Transformative payment integrity

An opportunity to drive healthcare cost savings

Healthcare spending in the U.S. continues to rise at a significant pace. In 2023 alone, national healthcare expenditures grew 7.5%, outpacing the U.S. gross domestic product (GDP)¹ growth rate of 6.1% That translates to healthcare spending of $13,493 per person²; other wealthy countries have historically averaged half that amount.

But the statistics, while daunting, also represent a significant opportunity for every segment of the healthcare system.  It is an especially opportune time, for example, for health plans to invent - or reinvent - solutions for controlling costs.  A tried-and-true cost-containment strategy for health plans is payment integrity (PI), financial optimization programs that lower costs without compromising care.

A surprising portion of the nation’s overall healthcare costs are driven by medical claims that are paid incorrectly. The U.S. Government Accountability Office (GAO) estimated that more than $100 billion in improper payments were made in the Medicare and Medicaid space alone in fiscal year 2023.  This represents 43% of the government-wide total of estimated improper payments that agencies reported for that year.  Studies show the annual cost of wasteful spending in healthcare typically totals around $900 billion³. Fraud, waste, and abuse impose an enormous cost on our nation’s economy and compromise the quality of healthcare provided to individual patients.

 

What is payment integrity?

Simply put, payment integrity is the process of ensuring a health claim is paid appropriately. Payment integrity can help plans manage cost of care by finding and addressing unnecessary medical expenses resulting from fraud, waste, and abuse, including:

• Providers’ non-adherence to their contractual terms.
• Duplicate claims payments.
• Coding inaccuracies and unbundling of services.
• Payment of claims other parties may be ultimately responsible for, either wholly or partially.

Payment integrity focuses on ensuring proper reimbursement payments are made by plans to providers for appropriate services rendered. That is, that the services were performed in the correct setting, by the designated provider, for a medically sound reason. Payment integrity is typically segmented into pre-payment solutions and post-payment solutions. Pre-payment solutions help plans eliminate claim payment errors before the providers are paid. Catching mistakes this early in the claim payment process minimizes the need for plans to reject claims which then require rework by the provider and plan for proper payment by the plan. Lower provider abrasion, administrative burden relief and timely payments characterize this approach. Post-pay solutions, sometimes called “pay and chase,” focus on identifying and recouping overpayments already made to providers that contain errors.  

One important post-payment area is subrogation, the recovery of money from another party that is liable for a claim. For example, if a plan member is in a car accident, the responsibility for paying medical claims typically belongs to the auto insurer. Class action lawsuits and workers’ compensation also belong in the subrogation program. Subrogation identifies occurrences of situations such as those mentioned above and helps plans rectify payment responsibility issues. 

 

Reinventing payment integrity

Today's technology innovations and workforce challenges are prompting health plans to take a closer look at payment integrity.  Plans with an eye toward strategic reinvention can reduce their own wasted costs while also improving the healthcare system and care affordability for all.

Carelon's Plante and Browder share five ways that health plans can maximize the power of payment integrity.   

 

1. Focus on an end-to-end strategy

Payment integrity is a crucial tool for managing healthcare costs – but it wasn’t always that way. Over the past few decades, those involved in the industry have seen it evolve from an undersourced operational niche to a strategic tool that health plans use to manage medical expense. "In the past, payment integrity was built on what most people referred to as 'point solutions,' Plante said. "Vendors would have a good idea about how to find a particular kind of claim overpayment and they would implement it, repeating that same approach over and over to build a payment integrity program. They were just trying to cover as much area as possible one concept at a time."   

Today, rather than point solutions, plans understand that a big picture approach will make their programs stronger. “From a programmatic standpoint, it is necessary to be strategic when discussing payment integrity with clients," Browder said. "Plans want to understand the process and how they can grow a program, whether they are starting small with just one area or are seeking an end-to-end approach.  Of course that end-to-end approach is appealing because it just offers so much more effective and efficient outcomes," he said.  

