Industry voices—ensuring premium revenue accuracy during COVID-19

FierceHealthPayer features an article by Jeff Martin, Vice President of Eligibility Operations at Discovery Health Partners. The article highlights the importance of making sure MA plans receive the revenue they deserve in order to ensure a stable financial picture during the COVID-19 pandemic.

Click here to read the full article.

Jeff MartinIndustry voices—ensuring premium revenue accuracy during COVID-19
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Protecting payment integrity through client-centered support

Unexpected events like the COVID-19 pandemic make it increasingly difficult for health plans to manage costs and ensure payment integrity. We recently sat down with Monica Frederick, Vice President, Account Management for Discovery Health Partners, to discuss how Discovery’s people and account management approach contribute to our clients’ success.

You’re a newer member of the Discovery Account Management Team. Can you share your experience prior to Discovery?

Over the past 20 years, I’ve held numerous sales and business development positions to support healthcare organizations in bringing new patient care modalities to the market. My experience on the medical side gives me insight into how managed care organizations can strengthen their payment integrity efforts so they can better manage costs and continue to focus on member care.

What makes Discovery a successful team and what are we doing differently to support our clients’ success?

Discovery has built a solid reputation for providing value to health plans by helping to solve their payment integrity challenges. We owe our success to our exceptional people and culture of accountability. Every employee across the organization understands the importance of their role and how they contribute to our clients’ success. And I see the whole organization working tirelessly to anticipate customers’ needs and earn their trust.

Communication is a big part of our approach to account management at Discovery. We talk to clients frequently in person and virtually, and we also conduct client surveys to hear directly from our clients on how we’re doing and how we can continue to provide profound value to our clients’ organizations.

Through this hands-on approach, we’ve learned that we do many things right. Clients especially appreciate how we advise them to determine the best course of action for their operations and provide timely follow-up to address their concerns. This valuable feedback also helps us identify opportunities where we can improve our processes and solutions to better meet clients’ needs.

In addition, we have a Client Council that brings together individuals across our client base whose voices influence the future of our business. We host in-person and virtual meetings with our Client Council to deepen relationships and understand what clients need to be successful. These meetings not only provide clients with valuable networking opportunities, but also offers clients opportunities to share insights and best practices with other health plan leaders and drive future innovations.

What is Discovery’s approach to account management, and how do we drive value throughout the entire engagement with a client?

Our approach is flexible to meet each client’s unique needs, but it always starts with earning their trust, by getting to know them and understanding their business operations. We listen closely to their concerns and create a plan that addresses their challenges and aligns with their strategy and priorities.

When clients join Discovery, we put together an implementation team with the right skills and specific expertise to ensure a smooth, accurate, and efficient implementation. Our approach is flexible and can wrap around or come behind existing vendors and processes already in place. Discovery’s multi-disciplinary teams work collaboratively and our experts evaluate each client individually. There is no one-size-fits-all approach.

Once implementation is completed, an internal hand-off to the Account Management team occurs and all unique attributes and needs for each client are discussed in detail. A dedicated account manager takes the lead to provide guidance and manage day-to-day activities and communicate the status of ongoing projects every step of the way. We don’t just hand over reports; we take time to meet regularly with clients to review their information in a way that’s meaningful so we can make recommendations for improvements and achieve their desired results.

What are some of the ways Discovery helps health plans address unexpected payment integrity challenges like the COVID-19 pandemic?

COVID-19 is unlike any event the healthcare industry has seen in modern times, thus health plans are faced with challenges they could not have imagined just a few months ago. Not only do health plans need to ensure their members receive the care they need and support their providers, health plans must also keep up with individual states’ mandates regarding “non-essential” claims processes and review of COVID-19 related claims. At the same time, they are struggling with reallocating resources to support critical COVID-19 initiatives while managing the shift to a remote workforce.

Discovery is proactively reaching out to clients to make recommendations, based on their business, to help protect premium revenue, pick up productivity shortfalls as needed, and help them protect their workforce. We continue to work diligently on behalf of clients as an extension of their teams to ensure they get the right information to support the continuity of their operations.

