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

March 26, 2019 Kevin McDonald
It’s challenging to identify and restore underpaid ESRD premiums. Here’s how to solve that.

Why it’s a challenge to identify and restore underpaid ESRD premiums

In her recent blog, Why Medicare Advantage plans may be losing money on members with ESRD, my colleague Lyndsay Deckert addressed the challenges MA plans face with receiving accurate premiums from CMS for members with end-stage renal disease (ESRD). I’ll pick up from Lyndsay’s information and delve more deeply into how Medicare Advantage plans can restore underpaid ESRD premiums.

Health plans miss out on millions in premium revenue that can be traced back to missing or inaccurate CMS data about ESRD statuses for MA members. To address this, many plans have developed processes for identifying and correcting inaccurate data, restoring underpaid premiums, and ensuring they collect the correct premiums going forward for their members with ESRD. However, ESRD premium restoration is a complex process that requires combing through multiple data sources to identify potential premium gaps and working through providers to correct ESRD-related patient information. This process is painstaking and requires tenacity.

ESRD reporting is (mostly) out of your control

The first challenge is sifting through data in CMS Monthly Membership Reports (MMRs), plan eligibility files, and claims data to find any potentially underpaid premiums. The clues may be hidden in various, disparate data sources. To make sense of these clues, it helps to have an automated process to bring all these data sources together and use optimized analytical queries to find anomalies in the data. This is in your control.

What’s not in your control is updating the potential missing flags once you’ve identified them. Plans must work with providers who are often pressed for time and resources and are subject to human error. One simple mistake can prevent CMS from restoring a patient’s ESRD status in the member data. This omission can take years to uncover and can cost the health plan millions in the meantime.

Plans can take control of ESRD restoration with systematic approach and patience

CMS allows health plans to identify, investigate, and restore up to 84 months of underpaid premiums for members with ESRD. However, it’s the plan’s responsibility to identify those ESRD members and to ensure their data is validated and corrected according to CMS guidelines.

Plans that take a systematic approach to analyzing and reconciling their ESRD membership can successfully restore underpaid premiums and ensure accurate premium payments going forward. Many plans find that partnering with an experienced ESRD premium restoration vendor to focus on the things outside the plan’s control can help maximize results.

Here are 5 components of an effective ESRD premium restoration program that plans should look for:

Analytics—Comb through vast amounts of MMR, eligibility, and claims data going as far back as 84 months and identify likely ESRD members that require further investigation

Investigation—Determine the root-cause issues for each ESRD member that’s identified and the right process for addressing the issues with the appropriate submitting authorities

Remediation—Use the right method of outreach and coordinate with dialysis centers, CMS, or other third parties to ensure that information is corrected and updates are confirmed

Restoration—Diligently track and reconcile restored premiums and monitor future premiums for accuracy for as long as it takes to make sure revenue is fully realized

Monitoring—Ensure that each identified ESRD member status continues to be reported accurately and that correct premiums continue to be paid

With a systematic approach, time, and patience, plans can gain control of ESRD member statuses and restore underpaid premiums.

Learn more about restoring underpaid premiums for members with ESRD.

Kevin McDonaldIt’s challenging to identify and restore underpaid ESRD premiums. Here’s how to solve that.
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Why Medicare Advantage plans may be losing money on members with ESRD

March 6, 2019 Lyndsay Deckert
Why Medicare Advantage plans may be losing money on members with ESRD

MA plans may be operating at a deficit for some members with ESRD diagnoses

Among the Medicare Advantage (MA) population, roughly half of a percent of members have a costly disease known as ESRD, or end-stage renal disease. Though this accounts for just under 100,000 people nationwide, the disease requires expensive, life-long care, which results in a disproportionate percentage of medical expense. For this reason, MA plans must ensure they know who these members are and verify that the premiums they’re receiving from The Centers for Medicare and Medicaid Services (CMS) are correct.

The 21st Century Cures Act (CURES; P.L. 114-255) will allow Medicare-eligible individuals with existing ESRD to enroll in Medicare Part C plans beginning in 2021[i]. With this significant change and as MA plans grow in popularity among older Americans, plans can expect to see an increase in their members with ESRD. To help manage this change, plans must focus on maximizing their financial performance so they can continue to remain competitive and offer enhanced benefits and care for their members.

And when it comes to covering the cost of care for members with ESRD, if CMS isn’t correctly paying these members’ premiums, then plans begin to operate at a deficit for these members. They pay the high cost of care, including ongoing dialysis treatments, but they do not receive the revenue to cover those costs. Over time, this adds up to millions in lost revenue for plans.

Higher CMS premiums should cover higher cost of care

CMS pays MA plans a significantly higher premium for each member with ESRD to help cover the higher costs of their expensive long-term treatment and care. The difference between a base monthly premium for a healthy member and a member with ESRD is roughly $6,000.