Data analysis tools like artificial intelligence, which includes machine learning, can broaden the amount of data that can be reviewed and help bring together disconnected programs and systems for better program ROI.  The sophisticated technology can also make the solutions more effective individually. “Carelon was born from one of our country’s biggest health plans,” Plante said. “That means we have access to deep data sets and world-class tech tools as well as a unique perspective on the industry. We offer solutions that can improve efficiencies across an entire system, not just in one focused area and we have the depth many others lack.”

Health plans are embracing that big-picture, end-to-end thinking. “With the piecemeal approach behind us,” said Browder, “together with our plan partners we have fixed our objectives on this more comprehensive and three-dimensional approach. Its focus on delivering transparency, cost efficiency, and value will enable mature plans to experience payment integrity as the strategic tool it is and leverage it appropriately to help them control costs and improve the health of the healthcare system.” 

Plans can then start to ask questions that drive greater transparency and better decision-making, Broder said. “For example, how do you determine which type of payment integrity strategy should be implemented for maximum recovery of an improperly paid claim? What’s the best approach for your program: Is it better to work with different service providers or move to an enterprise platform approach where you're looking for solutions that integrate lead generation, workflow, automation, and programmatic management?” Answering these types of strategic questions can create a cycle of continuous improvement as new insights and possible additional uses for analytics tools arise.

2. Take a proactive, data-driven approach

Health plans hoping to improve their payment integrity efforts should not only move to more comprehensive, end-to-end solutions, they should also embrace a more proactive, data-driven approach. “A lot of smaller to midsize health plans don’t have the financial backing or IT expertise to do more than the bare minimum with payment integrity,” Browder said. “As a result, they’re often very reliant on others — providers, members, or people representing those members — to provide them information so that they can recover money.” Plans that take a more passive approach to payment integrity not only limit their program’s potential value but also risk alienating providers and members.

Data analytics tools like Carelon’s Data Mining Solution allow plans to go on the offensive when it comes to payment integrity. “Our solution helps plans solve some of the healthcare industry’s most common challenges: wasted healthcare dollars, unnecessary administrative work, and a poor provider experience,” Plante said. “We combine world-class analytics, accelerated claim resolution, and an intuitive online workflow so plans can capture savings and address the root causes of overpayments.”

“Any payment integrity program that is mature and that's really meeting a health plan’s needs is going to be proactive about finding opportunities and will be continuously reassessing and prioritizing those opportunities,” Browder said. “Our clients routinely praise us for being highly proactive. That's one of the areas we've focused on for several years now: proactive outreach around sharing information and successes, and even sharing when there are issues, too.”

 

3. Aim for optimization and efficiency

Today, payment integrity programs at the highest level of maturity are looking beyond the advances already made to full optimization. “They’re focused on three key elements: capturing as much value as possible, delivering high return on investment, and managing member and provider relationships,” Plante said.

Optimization isn’t just valuable for health plans. “We spent several years intentionally investing in our people, our technology, and our processes,” Browder said. “We didn't grow during that time, but in the years since we've almost doubled in size, and we’ve retained most of our people, which is remarkable for an industry that can experience a fair amount of turnover. By looking closely at how we do things, we were able to optimize our efforts so that we can be even more effective for our clients.”

From a plan perspective, this kind of optimization can produce big payoffs. “Expertise grows with experience. And you really want that expertise when it comes to payment integrity,” Browder said. “Take the negotiation stage of subrogation. Negotiation isn't an ability most people are born with, it’s truly a learned skill. At Carelon, we focus a lot of our training on negotiation techniques and strategies, ensuring that our associates are good stewards of our clients’ money. The longer we retain those associates, the more valuable their experience and training become.”

