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Part of this administrative burden stems from a complex claims adjudication process impacted by legacy or outdated technology, a lack of clear contract or policy information, and no universal way for sharing information (e.g., member’s name, diagnosis code, etc.).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 But outdated or legacy technology can create just as much waste as you might find with manual processes.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.
Subrahmanyam ManthaThree 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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