Because most members with ESRD are affected by a variety of additional health factors that affect their CMS premiums to the MA plan, the actual monthly loss per member can exceed $7,000. You can see how, when those premiums go unpaid, this adds up quickly for a single member and why, for such a small population, the deficit can grow exponentially across the whole population. Considering nationwide MA membership, this represents as much as $600 million in lost ESRD revenue opportunity industry-wide.

ESRD diagnoses go unnoticed

You may wonder how CMS might be overlooking ESRD statuses. The reasons range from clerical errors to eligibility issues to technology problems. Sometimes it’s just a matter of a delay before CMS begins paying the premiums. In any case, it’s incumbent on the health plan to find these errors and work to correct them so they can recoup underpaid premiums.

Like with premiums for Medicare Secondary Payer (MSP), CMS allows health plans to recover underpaid ESRD premiums 84 months in arrears. All MA plans should examine their populations to identify any missed ESRD statuses and corresponding premium errors. They can work through CMS and providers to identify why the errors happened, correct the problems, and restore underpaid premiums.

Is my plan losing out on ESRD revenue?

Possibly. Unfortunately, ESRD premium gaps are difficult to manage because of the reliance on third-party providers such as dialysis centers.

The bottom line is that ESRD patients may not get flagged in CMS data. And since plans don’t have ready access to the information used in ESRD treatment and reporting, they may not even be aware of a member’s diagnosis until months or years into their treatment, after they have already missed out on millions in premiums.

We work with a number of MA plans to find missing ESRD flags and restore underpaid premiums for those members.  We’ve consistently identified millions of dollars in underpaid premiums for plans with more than 100,000 members. And even though some of these plans already successfully identified missing ESRD flags, we uncovered even more.

Learn more about restoring underpaid premiums for members with ESRD.

[i] https://fas.org/sgp/crs/misc/R45290.pdf

Lyndsay DeckertWhy Medicare Advantage plans may be losing money on members with ESRD
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The real cost of the payment integrity challenge

February 3, 2015 Discovery Health Partners ,
The real cost of the payment integrity challenge

Clearly healthcare is the most interesting and dynamic sector in the U.S. today. We are witness to an unprecedented transformation as healthcare stakeholders embrace new delivery entities and new reimbursement models, shift attention to building relationships with members, and explore new markets. There will be winners and losers in this game, and everyone is placing their bets.

The transformation underway is also forcing payers to prioritize where they are spending their money, and more attention is shifting to a corner of the ecosystem that has been neglected:  the efficiency of the billing transaction process between payer and provider, what we term healthcare “payment integrity,” or to state it more accurately, the lack thereof. As one speaker at AHIP Institute said, “there’s a lot of money changing hands for no apparent reason.”

Payment integrity ensures that a health claim is paid correctly—by the responsible party, for eligible members, according to contractual terms, not in error, and free of wasteful or abusive practices. As every payer and provider knows, determining whether a claim has been paid correctly requires departments full of claims analysts, auditors, and investigators.  And that’s the problem!

What is the cost of this waste and inefficiency?  The Institute of Medicine, a well-respected independent think tank, estimated that 30% of health spending in 2009—$750 billion—was wasted on unnecessary services and care coordination problems, excessive administrative costs, fraud, and other failures.  Focusing on payment integrity specifically, this included $190 billion in wasted administrative cost and $75 billion in fraud.  Earning wide coverage in media such as the NY Times and elsewhere, this report called for a system-wide reform.

More recently, an April 2012 study by Donald M. Berwick, former administrator for the Centers for Medicare and Medicaid Services (CMS), and RAND Corporation analyst Andrew D. Hackbarth estimated that five categories of waste consumed $476 billion to $992 billion, or 18 percent to 37 percent of the approximately $2.6 trillion annual total of all health spending in 2011.  This data suggests a problem of staggering proportions.

We estimate for healthcare payers that payment integrity problems cost them 3-7 percent of their paid claim dollars every year. That means, for example, a 500,000-member health plan with costs averaging $3,600 per member per year will pay $1.8 billion in claims, of which $56-131 MM will be wasted expense.  This hidden leakage is a problem not just for the payers (and their providers) who bear the direct cost of this administrative inefficiency.   It impacts the employers who underwrite the cost of group insurance, members who now shoulder more of the cost of care, and the economy at large as healthcare costs continue to consume more of our GNP.

Improved payment integrity is essential to a real healthcare transformation.   It is also a hidden source of funding for payers that could be put to work to enter new markets, engage with members, and tackle the challenges of reform.   It won’t be easy, and it won’t happen fast, but it is possible, as we’ll explore in future posts. We’ll examine how everything from technology to organizational structure can have a positive impact on payment integrity as we explore best practices, client case studies, and proven solutions. Stay tuned!

 

 

 

 

 

 

 

 

 

 

 

 

Discovery Health PartnersThe real cost of the payment integrity challenge
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