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Achieving Success In Claims Editing

A proactive claims editing strategy involves enabling providers to edit a claim well in advance of it being submitted to a payer.

In fact, the first opportunity to introduce editing is when a provider or billing administrator in the health system first enters a charge from their practice management system.

Historically, editing during charge entry, or pre-submission to a payer, has required some degree of guess work around correct coding and payer reimbursement policies, which could lead to misalignment resulting in denied claims or claim lines.

Some reports have suggested that up to 50% of denials are never re-worked. On average, 63% of denied claims can be corrected, but they cost providers roughly $118 per claim in appeals or as much as $8.6 billion in administrative costs nationwide. That number will continue to grow as claim and claim line denial rates continue to rise.

Creating early network transparency in claim editing between providers and payers to reduce denial rates and administrative costs is worth exploring further. Today, payers can provide early editing transparency by shifting edits into electronic data interchange workflows, simply known as EDI.

After a claim has been submitted to a clearinghouse it triggers a call to a messaging platform. If a claim is flagged in the EDI workflow, a configurable message is returned to the provider or submitter of the transaction through the messaging platform. As the notification goes back to the submitter it is best practice to use actionable messaging that helps the provider correct the transaction before it enters the payer’s claim adjudication system.

Because a health plan’s claim edits are already live and maintained in their claims editing software, they won’t need to recreate these. Rather, health plans can decide which edits should be made available in EDI workflows and mid-adjudication workflows. One system supports flexible editing deployments.

This benefits the provider by accelerating revenue cycle and reducing the administrative costs associated with rework and transaction EDI fees each time a claim is returned and resubmitted.

This is also an administrative savings benefit for the payer and supports greater transparency in provider networks.

There are many types of actionable edits that can be shifted into EDI workflows. Here are a few:

  • Optum maintains over 132 million standard editing combinations to ensure claims accuracy across all lines of business
  • Eligibility verification edits provide reliable validation of patient eligibility and accurate answers to coverage queries
  • Duplicate edits review each service and immediately identify if the same service is already on record
  • Prior authorization edits prevent unnecessary denials due to missing prior authorization numbers
  • Operational edits proactively alert providers of upcoming expiration of health plan credentialing
  • Attachment edits remind providers to attach supporting documentation for medical necessity
  • Administrative edits validate, route, report and track all X12 transaction types
  • Pattern detection helps break the cycle of pay-and-chase by identifying prepayments and overpayments
  • Quality analytics improve member health outcomes by forewarning providers of critical patient needs prior to care delivery

After receiving actionable feedback from the messaging platform, the billing operator is easily able to correct the claim and re-submit it for payment.

Did you know… most clearinghouses report a 97-99% first-pass rate, meaning they can get the claims through front-end HIPAA compliancy editing into an adjudication system at a rate of 97-99% of the time.

However, between 5% - 20% of claims are denied in the payer’s adjudication system and returned to be reworked. On average, reports have shown denied claim rework results in $31 per claim of costs distributed between health plans and providers.

Yay, clean claims are happy claims!

By shifting edits into EDI workflows, health plans are on their way to reducing the days in accounts receivable, optimizing their denial management strategies, and reducing the administrative costs required to rework denied claims.

For health plans that haven’t started editing in EDI workflows, claim edits are made mid-adjudication. Code-editing software was first implemented in the early 1990s, and since then a lot has changed. Year over year, health care spend is growing.

With increased government and consumer pressures to bring costs down, health plans are at the forefront of bending the cost curve.

Today, claim editing software should have pre-built direct integrations will all major adjudication systems to enable first pass claim editing with ease. This makes it easy for health plans to focus on creating an editing program that can catalyze their specific strategic business imperatives, whether it’s enforcing and enhancing certain policies or minimizing overpayments.

To increase savings and maximize ROI on claims edit software, many health plans turn to a dedicated services team. A team of physician-led experts can help identify cost-saving levers and generate custom edits by reviewing high-volume CPT codes against health plan policies. Although most commercial payers use the publicly available code edits including the hundreds of thousands of claim edits published pursuant to the Centers for Medicare and Medicaid Services’ National Correct Coding Initiative, health plans also use a host of proprietary payer-specific edits.

A dedicated services team is an extension of a claim editing program that helps ensure its success. They will work directly with payers to address key strategic areas of spend including specialty pharmacy, emergency department, genomics and labs.

As the final step in the claims process, applied after all other pre-pay cost containment mechanisms have been utilized, a second pass claims editor, pre-payment audit and review offer health plans their last, best chance to stop erroneous claim payments before they go out the door.

Inaccurate payments eat up 15 cents of every health care dollar and account for 5% to 10% of all claims paid. Validating claims payment decisions is critical to stopping costly overpayments, and improper and delayed payments.

Claims editing software can often include a pre-payment second-pass editor, which can be integrated into the later phases of the claims process. Second-pass editing systems review all claims that made it through the first-pass editor, acting as a second line of defense.

Second-pass editing systems can also perform specific edits that leverage adjudicated claim data. First-pass editors are often mid-adjudication and paid claim data is not yet available. Second-pass editors can also generate edits that may require a medical record or additional clinical data.

Payers are starting to elevate payment integrity into a core strategic function governed by a unified vision and directed by top executives, knocking down silos and aligning efforts across the organization to make sure the right claim is paid at the right time for the right amount. Fragmented payment integrity structure means that errors aren't caught until after payment, if at all.

The “Pay and Chase” method of post-payment recovery is expensive and inefficient. Claims editing software offers flexibility to edit claims for correct payment through a variety of different checkpoints along the payment continuum.

The goal is to reduce friction, improve claim edit transparency and invest in content strategies and delivery approaches that encourage correct coding, clean claims and automated payment decisions to drive down health care costs and increase affordable coverage. Clean claims are happy claims!


Achieving success in claims editing

Learn how creating a flexible editing program can help to catalyze a health plan's specific strategic business imperatives. Whether it’s enforcing and enhancing certain policies or minimizing overpayments, these best practices can guide you to success.

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