The pressure for payers and providers to operate more efficiently and cooperatively is increasing—which is why many in healthcare are seeking to decrease claims adjudication woes.
It’s estimated that nearly $210 billion annually is spent to process healthcare claims. Moreover, approximately one in five medical claims is processed inaccurately, according to the American Medical Association’s 2010 National Health Insurer Report Card. These processing errors cost the healthcare industry an estimated $15.5 billion. The AMA notes that if insurers could improve that number by just 1%, they would save nearly $778 million.
Payers have begun a variety of initiatives. For instance, Watertown, MA-based athenahealth created PayerView, a project that pinpoints the areas where the interaction between providers and payers breaks down. While CIGNA and UnitedHealthcare are among the payers using Lean processes to smooth out bumps.
The AMA report noted that CIGNA had the lowest rate of claims denials among participating plans—denying less than 1% of claims in 2010—and its response time for first-time claims remittance went from 12 days in 2009 to six days in 2010.
“In our partnership with the hospitals and physicians, we wanted to see how they bill and how they code and how that gets represented in the electronic transactions and submission into the company: How do we take that information in, and then how does it get processed against our system?” explains Paul Sanford, vice president of operating effectiveness at the Bloomfield, CT-based CIGNA. “We let the data drive us to a series of root-cause activities on both the hospital/physician side of the house as well as CIGNA.”
Depending on the size and complexity of each provider, the process took about three to four months for CIGNA to gather the necessary metrics to begin to remedy problems. Sanford says one ongoing theme that arose from the research: the interpretation—or misinterpretation as was generally the case—of the contract terms as represented in the codes that the providers were using.
“It’s not a good thing to interpret terms of a contract. So in the beginning, having a very specific conversation around documentation and in what we are negotiating in terms of terms, and how it is represented in terms of codes and expected reimbursement, is really the foundation to all of this,” he notes. “When there is any misinterpretation between what hospitals or physician groups expect to get reimbursed for, and in what they then put into their billing systems and what we put in our reimbursement system, then that’s where things tend to become problematic.”