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Is Your Data Dirty? The Value of Pre-Adjudication in Healthcare Claims Processing

Pre-adjudication — anything that happens before the payment of a claim — is especially valuable for today’s health plans, benefit administrators and networks. By focusing on the front end, the pre-adjudication process ultimately helps to reduce operational costs, increase adjudication and first-pass rates, and improve overall customer service.

Healthcare payers and benefit administrators are turning to pre-adjudication technologies that eliminate error-prone human processes and increase claim payment accuracy. Effective claims processing technologies can deliver this value at a low cost to enhance a health plan’s paper conversion, EDI claim cleaning and disaster recovery.

Automating the claims process, including claim data cleaning, increases claims quality and reduces costs. The impact can be maximized for individual payer requirements. Claim information can be improved so that it matches system files, lowering reject rates and improving adjudication rates all while ensuring HIPAA security and consistency.

This paper explores:

• The challenges of healthcare claims processing• How pre-adjudication addresses those

challenges• The benefits of advanced pre-adjudication

technologies.

Vincent Vallejo Director, Healthcare Business Development

BancTec

Challenges to providing healthcare claims processing services include claim data accuracy, scrutiny of payments, patient privacy demands, regulatory mandates and processing costs. Let’s examine the first three.

Claim data accuracy — Inaccurate, incomplete or erroneous data – dirty data – often results from a lack of updating of claim filing with payer system records. This data must constantly be synced to allow for increased member and provider matching.

Scrutiny of payments — As a result of healthcare reform, federal agencies now are initiating more robust audits, leveraging new technologies and focusing on improved healthcare processing integrity. These efforts reduce payment errors and prevent taxpayer dollars from being wasted in payments to the wrong people and in the wrong amounts.

Patient privacy demands — With electronic claims becoming an industry standard, patient privacy is one of the most important elements of healthcare information technology. With HIPAA requiring facilities to protect their electronic medical records with the proper IT security controls, guaranteed compliance with stringent security and information safeguards is essential.

How to Advance Your Claims Processing Advanced processing automation technologies can ensure accuracy of all claims processed. Paper and EDI claims, such as CMS 1500 and UB04 forms, can be imaged and converted to electronic format (837) and transmitted back to integrate with the appropriate claim system.

The most trusted BPO providers have made significant investments in enterprise software and infrastructure development, specifically addressing data security requirements. Annual external audits ensure SOC 1 (formerly SSAE 16 & SAS 70) compliance, and a multisite processing model coupled with high-availability technical architecture allows for superior business continuity and disaster recovery capabilities.

By focusing on the front-end operations for claims processing, 100 percent electronic claims submission can be enabled to reduce administrative costs and improve auto-adjudication rates.

Resolve Healthcare Claims Processing Issues with Breakthrough TechnologyOver the past decade, many organizations moved aspects of their claims processing offshore, only to experience poor quality, staff turnover, operational problems and unanticipated costs.

With the right provider, organizations can get all the cost advantages of a traditional outsourced model without incurring the risks of cost increases, quality fluctuations and security issues associated with processing claims offshore. Quality service on the front end with state-of-the-art technology in a secure environment removes the risk of claim errors and human labor in remote locations. Using technology instead of manual labor allows the solution to be customized to adapt to specific business requirements and improve performance without additional capital investment.

Meeting the Challenge of Claims Processing

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Automation Technology Can Extract, Enhance & Integrate the Claims ProcessThe latest breakthrough processing technology can increase data accuracy, lower costs and bring faster cycle times. The technology can automate and integrate all aspects of pre-adjudication claims processing, including cleaning and enhancing claim data.

1. Extraction• Data receipt and extraction• Image pre-processing • Forms classification

2. Enhancement• Advanced claim validation (ACV) using claim heuristic

databases• Provider and member matching methodologies• Exception data validation

3. Integration• Customized claim system integration • Secure HIPAA-compliant EDI transmissions• File transfer acknowledgements

Sophisticated searching methodology and business rules can enhance provider and member file matching. Automated provider-member file matching works with files to align claim data with provider and member data for improved accuracy. Business rules and industry edits can further cleanse claim data to deliver quality results closely aligned with the adjudication system.

The latest advanced provider-member verification systems are backed by up to a 99 percent matching guarantee when matching claim data to member and provider files. Additionally, customized processing rules can emulate decisions made by examiners to automatically integrate and align the data.

Advanced business rules such as industry edits, data crosswalks and pattern recognition technologies can combine to ensure data quality, lower costs and improve auto-adjudication rates.

Wehaveexperienceda36%decreaseinturnaroundtimeforreceipttopaymentand a 33% decrease in total processing cost per claim.

- Business Solutions Director, State Medicaid HMO

Midwestern claims processor streamlines operating efficiency, improves accuracy and turnaround, and keeps data onshore. With reduced headcount and overall costs, the administrator is now positioned for growth.

