Can Prepay Reviews Save Millions?

How long has Ceris been providing prepayment review services for clients?

We are a group health service provider under Corvel Corp.—they are our parent company and provide risk management and workers compensation. Ceris provides payment integrity solutions to the group health market. We have been around for approximately 30 years at this point and have predominately been a prepayment solutions provider for payers. We work with almost all of the large payers in the country as well as lots of TPAs [third-party administrators] totaling about 150 million covered lives now.

Why is payment integrity so important in the claims payment process?

That is a broad term that payers are using to talk about medical cost savings. There are payments made to providers all of the time, and insurers are trying to figure out solutions—internal or vended solutions like Ceris—to make sure that overpayments don’t occur. They know they are leaking money every day to the provider community and are trying to get a handle on claim-paying accuracy, but they ultimately need to drive medical cost savings.

How much money is lost through postpay analysis?

If you have a very high-functioning vendor in postpay and they are actively identifying post-payment errors, you can recover about 90% of overpayment dollars. It is inherently a very complex process, and it’s hard to get that money back. That 10% is material when you are talking about billions of dollars. Some programs will maybe only recoup up to 80%, and now you are talking about a lot of money.

How long does it typically take insurers to see any money returned from overpayments made to providers when using post-payment reviews?

High-functioning post-payment recovery teams can usually recover an overpayment within 90 to 120 days from the paid date of the claim depending on contractual limitations, recovery policies that can vary from state to state, and other variables.

Why is it so difficult to recover money that was paid in error?

When you are talking about getting money back from providers, the biggest challenge is not necessarily getting the provider to agree there was an incorrect bill but to issue a refund check. They tend not to want to give up money when they have been paid for services, which makes sense.

Also, the insurance industry fails to remember that not all providers they pay are participating in-network. If you are a nonparticipating provider, you may not have a lot of patients you see for a particular insurance company. The payer is often unable to recoup those overpayments because there just isn’t enough spend there to make the provider care about sending money back.

The provider doesn’t really have to comply with anything at that point; they have been paid for services and are just going to move on. Also, payers and clients often have a different appetite for how much they are going to pursue legally. Payers aren’t necessarily going to pursue small dollars.

How many errors are caught in the average claims review? How is it different with prepay reviews?

Hospital claims tend to have more errors, and the more complex the claims are, the more errors you tend to find. The most common we tend to find are hospital charges that are not separately reimbursable.

For instance, a patient is hospitalized, and they need to spend the night in the ICU. That ICU is going to have oxygen on the wall and other material equipment in that room. Oxygen and the equipment are not separately reimbursable; the cost of the ICU should cover all of that. But some billing departments bill for oxygen, tubing, equipment, etc. That’s what we identify and understand is being overbilled. We use artificial intelligence [AI] to see that is not a separate reimbursable claim. The same errors occur with prepayment and post-payment; it’s just a matter of paying it and chasing it or fixing it on the front end with prepayment reviews.

Are there any other places where you tend to see a lot of claims errors?

What we’ve really been seeing a lot of over the past three years is added charges related to respiratory care, and that’s a direct function of COVID-19. We are seeing a lot of respiratory charges on bills that are not separately reimbursable. Hospitals are charging for different types of ventilators that should be included in a diagnosis and episode of care. Depending on how they are reimbursed, a provider could be expecting payment for services rendered and then adding on charges for ventilator management and a respiratory therapist, which shouldn’t be reimbursable. But that is payer- and provider-specific.

Another very common example, especially in the post-payment space, is duplicate payments. Providers are allowed to send in corrected bills to correct a previously submitted claim to payers. If that is not processed correctly, the payer could end up sending in a duplicate payment. That alone could be billions annually. The payer can miss those and process the claim as an original one. There is just inherent waste throughout the process; sometimes it’s human error, and sometimes technology doesn’t catch it.

How does the prereview process work?

Ceris has some proprietary database information that we use to process claims. We can run a claim at the line level, checking CPT codes. We run them through machine learning and procure a full itemization from the provider or hospital and are very quickly able to identify everything not separately reimbursable. And we do value-add, where we have coders and clinicians look at other potential outliers that the system picks up and drive value with a human touch on that end.

Are there things people tend to find that computer analysis doesn’t?

Computer logic is only as good as what it was programmed to look for on the claim. The clear errors are easy to identify by the computer, but there are errors occurring on claims that require a trained coder or clinician to identify simply based on complexity and experience.

How much of that 10% of billing are you usually able to avoid when you prereview claims?

We don’t capture 100% of everything, but we capture a lot. We are disallowing 7% of what the provider has billed the payer. So we pick up 7% of what was incorrectly billed.

How does prepay work? Is it more difficult to administer than postpay review?

We wouldn’t be able to stop every claim and process it for review; there are just too many. So we work with each client to set thresholds on what they want to review. It depends on the audit being performed.

We work with a payer after claims have gone through a number of steps in the processing unit. Insurers send us a claim, and we get an itemization and do the work and send it back to them. Then, they ingest the information and send the payment to the provider based on what was disallowed and tell them why. Some of our clients are on referral; they refer certain claims to send to us. In some situations, there are providers that have contractual arrangements to not allow prepay review. It is rare, but it does occur.

Why isn’t everyone doing this?

Some providers won’t allow it. Also, providers and payers have an agreement that, once a provider submits a bill, they want to be paid within 30 days. Some have faster timelines, and some are longer. In either case, providers all have steps to make sure a claim is clean and can be paid. When you are introducing a vendor in that space, that vendor has to be able to turn the review around quickly and accurately so the payer doesn’t end up taking too long and hitting fees.

How long does the prepayment process take?

On average, less than five days, but it can be up to seven days on really large bills. One of the biggest challenges clients have is figuring out where to put the vendor in the process so they do the work and still get all of that information back in the system and make corrections and process the claim. They have a hard time figuring out where you insert this outside vendor in the process.

What is the cost? Do the savings make up for the price of the prereview?

Different audits drive different savings returns. What I can tell you is the cost of performing a prepay review or an audit postpay varies by complexity. Any payer or any client can experience a 3-to-1 return on cost at a minimum. I have seen reviews that exceed 10-to-1 returns, and it does speak to how efficiently a vendor can perform a review or audit. We leverage a lot of technology and machine learning to process claims quickly.

Does this work better for certain groups, or could it benefit all payers/employers?

Prepayment reviews work across all lines of business, all commercial fully insured, self-insured, and Medicare and Medicaid claims. We do review work across the board. I will say that most self-insured groups are in a contract with a TPA. Those TPAs may have contracts with vendors to get prepay reviews already. I think self-insured employer groups are becoming more knowledgeable about payment integrity solutions as they start looking at their medical costs. The knowledge in this space of their options has grown dramatically over the last five years.

If a self-insured employer’s TPA doesn’t have a vendor currently doing prepay reviews, how can an employer use one? Do they contract on their own?

Yes, the employer could work with the TPA to get a vendor in this space, or they could hire a vendor directly to perform an audit on their claim spend after the fact. If the latter, the employer would need to have this review performed post payment. But I would recommend they coordinate with their TPA in either circumstance.