Discovery went remote with payment integrity operations over a year ago, so we’re in a great position to help support our clients business during the pandemic. Discovery views challenges as an opportunity to learn from individual clients’ needs. As COVID-19 plays out, we will continue to partner with clients to make sure we are supporting them and their challenges are addressed in a timely manner.

 

Find out how Discovery Health Partners can help contribute to your payment integrity success in 2020. Contact us today!

Monica FrederickProtecting payment integrity through client-centered support
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Enhancing premium restoration in four steps

Today, more than 22 million seniors and people with disabilities choose a Medicare Advantage plan, and enrollment is projected to increase to an all-time high of 24.4 million this year1. Do you have insight into how much revenue your plan might be losing in underpaid premiums?

Ensuring accurate premium payments for your Medicare Advantage members requires the right people, processes, and technology to identify your potential for premium restoration. It all starts with data. By integrating data sources and viewing eligibility data holistically, you can easily identify members with the greatest propensity for inaccuracy: those requiring Medicare Secondary Payer (MSP) validation and those diagnosed with end-stage renal disease (ESRD).

Here are four steps you can take to capture underpaid premiums:

#1: Identify members with premium restoration potential

The undisputed first step in capturing underpaid premiums is identifying those members with premium restoration potential. Our experience shows that an average of 4% of Medicare Advantage members have open MSP records, and 50% of those records have premium restoration potential. By identifying members with MSP or ESRD, your plan can ensure those members are accounted for in MMRs and in payments from CMS.

#2: Improve process efficiencies

When analyzing open MSP and ESRD occurrences, your plan needs to identify and prioritize those that require investigation. By allocating scarce resources to the activities that will have the greatest impact on the bottom line, you can ensure that dollars and staff time are spent wisely and efficiently.

#3: Monitor the financial impact

As premium restoration becomes more complex and when resources are limited, sophisticated monitoring is needed to achieve the results your plan expects. With a proactive approach to monitoring premium restorations, you will want to forecast how many dollars will be added to the premium check, uncover whether you have received every month of restored premiums, and maintain an audit trail to validate the outcomes and steps taken to correct inaccuracies.

#4: Maintain ongoing premium restoration activities

Given the impact it can have on your bottom line, the premium restoration process must be maintained on an ongoing basis. By ensuring payment accuracy throughout the year, you can capitalize on significant revenue opportunities month after month, year after year.

Discovery’s data analytics combined with our deep understanding of CMS eligibility rules can help your plan unlock the hidden value in your data and collect the full value of premiums owed.

Discovery Health PartnersEnhancing premium restoration in four steps
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Jason Brown on the road ahead for payment integrity

As the industry transitions from volume to value-based healthcare, health plans face increasing pressure to better manage costs and ensure payment integrity. We recently sat down with Jason Brown, CEO of Discovery Health Partners, to get his thoughts on recent trends and how they’re shaping the road ahead in 2020.

Healthcare continues to change and evolve. What do you see as some of the trends setting the stage for optimizing payment integrity?

Health plans face a number of challenges when it comes to ensuring the right care is provided to the right member for the right amount. Complex billing processes, changing regulations, outdated and disparate data systems, and overlapping coverage all contribute to improperly paid claims. Today, nearly a third of claims are paid incorrectly, leading to billions in administrative waste.

In 2020 and beyond, we anticipate health plans will continue to struggle with rising healthcare costs, numerous competing priorities, and a lack of resources. Furthermore, changing regulations and mandates will continue to add layers of administrative and clinical complexity to a system already bogged down in paperwork. While there is no clear path to cost containment, there are ways health plans can work toward transforming their payment integrity approaches. An example is leveraging advanced technologies to move from retrospective payment to prospective payment—by detecting improper claims before they are paid, health plans can keep costs in check, increase member satisfaction, and most importantly, cultivate healthy provider partnerships.

What are some of the ways Discovery is helping health plans address their payment integrity challenges?

