The value of pre adjudication in healthcare claims processing - banc tec's whitepaper

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BancTec provides Healthcare payers and benefit administrators with pre-adjudication technologies thus replacing error-prone human process and providing application for document management, PPO network management etc.

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The value of pre adjudication in healthcare claims processing - banc tec's whitepaper

  1. 1. WHITE PAPERWWW.BANCTEC.COMIs Your Data Dirty?The Value of Pre-Adjudication in Healthcare Claims ProcessingPre-adjudication — anything that happens beforethe payment of a claim — is especially valuable fortoday’s health plans, benefit administrators andnetworks. By focusing on the front end, the pre-adjudication process ultimately helps to reduceoperational costs, increase adjudication and first-pass rates, and improve overall customer service.Healthcare payers and benefit administratorsare turning to pre-adjudication technologiesthat eliminate error-prone human processesand increase claim payment accuracy. Effectiveclaims processing technologies can deliver thisvalue at a low cost to enhance a health plan’spaper conversion, EDI claim cleaning and disasterrecovery.Automating the claims process, including claimdata cleaning, increases claims quality and reducescosts. The impact can be maximized for individualpayer requirements. Claim information can beimproved so that it matches system files, loweringreject rates and improving adjudication rates allwhile ensuring HIPAA security and consistency.This paper explores:• The challenges of healthcare claims processing• How pre-adjudication addresses thosechallenges• The benefits of advanced pre-adjudicationtechnologies.Vincent VallejoDirector, Healthcare Business DevelopmentBancTec
  2. 2. Challenges to providing healthcare claims processing servicesinclude claim data accuracy, scrutiny of payments, patient privacydemands, regulatory mandates and processing costs. Let’sexamine the first three.Claim data accuracy — Inaccurate, incomplete or erroneous data– dirty data – often results from a lack of updating of claim filingwith payer system records. This data must constantly be syncedto allow for increased member and provider matching.Scrutiny of payments — As a result of healthcare reform, federalagencies now are initiating more robust audits, leveraging newtechnologies and focusing on improved healthcare processingintegrity. These efforts reduce payment errors and preventtaxpayer dollars from being wasted in payments to the wrongpeople and in the wrong amounts.Patient privacy demands — With electronic claims becoming anindustry standard, patient privacy is one of the most importantelements of healthcare information technology. With HIPAArequiring facilities to protect their electronic medical recordswith the proper IT security controls, guaranteed compliance withstringent security and information safeguards is essential.How to Advance Your Claims ProcessingAdvanced processing automation technologies can ensureaccuracy of all claims processed. Paper and EDI claims, suchas CMS 1500 and UB04 forms, can be imaged and converted toelectronic format (837) and transmitted back to integrate with theappropriate claim system.The most trusted BPO providers have made significantinvestments in enterprise software and infrastructuredevelopment, specifically addressing data security requirements.Annual external audits ensure SOC 1 (formerly SSAE 16 &SAS 70) compliance, and a multisite processing model coupledwith high-availability technical architecture allows for superiorbusiness continuity and disaster recovery capabilities.By focusing on the front-end operations for claims processing,100 percent electronic claims submission can be enabled toreduce administrative costs and improve auto-adjudication rates.Resolve Healthcare Claims Processing Issues withBreakthrough TechnologyOver the past decade, many organizations moved aspects oftheir claims processing offshore, only to experience poor quality,staff turnover, operational problems and unanticipated costs.With the right provider, organizations can get all the costadvantages of a traditional outsourced model without incurringthe risks of cost increases, quality fluctuations and security issuesassociated with processing claims offshore. Quality serviceon the front end with state-of-the-art technology in a secureenvironment removes the risk of claim errors and human laborin remote locations. Using technology instead of manual laborallows the solution to be customized to adapt to specific businessrequirements and improve performance without additional capitalinvestment.Meeting the Challengeof Claims ProcessingT: 800-226-2832 | E: INQUIRIES@BANCTEC.COM | WWW.BANCTEC.COM
  3. 3. Automation Technology Can Extract, Enhance &Integrate the Claims ProcessThe latest breakthrough processing technology can increasedata accuracy, lower costs and bring faster cycle times. Thetechnology can automate and integrate all aspects of pre-adjudication claims processing, including cleaning and enhancingclaim data.1. Extraction• Data receipt and extraction• Image pre-processing• Forms classification2. Enhancement• Advanced claim validation (ACV) using claim heuristicdatabases• Provider and member matching methodologies• Exception data validation3. Integration• Customized claim system integration• Secure HIPAA-compliant EDI transmissions• File transfer acknowledgementsSophisticated searching methodology and business rules canenhance provider and member file matching. Automated provider-member file matching works with files to align claim data withprovider and member data for improved accuracy. Business rulesand industry edits can further cleanse claim data to deliver qualityresults closely aligned with the adjudication system.The latest advanced provider-member verification systems arebacked by up to a 99 percent matching guarantee when matchingclaim data to member and provider files. Additionally, customizedprocessing rules can emulate decisions made by examiners toautomatically integrate and align the data.Advanced business rules such as industry edits, data crosswalksand pattern recognition technologies can combine to ensure dataquality, lower costs and improve auto-adjudication rates.We have experienced a 36% decrease in turnaround time for receipt to paymentand a 33% decrease in total processing cost per claim.- Business Solutions Director, State Medicaid HMO