 

4. Improve member and provider experiences

Payment integrity isn’t just about stopping financial loss. It’s also increasingly about improving experiences for both members and providers. In the past, particularly during the subrogation process, members had to be far more involved than many would have liked. This sometimes took the form of time-consuming phone calls or lengthy written questionnaires. But, as Browder explains, “over the past four to five years, the trend has been to get away from reliance on members,” a trend he believes will continue to be a focus in the future. “Health plans are realizing that their members are very busy, and they already receive a lot of communication, from direct mail to phone calls to texts. The last thing they want is to receive another piece of correspondence from their plan about a claim. What this means is that payment integrity as an industry is going to move away from letters and calls to solutions like database mining and direct subrogation that completely remove the member from the process.”

There’s also an increasing recognition among plans that payment integrity can be a tool for building stronger relationships between payers and providers. “Everyone wants to eliminate that waste in the system. The providers want to eliminate that waste, the payers want to eliminate the waste,” Plante said. “The way to do that is to work together to increase the transparency around payments.”

The significant ability to recover overpayment funds from already-paid claims can cloud payment integrity's potential to ensure claims are submitted and paid correctly the first time, every time. Browder was emphatic on this point. “When we're thinking about payment integrity, the overall intention has to be to pay the claim correctly from the beginning. The goal should be building a program that has the right controls to prevent rework and to drive the best possible experiences for members through their providers,” he said. “If we can stop improper payments before they happen by helping providers understand how to submit claims properly, that’s where we want to be. In payment integrity, we say post-payment is good, prepayment is better, but prevention is the best. And a lot of that starts with provider education.”

 

5. Innovate with technology, but don’t forget the human element

Like many industries, healthcare is accelerating its use of cutting-edge tools such as automation and artificial intelligence – including machine learning - to increase operational efficiency and effectiveness and to manage costs. These evolving technologies offer a real advantage throughout the payment integrity process. For example, these tools can help plans more quickly realize the value of overpayment leads through automated validation rules and expanded lead generation. 

Plans can’t rely solely on technology to meet their payment integrity goals, however — human expertise is vital. “In this business, there are lots of things we can do technologically,” Browder said. “But when it comes to recovering money and case management, it's still very much a people business, and it will always be a people business. A really cohesive and effective payment integrity program is going to have all the right technology as well as the highly skilled, trained people.”

Plante agrees: “If you can fully automate a payment integrity solution, great. But many of the newest tech solutions we’ve been leveraging recently aren’t fully automated; they're enabling tools. There’s a big gray area between fully automated and fully manual solutions, and a lot of great, elevating capabilities exist in that space. These are the tool sets that allow a workforce to do what they need to do faster and more accurately, a productivity lift that can boost your payment integrity program significantly.”

 

A world of possibility

Plante and Browder are enthusiastic about the future of payment integrity. “I’ve had opportunities to do other work, but I always seem to find my way back to payment integrity and subrogation,” Browder said. “I love knowing that the decisions we make every day can lead to millions of dollars of value for our clients and improve the healthcare system.”

For Browder payment integrity is a puzzle that’s never fully solved. “Every year I've been involved in it, there's been another move, another way to make it better, another possibility to make improvements. And to me, that world of possibility is very exciting,” he said. “I would add that as claim volumes continue to grow and claim payment complexities continue to increase, it becomes easier for inappropriate claims to slip through the cracks and get paid so we need to continuously improve our capabilities to ensure we are doing everything we can to keep healthcare as affordable as possible.”  

Transformation often takes longer in healthcare than in other sectors. The industry’s many diverse stakeholders, regulatory hurdles, privacy concerns, and myriad other complexities can all stymie change. But there are examples of what is possible. “I believe that in the future, there will be many more elevated ways of exchanging data that will allow payers and providers to partner better on sharing information and managing programs,” Plante said. “When you think about banking and all the transactions of data and money that people complete every day in that industry, we know healthcare can get to that level too.”

In fact, the industry is well on its way. “We’re already familiar with the concepts of value-based contracting and value-based incentives in healthcare,” Plante said. “There's no reason we can't expand those ideas to include how we partner so that it's easier to understand how to pay accurately and correctly. You're not going to achieve perfection every time, but if we simplify our processes and work together, we can make payment integrity easier and more effective for everyone.”