• June 2008 FEATURE ARTICLES •
Health Plans and Technology
Claiming Responsibility
With new revenue integrity technologies, health plans and payers are more effectively controlling costs and identifying fraud.
By Michael Lubao
Just like their healthcare provider
colleagues, health plans and payers have a fiduciary
responsibility to spend hard earned premium dollars both fairly
and wisely. A vigorous approach to maintaining revenue integrity
is, of course, good business. But it’s also supposed to benefit
patients and healthcare professionals. Given that annual
healthcare expenditures are approaching
$2 trillion, the stakes are enormous and, from the perspective
of the individual, these high costs leave absolutely no room for
inaccuracy. When undetected, most errors and fraud count against
someone’s annual deductible or lifetime limit on benefits.
Dollars squandered today can mean financial risk tomorrow.
To further illustrate what is at stake, the
FBI estimates that healthcare fraud losses within the government
(commercial sector excluded) total more than $100 billion
annually. If those lost funds could be recovered and re-used, we
could insure every American citizen currently without healthcare
coverage, as well as our population of undocumented workers. The
measures that at-risk entities take to bolster revenue integrity
vary widely by size, organization type and state regulations.
But one aspect is the same everywhere: The complexities of
healthcare finance, frequent regulatory change and continuous
coding updates present formidable challenges.
Revenue integrity comprises three basic
elements: First, payers increasingly need the capability to
efficiently audit large volumes of claims data to verify for
proper coding and accurate reimbursement. Next, payers must
maintain the ability to protect against intentional fraud and
abuse, as required by law in some states. And third, payers can
make a valuable contribution to the healthcare community by
educating providers in such a way that they can avoid claims
submission mistakes and elevate their billing practices.
Until recently, however, it’s been difficult
to adequately address revenue integrity. "With an increasingly
high number of changes in coding, coverage and payer guidelines,
keeping on top of accurate claims adjudication without automated
auditing software can be challenging," says Tracy Harswick, CPC,
director of claims and decision support for Memorial Integrated
Healthcare in Hollywood, Florida. "It’s time consuming for
hospitals and medical system staffs."
As they managed claims for nearly 35,000
covered lives, such was the dilemma for Harswick’s nine-person
department within Memorial Healthcare System (MHS). Fortunately,
new analytical information technologies are helping
organizations like MHS to take on these responsibilities, in
addition to others.
Controlling Costs
As MHS had been doing, many organizations
continue to perform code auditing using manual processes. When
auditing is paper based, it’s a cumbersome, slow process with
limited reach in terms of the volume of claims reviewed as well
as rules and edits applied. MHS has augmented its claims
adjudication system with a new, electronic process for flagging
unclean claims and identifying coding errors. "There was no easy
way for specialists to uncover duplicate files, gauge
eligibility, or quickly review claims histories," says Harswick.
"And using paper, there’s no way to track accidentally overpaid
bills or duplicate bills, which come directly from profits. So
we took a proactive approach to ensure that physicians were
being reimbursed fairly and to open the door for cost savings."
MHS began using Virtual Examiner, a product
from Malibu, Calif.-based PCG Software that helps payer
organizations identify and understand coding errors with
intelligence built on tens of millions of reimbursement, coding
and regulatory edits. Most claims adjudication systems focus on
automation and expedited claims processing, however, this
particular solution monitors internal claims processes to target
unclean claims and conserve premium dollars. "During evaluation,
the vendor ran a test for us," says Harswick. "Their system
evaluated thousands of lines of MHS’s claims data from the
previous two years, and it demonstrated a significant financial
difference compared to our existing methods."
Spiking, Churning and Trending
The second component of revenue integrity
calls for measures that protect against fraud, which has become
a big business in recent years. In 2005, a group of providers in
three south Florida counties submitted $2.5 billion in
fraudulent HIV/AIDS-related Medicare claims. That’s compared to
less than $1 billion in legitimate claims for the rest of the
U.S. combined. That may be an extreme example, but a
conservative estimate by the National Health Care Anti-fraud
Association places fraud at a minimum of 3 percent of total
commercial and Medicare and Medicaid healthcare expenditures.
