4 strategies to curb medical cost increases as healthcare utilization rebounds

When the COVID-19 pandemic accelerated rapidly in early 2020, the impact on healthcare utilization was sharp, dropping nearly 32% in April 2020 as both providers and healthcare consumers quickly moved to delay or cancel elective procedures. As noted by the Peterson-KFF Health System Tracker, this continued into 2021, with approximately one in five adults continuing to miss or delay medical care, and by some metrics utilization remained below pre-pandemic levels even into 2022.

Now, the federal COVID-19 Public Health Emergency is officially over, public health restrictions have been lifted, healthcare staffing has rebounded, and more vulnerable healthcare consumers such as seniors are growing increasingly comfortable with receiving care. This means that health plans are realizing the impacts of the pent-up demand that accumulated during the height of the pandemic and beyond, with the largest national payers readying themselves for a jump in medical costs due to higher-than anticipated utilization in surgeries and other procedures. The country is also experiencing an aging baby boomer population coupled with a bump in life expectancy and a more active senior population.

This increase in healthcare consumption is validated by Cotiviti’s own payment integrity data, which has shown year-over-year increases in both utilization and unit cost of several surgical procedures that far outpaced expectations. For example, for total knee arthroplasty, utilization is up 12% (versus overall utilization increases of just 1–2%) while unit cost is up 10%. For pulmonary vein isolation, utilization is up 17% while unit cost is up 11%.

While it’s undoubtedly a positive trend that healthcare consumers are catching up on necessary procedures and closing care gaps that widened during the worst of the pandemic, payers should consider several actions to help ensure they are paying claims accurately and appropriately amid this sharp increase in utilization. This ultimately reduces waste in our healthcare system, improves efficiency, and helps ensure that healthcare dollars are being spent where they can have the greatest impact. Here are four steps that can help health plans to achieve these goals.

1. Thoroughly review claim editing exemptions and reevaluate whether they should be removed. Early in the pandemic, health plans quickly moved to exempt COVID-related claims from their prepay claim editing to minimize provider abrasion and ensure that payment would not be denied. While some plans have since removed these exemptions, others continue to leave them in place—which is concerning given the amount of errors, waste and abuse we’ve observed related to behavioral telehealth and other areas where utilization has sharply increased since 2020. Health plans should work with their payment integrity partners and ask for reports to examine the impact of turning off these and other claim editing exemptions.
2. Benchmark current payment and medical policies against those of peer health plans to look for potential payment integrity gaps. For example, are there specific areas such as evaluation and management (E&M), drugs and biologicals, ER facility, or inpatient spend where you’re not ensuring payment policy adherence via claim editing? Ask your vendor to help you benchmark your current payment policy adherence gaps against your health plan peers to help determine the right level of improper claim prevention that won’t negatively impact your provider relationships.
3. Focus on clinical expertise and defensibility to minimize any potential increase in provider disputes. Payers know that proactively communicating policy changes to providers is key to reducing abrasion when they are deployed. To truly minimize abrasion and increase credibility with providers, however, plans must focus on the clinical defensibility of their edits. This requires partnering with a transparent vendor that will provide the sourced rationale behind the vendor’s payment content for the plan’s internal support teams to use and deploy in provider portals and other communications.
4. Address untapped areas of payment integrity. While outpatient and professional claims editing is the most widely used form of payment integrity among health plans, rising medical and dental costs necessitate that plans go further in both their pre and postpay programs. Ask your payment integrity partner about their solutions for:
• Inpatient claim and DRG review, deploying the expertise of nurse coders to review medical records with analytics-driven chart selection both before and after claims are paid
• Prepay coordination of benefits (COB) claim review, going beyond eligibility checks to analyze contracts, third-party benefit agreements, and other data sources to determine payment responsibility
• Data mining to recover high-value overpayments related to complex claims and contract terms that cannot be reviewed before payment
• Dental claim prepay review, adding automated and clinical coding review to dental carriers’ claim processing

The current rise in healthcare utilization and unit costs provides an impetus for payers to shore up their payment integrity programs. But make no mistake, it’s ultimately about paying the right claims accurately at the right point in the claim process to deliver better results for members, providers, and the plan itself.