This past year has been an exciting time of innovation and growth for Discovery. We have an expanded suite of payment integrity solutions—Coordination of Benefits, Subrogation, Data Mining, Clinical Audits (in areas such as diagnosis-related group (DRG) audits and itemized bill review audits) and Premium Restoration. Our integrated solutions are designed to work together. This connected approach helps optimize claims recoveries and avoid future expenses across the entire claim lifecycle while reducing provider and member abrasion.

What makes Discovery unique is that our solutions start with our clients’ own data and processes. We leverage the latest analytical tools and technology like machine learning to identify patterns that present opportunities for cost recovery and cost savings. By blending artificial intelligence with human expertise, we identify hidden errors and root causes that are often overlooked. We also provide the highest levels of support to our clients, acting as an extension of their teams, to free up their internal resources so they can focus on other business priorities.

Since its inception, Discovery has been proud to provide flexible solutions that help health plans solve their payment integrity challenges. Our newly formed Client Council provides a platform for clients to share industry insights and challenges with their peers and help drive product innovations with Discovery. Going forward, custom-tailored solutions like ours will be key to helping plans manage costs while maintaining the high levels of care that their members expect.

What’s on the horizon for Discovery in 2020?

During the past decade, we’ve demonstrated measurable success by helping our clients improve operational efficiencies, increase claims accuracy and payment, and recover dollars back to their health plans.

From 2020 forward, we will continue to evolve existing solutions and create new forward-thinking approaches to help plans prevent and recover inaccurate payments. By expanding our use of data analytics and data integration and accelerating our investments in research and technology like machine learning and predictive analytics, we will help health plans capitalize on information to coordinate claims correctly. Once individual plans reach the point where they are paying the appropriate amount for the healthcare that’s delivered, they can re-invest in clinical care for their members.

At the same time, we will position clients to transition toward a more proactive approach to cost management. Reimagining the payments process and applying insights further upstream will be key to enabling providers to take advantage of opportunities to proactively change wasteful behaviors.

And of course, we’ll continue to keep our finger on the pulse of the industry. By building partnerships with our clients, industry organizations, agencies and others to learn about best practices and stay on top of the latest trends, we can prepare clients for the challenges ahead.

 

Find out how Discovery Health Partners can help strengthen your payment integrity initiatives in 2020. Contact us today!

Jason BrownJason Brown on the road ahead for payment integrity
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A year in review: top blogs from 2019

The new year is upon us and with it comes a new decade. It has been a decade of transformation for healthcare with regulatory changes, health system consolidation, healthcare consumerism, and new technologies that have forever changed the industry. 2019 has been a time of change and growth for Discovery Health Partners as well. Here are highlights from our most popular blogs of 2019 to remind you what we’ve been up to all year.

3 bad habits that are good for subrogation

In February, we talked about the three “bad habits” that can lead to successful subrogation: be unfair, ignore your members, and be pushy. In any other scenario, these tactics can get you into trouble. But for subrogation, being unfair requires that you not treat all cases equally. Ignoring your members is all about avoiding member abrasion. And being pushy involves aggressively identifying and verifying subrogation cases. Altogether, these tactics help improve the opportunity for quick and fair settlement of subrogation cases.

Why Medicare Advantage plans may be losing money on members with ESRD

In March, we featured a post about the challenges Medicare Advantage plans face with members with end-stage renal disease (ESRD). Though ESRD afflicts fewer than 100,000 people nationwide, the disease requires lifelong care—and a disproportionate percentage of medical expense. The blog discusses the gap in CMS premiums for ESRD members and what Medicare Advantage plans can do to better identify them.

It’s challenging to identify and restore underpaid ESRD premiums. Here’s how to solve that

Another popular blog continued the ESRD discussion, highlighting a systematic approach Medicare Advantage plans can take to restore ESRD premiums. This includes automating the process of sifting through data to identify potentially underpaid premiums and maximizing the 84 months that CMS allows plans to identify, investigate, and restore premiums. The blog identifies five key components of an effective ESRD program: analytics, investigation, remediation, restoration, and monitoring.