Other sources report rates as high as 14 percent.
Revenue integrity technologies, such as the
solution we’ve deployed, are currently being utilized to help
payer organizations and administrators analyze hundreds of
thousands of claims at a time, searching the data for certain
outliers and patterns of abuse. Examples of patterns these
systems search for include indicators such as "spiking,"
"churning" and "trending." Because providers typically generate
consistent volumes of claims, software can monitor practices or
providers over time. Sudden "spikes" may require further
investigation, which is especially critical in the age of
electronically submitted claims.
An example of spiking occurred when one of
our customers used our revenue integrity software’s fraud module
to review spikes in the volume of their claims and discovered
13,000 fraudulent claims electronically submitted by a durable
medical equipment supplier. Although payments were made, the
organization has taken steps to recover lost funds. Had an
examiner received 13,000 claims in paper form, this would have
immediately triggered an audit and ultimately stopped, but since
the claims were submitted directly into the claims system via an
electronic data interchange, they were automatically adjudicated
and paid.
Evaluation and management coding for office
and hospital visits will usually fall within a normal bell-curve
distribution for most practices. Software should be utilized to
compare the billing provider’s code submission against
comparable specialty and/or CMS benchmarks to reveal billings
skewed toward the highest levels. This consistent safeguarding
practice should help to identify churning indicators.
Aggregating claims data and identifying those providers who
always bill the same level of code is not only an important
quality review, but also a financial responsibility of the
payer.
Trending comes in many forms and an adequate
revenue integrity software solution should incorporate extensive
flagging and reporting capabilities in order to detect them.
There are only so many hours in a day; fraudulent claims may
indicate trending from an impossible number of encounters or
services provided in one day, week or month. Billing 20
level-five office visits in a day, for example, should be
identified as inaccurate or fraudulent claims.
In another example, we found a Chicago-area
physician pilfering our tax dollars by billing over 900 visits
per day to the Illinois Medicaid program. Today, this physician
is no longer practicing medicine.
Provider Education
Revenue integrity tools have a third
function; offering constructive feedback to providers. With
intelligent technology, at-risk organizations can share clean,
demonstrative data that helps providers understand errors.
Software packages like the one we’ve implemented let payers
equip their providers with remittance advice and reimbursement
recommendations to assist in scrubbing future claims. With
education on correct billing procedures, payers are helping to
update their providers’ billing systems so future claims will
not be returned unpaid. At the same time, the information can
improve provider relations by minimizing the friction and effort
associated with deliberations regarding reimbursement rates.
Increasingly essential for providers as well
as payers, revenue integrity technologies benefit those
dedicated to improving their billing operation. These
forward-thinking organizations realize that a higher percentage
of clean claims will ultimately lead to improved cash flow.
Claims auditing tools are well within the reach of any type of
payer organization. Installation and integration with existing
systems should be possible in a matter of hours or days and with
little, if any, disruption or downtime. Furthermore, users in
the claims department should not have to change their data input
procedures and customization should not represent a hindrance to
carrying out a timely implementation.
The AMA and CMS are working diligently to
create concrete payment guidelines and codes, therefore, it is
important that claims auditing software not be programmed to
ignore these rules. Doing so could place the provider or group
at risk for collusion. The software selected should also be
powerful enough to review hundreds of thousands of claims per
hour, even as it evaluates them against tens of millions of
Medicare, CCI and other edits. Finally, the solution should not
cost more than it saves. Many vendors rent software at
exorbitant prices to the extent that actual recoveries never
exceed the yearly rental fees.
For good business and healthy communities,
plans and payers are increasingly adopting the revenue integrity
model. Protecting premium dollars, detecting fraud, implementing
recovery programs and strengthening payer-physician
relationships are all key parts of the solution.
Michael Lubao is chief executive officer of
PCG Software Inc. Contact him at
mlubao@pcgsoftware.com .