White paper: The “smart prepay” approach to payment integrity

Health plans of all sizes struggle with adjudicating claims appropriately while minimizing the need to pursue overpayment recovery. According to the Centers for Medicare & Medicaid Services (CMS), the estimated improper Medicare fee-for-service payment rate for FY 2022 was 7.46%, approaching $31.5 billion in inappropriate payments for one government program alone. For the entire healthcare industry, annual estimates of waste reach as high as $935 billion, according to the most recently available studies.

One choice commonly facing health plans is whether to deploy a subscription-based, prepayment software solution from a vendor, managed in part or in whole by the plan. On the surface, this can look like an attractive, cost-effective option, one that appears to enable payers to retain greater control over how their claim edits are implemented. But when plans dig deeper, they discover significant challenges. These difficulties include:

• Payment integrity coverage: Health plans are used to performing automated editing on professional and outpatient facility claims that are in violation of very clear coding guidelines. Software-only solutions on the market today typically stop there and cannot address the complexities of preventing improprieties within coordination of benefits and inpatient claims, or those found within larger patterns of waste and abuse.
• A closed-loop feedback system: Prepay claim editing software lacks a closed-loop feedback system where insights garnered from postpay programs feed into new prepay policy. Plans running their own software in a vacuum run the risk of continuing to let the same errors slip through their prepay systems time and again, increasing abrasive overpayment recovery and decreasing savings.
• Payment policy content updates: Keeping payment policy up to date with bodies such as the American Medical Association (AMA), CMS, Medicaid agencies, and other organizations is job one of any prepay review system. With a software-only solution, content is generally released along with software updates on a quarterly basis or perhaps even less frequently.
• Compliance: Software-only vendors may deliver editing content only based on general Medicaid guidelines, leaving plans to configure their own system or pay the vendor for state-specific Medicaid customization to stay in compliance.
• Configuration flexibility: A software-only solution requires significant health plan resources to learn how to navigate claim editing software as well as administer configuration changes, which can be particularly challenging across multiple platforms and lines of business.

In contrast, deploying a “smart prepay” approach through a managed service model delivers better savings and accuracy all along the claim stream. This involves a payer adopting an outsourced, holistic prepay claim review that is accompanied and informed by a postpay safety net.

Take time to learn how a full-scale solutions vendor can manage prepay claim editing alongside claim pattern review; fraud, waste, and abuse management; coordination of benefits, and more—while efficiently synchronizing with postpayment integrity interventions where they are needed. It’s not about maximizing prepay efforts, but rather making the plan’s prepay approach smarter for a cleaner claim payment stream.