Subrogation: 3 ways SaaS can help

In July, we returned to the topic of subrogation with a discussion of how software-as-a-service applications can help. Plans are finding that combining SaaS applications with in-house expertise creates a more effective, data-driven approach for finding and validating subrogation recovery opportunities. Specifically, you can: 1) make in-house recovery more efficient and insightful; 2) gain accessible, easy-to-use, scalable, and secure solutions; and 3) do more at a lower cost.

Stay tuned to our blog for more insights on these topics and to see what 2020 has in store. You can also get the latest industry and Discovery updates by following us on LinkedIn and Twitter. Are you interested in learning how Discovery Health Partners can support your organization? Contact us today!

Discovery Health PartnersA year in review: top blogs from 2019
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Three ways to tackle the high cost of waste

New research published by the Journal of the American Medical Association (JAMA) estimates that 25% of U.S. healthcare spending, or $760 billion to $935 billion, is spent annually on waste1. According to the study, the greatest source of waste is administrative complexity, which accounts for $265.6 billion in annual waste.

Part of this administrative burden stems from a complex claims adjudication process impacted by legacy or outdated technology, a lack of clear contract or policy information, and no universal way for sharing information (e.g., member’s name, diagnosis code, etc.). These administrative challenges results in data and eligibility errors that are made throughout the claims continuum, resulting in millions of dollars in improper payments.

Life of a claim: Errors along the way

Payment Integrity continuum DiscoveryDespite the best efforts to address waste, administrative complexity in the healthcare system continues. Recent research from JAMA shows that measures to eliminate waste would result in a 25% improvement, but there’s more work to be done. Finding the root causes of errors is the most effective way to ultimately remove waste—and the high cost of it—from health plans’ payment integrity operations.

Here are three approaches to combatting the high cost of waste in your payment integrity strategy.

1. Reduce manual processes

Manual processes are often at the heart of human error. Manual processes are tedious, error-prone, and inefficient, contributing to the high cost of waste in healthcare. When your entire claims adjudication or payment integrity process contains manual tasks, the likelihood of error is high. Reducing or eliminating manual effort in your payment integrity processes will go a long way toward reducing waste.

2. Use technology to your advantage

Technology plays a key role in taking out waste from the payment integrity process. But outdated or legacy technology can create just as much waste as you might find with manual processes. With the right technology in place, you can modernize your payment integrity processes and reduce the amount of time and effort associated with correcting complex claims.

By the same token, emerging technologies like artificial intelligence and machine learning solve traditional payment integrity problems in new and innovative ways. These technologies offer analytics and predictive insights that can optimize your claims payment processes and drive data-driven decisions.

3. Look to a partner for advanced capabilities

A partner can supplement your in-house operations and offer the expertise you need to reduce waste. The right partner will bring robust capabilities that round out your core operations—capabilities like data mining techniques that prevent incorrect and unnecessary payments; industry experts who are up on the ever-changing and complex healthcare landscape; and processes that identify opportunities to correct, recover, and prevent improper payments at all points in the claims’ lifecycle.

The high cost of waste can threaten the viability of organizations throughout the healthcare ecosystem. With a holistic, connected payment integrity strategy built around these three tenets, your organization can improve operational efficiencies and achieve financial integrity by preventing improper payments—all while eliminating waste and generating meaningful results.

To learn how Discovery Health Partners can help you advance into the future of payment integrity, contact us today.

1“Waste in the US Health Care System: Estimate Costs and Potential for Savings,” JAMA, October 7, 2019.
Discovery Health PartnersThree ways to tackle the high cost of waste
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Insights and observations on the digital healthcare revolution

At our recent Discovery Client Council meeting, we had the pleasure of hosting Wheeler Coleman, CEO and Executive Partner of EC-United and a member of our Strategic Advisory Board. In this guest blog, Wheeler summarizes the key takeaways of his presentation on the healthcare digital revolution.

