Beyond Medical Cost Savings: Optimizing Payment Integrity Value

Matthew Hawley, Executive Vice President of Payment Integrity, Cotiviti

Health plan leaders increasingly recognize the value of utilizing technology as a counteroffensive against high medical loss ratios, which are now close to 90% in the large group market. Considering this challenging environment, many health plans are investigating new tools to derive more value from their payment integrity programs. When optimized with technology and expertise, these programs can protect plans against inappropriate payments caused by inefficiencies and inaccuracies during their prepay and postpay processes, as well as fraud, waste, and abuse (FWA). The federal government estimates the cost of health care FWA alone to exceed more than $100 billion each year—a stunning figure that could threaten health plans’ ongoing efforts to provide access to affordable, quality care for their members.

As the industry is poised to face the same pressures in 2025, health plan leaders should consider several key questions to determine if they are maximizing the value from their payment integrity programs.

Are You Viewing Payment Integrity Across the Entire Continuum?

Many health plans still consider their prepay and postpay approaches as separate functions, rather than parts of the payment integrity continuum. Integrating these efforts into a cohesive program requires technology and culture change, yet the benefits for plans can be significant. Health plans that tap technology and expertise to connect these processes can gain efficiencies by shifting more functions to the front end.

One example is the integration of automated prepay claim review with advanced analytics focused on prepay FWA management—a process that traditionally has been performed only postpayment. Using machine learning to analyze patterns among providers with high volumes of claims, one Medicare Advantage plan saved more than $1 million in inappropriate payments within less than a year. This not only improves the plan’s sustainability, but also protects individual benefits for plan members.

Are You Ready to Close Gaps in Your Primary Claim Editing Process?

Implementing second-pass or final-filter claims editing is one of the most effective ways for health plan executives to protect against inappropriate payments. By implementing second-pass editing, health plans can save as much as 4% on their annual outpatient and professional claim spend.

Despite these potential rewards, many health plan leaders—especially those with smaller, regional plans—do not add second-pass editing because they lack the expertise or resources in-house. Leveraging support from a third party can help plans of all sizes make second-pass claim editing an integral part of their payment integrity efforts.

Are You Optimizing Clinical Know-How to Ease the Burden on In-House Staff?

While payment integrity software can yield considerable net medical cost savings for health plans, its true value often cannot be realized unless it is paired with human experience. Without the benefit of knowledge from outside clinical experts, provider relations specialists and claims analysts may overburden the plan’s own physicians and nurses with claim and policy questions. For this reason, health plan executives should carefully consider whether their current processes add to or alleviate their staff’s administrative burden and the associated costs. Full-service payment integrity partners have the consultative expertise to unravel complex billing scenarios to identify when inappropriate billing is more than a clerical error, without placing additional pressure on in-house clinicians.

Another reason to pair software with clinical expertise is that using software alone often leads to unforeseen costs that can diminish their true ROI. These costs may include additional personnel, software licenses, security, and hardware. In some cases, health plans must also absorb costs associatd with inventory management, coordination of benefits employment verification, and other capabilities. For these reasons, plans should consider the broader value of service models that deliver more than just medical cost savings.

Are You Benchmarking Your Payment Integrity Performance Against National Standards?

Analyzing datasets from multiple customers and business segments allows a payment integrity partner to provide health plans with greater opportunity to identify overpayments. This also enables the partner to avoid potentially disruptive, time-sensitive record requests in certain cases or to ensure the correct charts are selected when medical records are needed. In addition, using analytics to benchmark their health plan’s performance against key performance measures allows health plan leaders to better understand payment trends affecting a diverse group of payers across the industry, as well as the potential implications for their own markets.

Using benchmark analytics can also enable health plans to make more informed policy updates and develop customized rules to protect against improper claims. Ultimately, this allows plan executives to direct their payment integrity efforts with greater confidence, even in an uncertain landscape.

Thinking Beyond Medical Cost Savings

Although achieving medical cost savings is central to today’s most innovative payment integrity programs, it is certainly not the only dimension. Health plans should weigh the price of external solutions against net medical cost savings combined with other savings opportunities.

Building a better integrity program also requires a holistic view of the spectrum of prepay and postpay processes that support payment integrity. When paired with expert human guidance, today’s technology tools allow health plans to identify the best opportunities to update their policies and processes for more accurate payments. By optimizing the full claim payment cycle, health plans can ensure that they have implemented a comprehensive payment integrity program designed to deliver long-term value beyond medical cost savings.

About the Author

Matthew Hawley is Executive Vice President of Payment Integrity at Cotiviti, where he oversees the organization’s prospective payment integrity and fraud, waste, and abuse solutions. He has been with the organization for 2 decades.