Health expenditures in the U.S. reached $4.1 trillion in 2020, with annual spending projected to total $6.2 trillion by 2028, according to the Centers for Medicare & Medicaid Services. The increases are driven by the complexity of coverage but also by innovations in treatments and procedures.

Rising costs are concerning for employers and employees alike, which makes ensuring payment integrity for health care claims critical, says Jessica Bemowski, Payment Integrity Manager for UMR.

"Payment integrity puts policies and procedures in place to help control the total cost of care," Bemowski says. "As we continue to see an increased volume of claims and more complex procedures, it's important to ensure there are end-to-end processes to review claims for fraud, waste, abuse and error."

Errors and staffing shortages

Errors are getting more attention as third-party administrators (TPAs) like UMR seek to increase claims payment accuracy and find savings for customers. Most of the errors found are not intentional, Bemowski explains. Rather, the rapidly evolving health care environment often makes it challenging for the workforce today.

The staffing shortages facing the health care industry also extend to medical coders and billing staff. According to the U.S. Bureau of Labor Statistics, the demand for medical record specialists and coders is projected to grow at an annual rate of 7% through 2031, which can make recruiting and retaining qualified staff difficult. In a recent survey of Chief Financial Officers by the Healthcare Financial Management Association, half said it's harder to find these types of skilled workers today.

Value of end-to-end payment integrity 

To identify and reduce errors in claims payments, insurance carriers and TPAs are leveraging technology and advanced analytics to drive accuracy, savings and provider education. Bemowski advises brokers to evaluate the payment integrity solutions in place – and the associated results – when making recommendations to clients.

"It's important for a TPA to have a full end-to-end payment integrity solution," she says. "In the TPA world, we have responsibility for the customer's checkbook, so we want to be extremely careful and treat their money as our own. With an end-to-end solution, you catch different things within different phases of the life of a claim."

The first phase is pre-adjudication, an upfront look at the claim that applies coding logic to confirm basic elements, such as whether the codes used in the claim include the appropriate number of units and can be billed together.

From there, claims move through a prepayment review that typically includes manual reviews by experts to determine medical necessity or identify potential fraud. Subrogation logic is also applied at the prepayment stage to determine if another party may be financially responsible for the injury or loss.

Deeper-dive reviews produce tangible savings

At this point, standard payment integrity processes move through claim adjudication, payment and post-payment reviews. Bemowski recommends that end-to-end processes also include options for a deeper-dive evaluation.

"UMR offers a program called Advanced Claim Review that utilizes specialized algorithms, artificial intelligence and advanced detection analytics to target specific claims for additional review by experts, such as certified coders, registered nurses and medical directors," she explains. "These experts go beyond traditional review methods to request medical records, operative notes and itemized bills to determine if what's billed on the claim is within the medical record."

Implemented in 2019 to review targeted physician surgical claims, UMR's Advanced Claim Review program produced savings of 21 cents per member per month in 2020. Today, with an expanded scope that includes all physician and facility claims, the savings exceed $1 per member per month.

"At the end of the day, you don't want to find savings because that means there are errors in the claims," says Bemowski.  "Our goal is to identify errors through technology and analytics so that we're able to target specific claims and educate providers through those denials, so the claims are billed appropriately in the future."

Learn more about how UMR, the nation's largest medical TPA, provides end-to-end payment integrity solutions that increase claims payment accuracy and reduce total costs.

Ann Clifford is a freelance writer who translates her background in financial services marketing into specialized content focused on employee benefits and small business topics.