Survive or thrive

The digital revolution has been a game changer for all industries, and health payers are not immune. Startup companies are creating new business models and blending existing and emerging technologies to leap-frog and disrupt well-established companies and business protocols. There are also well-established companies in other industries that are entering the healthcare industry to the same end—to change the model and dislocate the existing players.

A few good examples of this are Amazon, Google, and Microsoft. These companies see healthcare as an industry ripe for an operational and administrative transformation that they can deliver through their powerhouse of technological capabilities and expansive digital footprint. To survive, payers must take this threat seriously. They cannot take their leadership position or their iconic name for granted. Resting on their laurels will very likely result in a slow death spiral.

Look at a company like Kodak. They were a market leader with a great brand. Did you know that they created the digital camera? But they were so happy with their position that they refused to make changes and ignored the red flags:

  • Hitting a revenue plateau
  • Competing on price / no differentiation
  • Big on data and short on analysis and actionable information
  • Neglected table stakes
  • Too much pride
  • Too deep in their comfort zone

Healthcare payers need to make sure they don’t fall victim to the same pitfalls. They are enjoying large revenues now, and too many are unwilling to reconsider their business models and leverage technology to maximize efficiency.

We’ve seen how this plays out in other industries. The following well-known companies were able to leap-frog the competition and disrupt well-established businesses by creating new models and leveraging existing and emerging technology.

Uber disrupted the taxi and limousine business models and, in many markets, expanded the demand for service by leveraging GPS, e-commerce, and mobile technology.

Netflix disrupted the cable and movie industries and recently their stock increased 20 percent due to increased subscriptions. This happened when 4G was introduced and movies could be streamed to individual homes. They quickly pivoted from shipping DVDs to digitally streaming movies. The outcome has been the end of the video rental business and a cable industry trying to play catch-up.

Airbnb disrupted the hospitality market and transformed how people approach travel accommodations worldwide by allowing people to lease their homes electronically.

These three different companies in three different industries each changed the playing field and caused disruption by using new and emerging technologies, redesigning how services were delivered, and lobbying for new rules and regulations. So, the question for us is not if, but when will this happen to healthcare payers? Those who are reluctant and slow to adopt emerging technology or work with new technology partners could soon find themselves like the Kodaks of the world.

How does this apply in healthcare?

The companies we’ve already mentioned, and so many more, have reset consumer expectations across the board. In healthcare, we must keep up with the evolving demands of the new “digital patient” by harvesting actionable information from all the data that is being generated by the internet of things. To do this, our options must be instant, seamless, and insightful:

Instant—Information is now in all our pockets and consumers demand information in real time. Historically, our industry has taken advantage of batch processing, but we need to change our processes and our information systems to allow for real-time processing.

Seamless—The relationship between payer, provider, and member needs to become real-time. Payers and providers must be able to exchange information in real time without impacting the member experience. The member does not want to know what’s happening behind the scenes.

Insightful—Consumerism and social networks are generating an unprecedented amount of data that we need to be able to harvest and transform into actions. The new generation of analytics (advanced analytics, ML, AI, robotic technology) will allow us to discover noncompliance and fraud more easily than ever before, but only if data is converted to information that triggers action by the payer, provider, or member.

The digital revolution is upon us!

To catch up and better serve consumer demands and stay ahead of competition, companies will need:

Strategic partnerships—Companies must seek non-traditional employees and partners.

Operational excellence—Companies must reduce costs and increase efficiencies.

Emerging technology—Companies must rapidly adopt and embrace new technology.

Healthcare has historically been a slow mover in this regard, but some progressive healthcare organizations have already begun differentiating themselves by providing a more customer-friendly, tech-enabled experience. Still, it’s not too late for those companies contemplating their next moves. The companies that make this a priority and quickly adapt to this inevitable change can survive and rise to the top of their sectors. But the clock is ticking, and for those organizations that continue with business as usual, time is running out.

To learn how Discovery Health Partners can help you advance into the future of payment integrity, contact us today.

