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 ensure these claims are accurate and necessary.

Overall healthcare spending is slated to increase exponentially over the next few years, and private payers are expected to cover a large share 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 the 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 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, according to CMS researchers.

To put that into perspective, the US spent $3.8 trillion on healthcare in 2019. Payers accounted for almost three-quarters of spending that year, with private payers disbursing $1,195.1 billion, the American Medical Association (AMA) found using 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 COVID-19 has compounded that,” 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 for seeing a wave of innovation. The Food and Drug Administration (FDA) approved 53 new therapies in 2020, the second-highest number 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 have more billing errors than 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, 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 the volumes of primary total hip and primary total knee arthroplasty to grow by 71 percent and 85 percent, respectively, by 2030. In addition to volume growth, a separate study has found that advances in additive manufacturing, surface modification of replacements, and robotic-assisted surgery have expanded 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 is 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 identify these claims and scrutinize them to ensure appropriate reimbursement for services and compliance with medical billing requirements. Otherwise, payers risk overpaying for services, especially newer therapies and services that lack established billing and documentation guidelines. Often, these claims must be reviewed by specialists or experts in a particular field to identify potential billing or coding errors and the true medical necessity.

Payers can also bolster payment integrity programs by leveraging pre-payment reviews to prevent overpayments in the first place. The reviews complement 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 to navigate 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 diagnosis-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. Still, the solutions should include operational processes to ensure the technology is configured to a payer’s specific contractual terms. In addition, the technology should be backed by clinical reviews and analytics that can identify potential issues before a claim is even paid 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 insights gleaned from software solutions and vendor partners to educate providers on billing compliance for 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.

(Source: https://healthpayerintelligence.com/news/as-high-dollar-claims-come-in-focus-on-payment-integrity-is-key)