Business ChallengesAs one of the first to install OCR capabilities for data entry improvement, this leading claims administrator was becoming increasingly dissatisfied with excessive processing costs despite being a recognized technology innovator in the industry. Even with measureable improvements, processing costs remained high since their OCR vendor was minimally proficient in the complex world of dental and medical claims data capture, validation and applying essential business rules required for streamlined processing. Cumbersome pre-adjudication duties, labor-intensive quality and accuracy checking functions, and excessive manual keying and re-keying often were required.

Requirements • Minimize direct labor cost• Assure cost-effective onshore claim processing• Improve claim data quality• Improve processing throughput rates• Streamline the claims processing environment• Position for growth

Best Practice SolutionThe BPO provider had a keen understanding of medical and dental claims processing, standard and custom business rule capabilities, and the value that could be added through the outsourcing of claims cleaning. The managed pre-adjudication services proved successful for the client’s dental claims services.

Results • Automated complex dental claim processing• Provided a competitively priced onshore solution, creating a 61 percent improvement• Reduced claim backlog • Dramatically improved claim data quality• Produced fast, measurable ROI by replacing direct labor cost with technology• 30-day turnaround rates have gone from 65 percent to 99.17 percent • 40-45 percent of all claims now processed with “one touch.”

case study: leading claims administrator

Best Practices for Advanced Claim ValidationThe introduction of advanced claim validation (ACV) accomplishes something that takes many BPO companies years to master. ACV is claim review based on deep industry knowledge and actual historical claims experience with individual providers, geographies, specialties and settings of care.

ACV balances heuristic data — such as ZIP codes, gender, and correlated data — so that payers are not inaccurately matching the claim data themselves. It takes out the manual intervention so that the payer doesn’t have to touch the claim, and the correct payment is sent to the provider.

This technology enhances the data for each payer and is customized for its payment system. The data flows into the appropriate claims system and is reflected as requested. ACV generates specific instructions for the exception processing technology to direct the claim specialists to problem areas for correction.

When industry and customer-specific business rules are strengthened with statistical filing patterns sampled from millions of actual claims, the results are impressive. Well-designed business rules can evaluate each new claim against history for a provider or geographic region across diagnosis, procedure, setting of care, price and other measures.

This intelligence enables the BPO vendor to “know” providers to create customized instructions for each claim ,and to quickly highlight issues for correction by an exception processing team. Advanced systems use many industry data sources in addition to the context of historical claims to establish ‘clues’ about the accuracy of the claim. The clues are then assessed together to come up with decisions that drive the creation of exception processing instructions custom built for exception processing each individual claim.

We reduced our volume of fall-out claims by 89%.

Thisreductioninmanualworkflowallowsusto

dedicatestafftimetocrosstrainingandother

keyinitiatives.

-SeniorDirectorofOperations, Large Integrated Health and Cost Containment

Electronic Data Interchange (EDI) Claim Intake and ProcessingFor years, Electronic Data Interchange (EDI) claims submission has reduced payer rejections and administrative costs while increasing the speed of the payment. So why do EDI transactions still have adjudication issues? The reason is that the best data the provider has is simply not good enough.

Payers and providers have natural differences in update cycles, system and business processes that contribute to adjudication errors. Payers contract with providers at longer periods than members – and members often update their information only annually. Sometimes payers receive regular updates from employer personnel, but more often than not, data is never given to the provider until an encounter. This is why demographic data becomes stale so quickly.

Providers have little opportunity to get patient data corrected, and they have limited resources and capabilities to keep their own demographic data synchronized with every payer.

Partnering with a BPO provider that maintains close professional relationships with major PPO networks and clearinghouses allows for direct integration with the clearinghouses to intake EDI claims. Automation technology reconciles the difference between provider and payer data, including provider and member information.

Once received, the data submitted on EDI claims is cleansed and enhanced through matching and data augmentation to synchronize the data on the claim with the data the payer expects to see. This significantly improves auto-adjudication rates. With the vast majority of data problems in healthcare introduced by synchronization issues, the percentage of improved EDI claims received can increase by as much as 90 percent when implemented correctly.

In addition to data reconciliation, processing both EDI and paper claims maximizes the ability to find the greatest number of duplicate claims that providers sometimes file by printing an EDI claim to paper in an attempt to accelerate payment.

case study: leading insurance companyWorkplace division of leading insurance company finds value in healthcare claims processing with improved payment accuracy and reduced costs.

Business ChallengesFueled by positive reports from its parent on how document imaging was streamlining numerous paper-based processes, this life, dental, supplemental health and disability insurance division went in search of help for its largely manual claims processing department. Initially, the parent company was chosen to perform Intelligent Character Recognition (ICR) services at a reasonable cost, but it was soon discovered that general document character recognition services provided little benefit over what a dedicated health claims outsourcer might provide.

A more specialized document imaging company was chosen to convert paper and various EDI-submitted claims to industry-accepted format standards for subsequent processing. However, the specialized nature of health, dental and disability claims was overwhelming for the inexperienced outsourcing vendor, despite proven ICR performance with other clients outside the healthcare sector.