Wheeler ColemanInsights and observations on the digital healthcare revolution
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Count on Discovery’s HITRUST CSF® certified technologies to protect your health plan’s data

In the midst of HIPAA regulations and ongoing threats to healthcare data, health plans increasingly require their vendors and partners to demonstrate a strong commitment to patient and member data privacy and protection. As a provider of data-driven solutions for healthcare payers, Discovery Health Partners has stepped up to meet this demand with the achievement of HITRUST CSF® certification for its core technologies.HITRUST certification

The certification for our Discovery Case Manager, Dashboard and Reports, Secure File Transfer Protocol (SFTP), and Medicare Secondary Payer (MSP) technologies demonstrates that they have met key regulations and industry-defined requirements and are appropriately managing risk. These technologies drive the use of data across our solutions including Medicare Secondary Payer (MSP) Validation, Subrogation, and Coordination of Benefits:

  • Secure File Transfer Protocol: The technology that allows us to securely and quickly load and integrate data from multiple sources to help identify payment and revenue integrity opportunities.
  • Discovery Case Manager: Our core workflow software that is used to manage work in progress across all our solutions. This is the application that captures and stores information needed to support payment integrity processes and creates an audit trail to support tracking and compliance.
  • Dashboard and Reports: The technology that provides standard and custom reports that track key performance indicators and results across our solutions.
  • Medicare Secondary Payer: The application that is used to identify, validate, and track updates to CMS eligibility information and premium reconciliation for Medicare Advantage plans.

This achievement places Discovery in an elite group of organizations worldwide that have earned this certification. By including federal and state regulations, standards and frameworks, and incorporating a risk-based approach, the HITRUST CSF helps organizations address these challenges through a comprehensive and flexible framework of prescriptive and scalable security controls.

“In entrusting their data to us, our clients expect a highly secure environment. I am thrilled that we can demonstrate our commitment to meet their needs through our HITRUST CSF certification, the gold standard in our industry,” said Jason Brown, Discovery Health Partners’ Chief Executive Officer.

He went on to explain that, “Our mission for strong information security does not stop with HITRUST certification. We will continue to evolve our tools as threats evolve, and will continue to drive for better policies and procedures that further safeguard our technology and our clients’ data.”

Discovery Health PartnersCount on Discovery’s HITRUST CSF® certified technologies to protect your health plan’s data
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5 Key roles your company needs for data analytics success

What roles are necessary in your healthcare organization for successful application of your data analytics? Whatever the size, culture and maturity level of your company, there are five key functions your organization needs to develop models that can help drive solutions to real-world problems.

5 key roles necessary for creating analytics that will drive value for your organization

  1. Data Liaison
    The person in this critical role is someone who really understands your business goals—and can straddle the discussion between business and data. They participate in discussions with your business around your real-world problems and understand enough of the data to realize when a particular problem might be something that can be addressed with the data you can access. In fact, this person is so familiar with your business they might even be able to generate their own list of real-world problems you face that could be addressed with available data knowledge.
  2. Data Architect
    This key technical leadership position understands your big picture—they know what data you have, where it is, and how it fits together. They are current in their understanding of data technologies and can apply that knowledge to your organization’s plans on how it will leverage data.  They help create the blueprint for the environment(s) you need for data science and analytics.
  3. Platform Architect
    Many organizations don’t have data set up in a way that’s really conducive to analytics or big queries. In this IT role, your platform architect will work closely with the analytics team to create the infrastructure needed for effective analytics. They are the person who makes sure your organization has enough “horsepower” for the job at hand.
  4. Data Analyst
    As the extractor of data, this is the person you’re most likely to already have in your organization. The data analyst is often your go-to person for analyzing data sets and reporting results. The data analyst understands SQL, SAS statistical software, and your business goals to manipulate healthcare databases and produce analytic findings.
  5. Data Scientist
    For more advanced analytics against your data sets, the data scientist works to understand real-world problems and writes the models. They work with big data, using various technologies to develop models that convert data into actionable insights. They may also help identify new data sources and work with the data and platform architects to fuse them with other enterprise data sources. This role collaborates with the data analyst to get access to usable data and works with the data liaison to understand what the real-world problem is and build the models that ultimately help drive your value.

