White Paper

Reinventing Claims Payment For A Value Based World

Source: Change Healthcare

By Amy Larsson, RN, BSN, MBA Vice President, Clinical Claims Management, Change Healthcare

Value-Based Healthcare

Payers need to choose between automated payment and accurate automated payment

The U.S. healthcare industry’s claims-payment system is frustrating to providers, payers, and patients alike. Inefficiency and a systemwide tendency for error wastes precious resources, worsens miscommunication and mistrust among all stakeholders, and inhibits the ability to transition to value-based approaches that achieve better outcomes. We need to rethink our industry’s disjointed and siloed approach in order to solve a very integrated problem.

Despite billions invested in achieving efficient claims payment, more than 7% of claims are not paid correctly the first time, the second time, and sometimes even the third time¹. The remediation process costs health plans more than $43 billion annually². Indeed, an entire sector of the industry has evolved to examine claims retrospectively, identify inaccurate payments, and reconcile over- and under-payments. This broad “pay and chase” approach increases administrative costs for the entire industry.

Not only does this waste time and money, but it also impedes providers’ ability to manage their revenue cycle effectively, erodes their confidence in payers, and creates  a barrier to closer strategic alignment. Consumers are also impacted. Like providers, they have a reasonable expectation that claims should be paid accurately and quickly the first time, and that the system should be focused on delivering good healthcare–and not rectifying payments.

Ironically, the industrywide push for automation is compounding the problem with errors rather than alleviating it. As payers work to improve their claims-payment systems by automating processes, they periodically identify gaps where manual steps are still required. To bridge these gaps and lift performance, they invest in more automation. Efficiency and costs improve in those targeted areas, but inaccurate payments continue as errors cascade through the system. This drives more frustration, more manual remediation, and (ironically) more investment in automation as payers chase problems wherever they show up next. To break this vicious cycle, payers must stop thinking about automation in a siloed or point-by-point way and start tying disparate payment systems together. The drive for accurate adjudication across the claims- payment continuum can be a  game-changer. It can optimize processes, reduce costs, align systems and stakeholders, and create the conditions for bringing accurate payment for value-based payment models to scale.