Specific issues included significant keying and re-keying requirements, added costs, dwindling efficiency, with 80 percent of all claims still being manually adjudicated.

The Requirements• Minimize conversion cost• Assure cost-effective form development• A partner with healthcare claims expertise• Streamline the claims processing environment• Reduce duplicate claim overpayments • Build an STP foundation

Best Practice SolutionThe BPO provider was initially selected for document imaging, and it began full production paper-based claim conversion and EDI claims cleaning within four months. Outsourced services for mailroom processing, fax claim services and PPO processing followed.

The Results • Automated complex specialized and dental claim processing• Full production in four months• Increased auto-adjudication rates by 75 percent• 400-percent growth in claims processing without additional headcount• Improved and automated the re-pricing process• Produced fast, measurable ROI by replacing direct labor cost with technology

How to Meet Healthcare Compliance StandardsLeaders in claims processing have long recognized industry sensitivity with processing healthcare claims and related information. HIPAA compliance secures the privacy of protected health information (PHI).

Most effective pre-adjudication services are accomplished with advanced technology, but some claims still require exception

processing — meaning human intervention to investigate and correct individual fields that don’t meet standards.

The option of hybrid onshore/offshore claims processing, or redaction, has become a model worth considering. Redaction is made possible using form definition technology to slice through each claim image, and physically separates the patient/insured section, which contains the personally identifiable information (PII), from the rest of the claim. Redaction technology eliminates any possibility of a person or software illicitly obtaining the image or OCR results for PII fields.

In this model, the fragment containing PII can be routed to a trusted onshore location for exception processing while the non-PII fragment containing provider and service lines can be routed to an offshore location for exception processing at a lower cost. This balance creates a cost-effective process that meets all state-mandated requirements.

Reasons to take advantage of redaction technology include:

• The added assurance of knowing that PHI is eliminated for claims during all human-based exception processing activities.

• The promise that critical PII information does not leave the U.S. and is processed at HIPAA-compliant onshore processing locations.

• The price advantage and quality guarantee that comes from processing non-PII sections of the claim at a less costly offshore labor location.

Benefits Go Beyond Traditional BPO SolutionsAutomation solutions provide health plans with the best options for paper conversion, EDI claim cleaning and disaster recovery. Many find that high-quality technology simply delivers the best value at the lowest cost for accurate claims processing.

Healthcare payers and benefit administrators are provided with pre-adjudication technologies that replace error-prone human processes and provides applications for PPO network management, document management, workflow and overpayment protection. These solutions improve adjudication rates, increase payment accuracy and enhance customer service.

When a health plan or benefit administrator uses a BPO provider to manage its core pre-adjudication process, related services like mailroom and clearinghouse integration can become significantly less expensive to conduct since the core claim data is cleaned and indexed.

The technology creates faster cycle times and meets specialized demands of leading healthcare organizations, achieving a balance between solving industry challenges and compliance restrictions while improving the bottom line and the customer experience.

It is important to find a BPO provider that can incorporate specific business rules and customize its system capabilities to align with the client’s business needs. The technology must be scalable to quickly ingest new groups and business lines into the claims administration. A customizable and scalable solution can be provided to increase data accuracy with a technical infrastructure that provides 99.9-percent system availability.

We’re better at managing the distribution of our

workload, our overhead costs are down and our

auto-adjudication volumes have climbed.

- Director of Operations, TPA

The Claim Quality MythThe health insurance industry uses a claims processing metric called claim-level quality, but traditional OCR providers scan a claim and provide a claim-level representation of what was originally presented on the claim. Today, providers can recognize that data errors —

even those that match the claim submission — represent more expensive reject-processing consequences. A real quality guarantee includes a match rate of providers and members to a file with a less than one percent reject rate.

Conclusion: Eliminate Dirty Data on the Front EndAutomating every step of the pre-adjudication cycle allows claims to be processed more efficiently and more accurately. As claim processing improves, auto-adjudication rates rise and the total cost per claim falls.

Operational inefficiencies caused by error-prone human processes can be remedied. Leading BPO providers can outsource healthcare claims processing better, faster and more cost-effectively than any manual, in-house paper-based process.

Modern providers are notably different from traditional outsourced labor and BPO solutions, because the claim-cleaning power is derived completely from automation. The powerful technology can:

• Eliminate error-prone human processes• Guarantee increased pre-adjudication rates• Increase claim payment accuracy• Lower costs per claim.

A cleaner payment process is created by innovative automation technology that eliminates dirty data on the front end. The lower an organization’s adjudication rate, the more advanced pre-adjudication technologies can help.

About BancTec BancTec helps clients around the world simplify the process of managing their information.

Founded in 1972, the company provides financial transaction automation and document management services for organizations seeking to drive efficiency in their financial and back-office processes. Operating 21 BPO centers in the United States and worldwide, BancTec utilizes a common technology platform to deliver reliability, security, and consistently high levels of performance.

For further details, visit www.banctec.com