You don’t necessarily need five people to fulfill these functions since some of these data analytics roles can be combined. You may have an organization where your data analyst and data liaison roles are filled by the same person, or one person may serve as both data and platform architect. The key is to understand that you’re checking each of these boxes so your company is able to take a singular real-world problem and help turn it into the model that’s going to help drive value.

 

Discovery Health Partners5 Key roles your company needs for data analytics success
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Calculating cost avoidance: A closer look at one of 2017’s top payment integrity trends

This post is part of an ongoing series about trends happening within the payment integrity space for healthcare payers. This series features contributions from Discovery Health Partners payment integrity experts discussing these trends, why they’re happening, and how they affect health plans. To learn more about all of the top trends, download our 2017 Payment Integrity Trends whitepaper.

Making the business case for prepayment cost avoidance

As health plans more aggressively adopt cost avoidance as a payment integrity tactic, many struggle with the business justification. There simply is no industry-standard method of quantifying cost avoidance.

With pay-and-chase models of recovery, it’s usually pretty simple – you calculate the recovery and if you’re using a vendor, you subtract a percentage contingency fee. It works nicely in a spreadsheet formula and the extra cash looks great in your P&L. But if you’re avoiding—not recovering—dollars, how do you measure the return on investment? How do you calculate the costs avoided?

Health plans have been left to their own devices to determine the right method to quantify the business case for cost avoidance. And to compound this issue, the method of measuring cost avoidance and the business case isn’t consistent across all types of payment integrity. The calculation and return on investment will differ depending on whether you’re looking at coordination of benefits, subrogation, claims analytics, etc. Based on my experience, even among the largest health plans, there is incredible diversity of opinion on how to measure and value prepay. Read on to learn about some examples that I’ve come across.

Claims cost multiplied by estimated months of savings

This large commercial plan with over 40 million members uses average claim cost per member to calculate potential savings from cost avoidance. The plan first identified “leads,” or members suspected of having other coverage, and sent them to Discovery Health Partners to verify other coverage.

Of those leads, 10% have been confirmed to have other primary coverage. The plan estimates that it would have paid claims for those members for 6 months before catching the error. By multiplying the 6 months times a monthly claims cost per member, the plan figures it avoids more than $7 million in erroneous payments.

This method provides a general sense of the value of cost avoidance, which allows this plan to justify the cost of using a vendor as a partner for some of its prospective COB processes. Not all buy into this method, though. Some might argue that not all members would incur the average claim cost in all 6 months, and some of the costs, had they been paid up front, likely would have been recovered on the back end. This method doesn’t account for that.

On the other hand, it accounts for neither the administrative cost avoided by not having to recover on the back end nor the fact that a percentage of recovery efforts are unsuccessful. In the end, this plan felt that these balance each other out and the methodology works for now.

In another example for COB cost avoidance, one of our clients uses the average cost of claims for each member over the previous 12 months and applies that value over the next 12 months.

Costs to consider when calculating ROI on cost avoidance

Once you have identified a method of calculating the value of cost avoidance, you need to understand the costs that are involved in developing cost avoidance capabilities.

  • Vendor fees. How vendors make revenue will depend on the method the health plan uses to calculate cost avoidance. Options could include contingency, transactional (per validation), monthly, and fixed fees.
  • Resources. Subject matter expertise and operational expertise will help ensure you avoid the right costs at the right time with minimal member and provider abrasion.
  • Technology. Software and other programs allow you to integrate the data from correct sources into your systems so you can make timely pre-payment decisions. This could include applications to manage the workstream.

The move to prepay cost avoidance requires a set of skills that health plans need to develop or acquire in order to be successful. These should be considered when calculating the cost. See our infographic for a list of these capabilities.

 

 

 

 

 

 

 

 

Discovery Health PartnersCalculating cost avoidance: A closer look at one of 2017’s top payment integrity trends
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