations?

4. Overreliance on traditional External Vendors: The prevalent reliance on traditional external vendors for payment integrity solutions worsens the challenges payer companies face. Outsourcing these critical functions to traditional vendors diminishes control and introduces layers of complexity and inefficiency into the claims resolution process. Payer companies find themselves at the mercy of these external traditional vendors, navigating through a labyrinth of contractual obligations and service-level agreements. This overreliance on third-party vendors compromises agility and inflates operational costs, compelling payer companies to seek alternatives that offer greater control and efficiency. Below are the questions to consider for payers regarding overreliance on traditional vendors:

  • How does your organization balance the benefits of outsourcing with the need for control and agility in claims resolution?
  • What steps are taken to minimize the complexities introduced by reliance on external vendors?
  • How do you ensure transparency and accountability in vendor relationships to mitigate risks associated with overreliance?

5. Escalating Costs Associated with Multiple Vendor Dependencies: The multiplicity of payment integrity vendors further compounds the financial burden borne by payer companies. Engaging multiple vendors to address various aspects of payment inaccuracies not only strains resources but also escalates costs exponentially. This fragmented approach undermines collaboration and dilutes accountability as payer companies struggle to reconcile disparate reports and recommendations. The soaring costs associated with vendor dependency appear as a significant pain point for payer companies, necessitating a shift towards streamlined solutions that promise tangible cost savings and efficiency gains. Here are the questions to dig into to find the extent of problems due to the multiplicity of payment integrity vendors' issues:

  • How does your organization evaluate the cost-effectiveness of engaging multiple vendors versus streamlined solutions?
  • What strategies are in place to consolidate vendor relationships and optimize resource utilization?
  • How do you ensure alignment between vendor costs and the value delivered regarding accuracy and efficiency gains?

6. Fragmented Solutions Hindering Comprehensive Resolution: Amidst the proliferation of disparate payment integrity solutions, payer companies grapple with fragmentation and inefficiency. The piecemeal approach to addressing payment inaccuracies fails to offer a holistic view of the underlying issues, perpetuating a cycle of reactive rather than proactive resolution. Payer companies yearn for comprehensive solutions that consolidate disparate functions into a unified platform, offering seamless integration and actionable insights. The fragmented landscape of existing solutions underscores the imperative for payer companies to embrace transformative approaches that promise a paradigm shift toward comprehensive payment integrity. Here are the questions to consider:

  • How does your organization integrate disparate payment integrity solutions to provide a unified view of claims processing?
  • What measures are taken to ensure solutions address underlying issues comprehensively rather than piecemeal?
  • How do you promote a proactive approach to payment integrity by consolidating functions into a unified platform?

7. Low accuracy results in significant losses in claims costs: With outdated technology, current vendors only address a fraction of inaccurate claims, lacking tailored solutions for payers. To evaluate this issue, consider asking:

  • How does your organization ensure that it is using the latest effective technology to support accurate claims processing?
  • What measures are in place to continuously improve claims processing accuracy and mitigate losses due to inaccuracies?
  • How do you assess the financial impact of outdated technology and low accuracy on claims costs, and what strategies to mitigate your health plan-specific challenges are implemented effectively?

In conclusion, payer companies navigate a complex landscape fraught with challenges that impede the attainment of payment integrity. From the lack of transparency and misaligned incentives to the lack of control of internal teams, low accuracy, and escalating costs, these challenges underscore the urgent need for innovative solutions. While some payment integrity solutions offer a beacon of hope (we will describe these solution values in our upcoming article), it's imperative to recognize and address the underlying causes driving the quest for enhanced payment integrity. Only by confronting these challenges head-on can payer companies pave the way for a future defined by transparency, efficiency, and cost-effectiveness in claims processing. In this series' third and last article in a few weeks, we will describe the values that an effective payment integrity solution should deliver to tackle the above causes.