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As High-Dollar Claims Come In, Focus on Payment Integrity Is Key

High-dollar claims are a persistent challenge for payers; a comprehensive payment integrity strategy can help payers ensure higher dollar claims are accurate and necessary.

Overall healthcare spending is slated to increase exponentially over the course of the next few years, and private payers are expected to foot a large portion of the bill.

The Office of the Actuary at CMS estimates national healthcare spending to grow at an average annual rate of 5.4 percent through 2028. This outpaces average projected growth in gross domestic product (GDP) by 1.1 percentage points, bringing healthcare’s share of the economy to a whopping 19.7 percent of GDP by the end of the period.

Medicare will experience the largest increase in healthcare spending as the population ages. However, private payers are expected to account for nearly 5 percent of national healthcare spending through 2028, CMS researchers reported.

To put that into perspective, the US spent $3.8 trillion on healthcare in 2019. Payers represented almost three-quarters of spending that year, with private payers doling out $1,195.1 billion, the American Medical Association (AMA) found using the National Health Expenditure data. Notably, this increase in spending occurred before the COVID-19 pandemic hit.

As healthcare spending increases, payers are noticing a troubling new trend: Provider partners are submitting more high-dollar claims as new therapies and technology emerge and the aging population grows, requiring more complex, intensive services.

High-dollar claims are here to stay

Payers are—and will continue to be—hyper-focused on cost containment in the current healthcare environment, especially in the wake of the COVID-19 pandemic. High-dollar claims pose a significant financial risk for payers.

“The expectation is that healthcare costs are going to continue to rise, and that has been compounded by COVID-19,” says Amy Anzola, Vice President, Hospital Bill Review at Zelis. “There are new treatment regimens and mechanisms for addressing the virus because of the uncertainty of the disease. It’s challenging to disallow services when there really is no standard treatment plan yet.”

The COVID-19 pandemic will fuel the high-dollar claim trend as researchers uncover new diagnostic and treatment plans and grapple with how to manage the virus in the long term. But it isn’t the only condition seeing a wave of innovation. The Federal Drug Administration (FDA) approved 53 new therapies in 2020, the second highest count ever. The blistering pace of approvals has continued, with the agency recently approving new—yet perhaps, controversial—therapies like Biogen’s drug for Alzheimer’s disease, Aduhelm (aducanumab).

“We don’t know enough right now, so a lot of therapies end up being experimental and that is expensive,” adds Bonnie Coburn, Vice President, Product Claims Editing at Zelis. Not to mention, claims for experimental treatments tend to come in with more billing errors compared to claims for more established or repetitive treatments, increasing costs for both payers and the healthcare system at large.

Payers can expect higher dollar claims for COVID-19 care, the industry experts predict. But the overall growth in high-dollar claims is a trend payers should already have been preparing to address.

“We’re seeing the elderly population increase,” Anzola explains. “As we continue to see an increase in life expectancy, we’re seeing these patients utilize significantly more services.”

The services becoming more common among older Americans tend to be more complex, too. For example, the volume of primary total joint arthroplasty has risen in recent decades and researchers expect levels for primary total hip arthroplasty and primary total knee arthroplasty to grow by 71 percent and 85 percent, respectively, by 2030. On top of volume growth, a separate study has found that advances in additive manufacturing, surface modification of replacements, and robotic-assisted surgery have created more access options for complex arthroplasty cases.

Technology and other advancements are pushing the boundaries, but that does not necessarily mean everything should be reimbursable, Anzola stresses.

More comprehensive payment integrity needed

Payment integrity programs mitigate the financial risk associated with high-dollar claims. But more is needed to address the ongoing trend in which payers receive claims for more expensive, experimental treatments for more members.

Programs should be identifying these claims and scrutinizing them to ensure appropriate reimbursement for services and medical billing compliance. Otherwise, payers run the risk of overpaying for services, especially those newer therapies and services that do not have established billing and documentation guidelines. Oftentimes, these claims must be reviewed by specialists or experts in a particular field to truly identify potential billing or coding errors and medical necessity.

Payers can also bolster payment integrity programs by leveraging pre-payment reviews to prevent overpayments in the first place. The reviews are a complement to post-payment audits, which catch improper payments after the fact.

Implementing a comprehensive payment integrity program is key to meeting the demand for innovative healthcare. However, many payers already struggle with navigating the increasingly complex healthcare environment in which each provider has their own contract detailing billing compliance and payment rates. Additionally, the claims are placing even more administrative burden on an already full plate for internal staff.

“It takes the right combination of software solutions and services that wrap around them,” Coburn states.

Technology should be able to fully understand the complex healthcare environment, including the differences between inpatient and outpatient reimbursement, per-diem and diagnostic related group (DRG) rates, and in-network versus out-of-network charges. Solutions should also integrate with adjudication vendors to automate payment integrity and make it easier for payers to receive information on high-dollar claims.

The capabilities place technology at the center of payer payment integrity strategies, but the solutions should have operational processes around them to ensure the technology is configured to a payer’s specific contractual terms. In addition, the technology should be backed by clinical reviews, as well as analytics that can identify potential issues before a claim is even paid out to providers.

“Even with robust solutions and good services, it’s hard for payers to navigate on their own,” Coburn says. “It really is a partnership between a client and a vendor that is important.”

Payers can use the insights they have gleaned from software solutions and their vendor partners to educate providers on billing compliance when it comes to high-dollar claims. A trusted partner enables payers to be proactive about payment integrity, while allowing for thorough examinations of claims most at risk of improper payment.



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