  4. 4. Midwestern claims processor streamlines operating efficiency, improves accuracy and turnaround, and keeps data onshore. Withreduced 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 becomingincreasingly dissatisfied with excessive processing costs despite being a recognized technology innovator in the industry. Even withmeasureable improvements, processing costs remained high since their OCR vendor was minimally proficient in the complex worldof 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 growthBest Practice SolutionThe BPO provider had a keen understanding of medical and dental claims processing, standard and custom business rulecapabilities, and the value that could be added through the outsourcing of claims cleaning. The managed pre-adjudication servicesproved 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
  5. 5. Best Practices for Advanced Claim ValidationThe introduction of advanced claim validation (ACV) accomplishessomething that takes many BPO companies years to master.ACV is claim review based on deep industry knowledge andactual historical claims experience with individual providers,geographies, specialties and settings of care.ACV balances heuristic data — such as ZIP codes, gender, andcorrelated data — so that payers are not inaccurately matchingthe claim data themselves. It takes out the manual interventionso that the payer doesn’t have to touch the claim, and the correctpayment is sent to the provider.This technology enhances the data for each payer and iscustomized for its payment system. The data flows into theappropriate claims system and is reflected as requested. ACVgenerates specific instructions for the exception processingtechnology to direct the claim specialists to problem areas forcorrection.When industry and customer-specific business rules arestrengthened with statistical filing patterns sampled from millionsof actual claims, the results are impressive. Well-designedbusiness rules can evaluate each new claim against history for aprovider or geographic region across diagnosis, procedure, settingof care, price and other measures.This intelligence enables the BPO vendor to “know” providersto create customized instructions for each claim ,and to quicklyhighlight issues for correction by an exception processing team.Advanced systems use many industry data sources in additionto the context of historical claims to establish ‘clues’ about theaccuracy of the claim. The clues are then assessed togetherto come up with decisions that drive the creation of exceptionprocessing instructions custom built for exception processing eachindividual claim.We reduced our volume of fall-out claims by 89%.This reduction in manual workflow allows us todedicate staff time to cross training and otherkey initiatives.- Senior Director of Operations,Large Integrated Health and Cost Containment
  6. 6. Electronic Data Interchange (EDI) Claim Intake andProcessingFor years, Electronic Data Interchange (EDI) claims submissionhas reduced payer rejections and administrative costs whileincreasing the speed of the payment. So why do EDI transactionsstill have adjudication issues? The reason is that the best data theprovider has is simply not good enough.Payers and providers have natural differences in update cycles,system and business processes that contribute to adjudicationerrors. Payers contract with providers at longer periods thanmembers – and members often update their information onlyannually. Sometimes payers receive regular updates fromemployer personnel, but more often than not, data is never givento the provider until an encounter. This is why demographic databecomes stale so quickly.Providers have little opportunity to get patient data corrected, andthey have limited resources and capabilities to keep their owndemographic data synchronized with every payer.Partnering with a BPO provider that maintains close professionalrelationships with major PPO networks and clearinghouses allowsfor direct integration with the clearinghouses to intake EDI claims.Automation technology reconciles the difference between providerand payer data, including provider and member information.Once received, the data submitted on EDI claims is cleansedand enhanced through matching and data augmentation tosynchronize the data on the claim with the data the payer expectsto see. This significantly improves auto-adjudication rates.With the vast majority of data problems in healthcare introducedby synchronization issues, the percentage of improved EDIclaims received can increase by as much as 90 percent whenimplemented correctly.In addition to data reconciliation, processing both EDI and paperclaims maximizes the ability to find the greatest number ofduplicate claims that providers sometimes file by printing an EDIclaim to paper in an attempt to accelerate payment.
  7. 7. case study: leading insurance companyWorkplace division of leading insurance company finds value in healthcare claims processing with improved paymentaccuracy 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 claimsprocessing 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 providedlittle 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 toindustry-accepted format standards for subsequent processing. However, the specialized nature of health, dental anddisability claims was overwhelming for the inexperienced outsourcing vendor, despite proven ICR performance with otherclients outside the healthcare sector.Specific issues included significant keying and re-keying requirements, added costs, dwindling efficiency, with 80 percentof 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 foundationBest Practice SolutionThe BPO provider was initially selected for document imaging, and it began full production paper-based claim conversionand EDI claims cleaning within four months. Outsourced services for mailroom processing, fax claim services and PPOprocessing 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
  8. 8. How to Meet Healthcare Compliance StandardsLeaders in claims processing have long recognized industrysensitivity with processing healthcare claims and relatedinformation. HIPAA compliance secures the privacy of protectedhealth information (PHI).Most effective pre-adjudication services are accomplished withadvanced technology, but some claims still require exceptionprocessing — meaning human intervention to investigate andcorrect individual fields that don’t meet standards.The option of hybrid onshore/offshore claims processing, orredaction, has become a model worth considering. Redaction ismade possible using form definition technology to slice througheach claim image, and physically separates the patient/insuredsection, which contains the personally identifiable information(PII), from the rest of the claim. Redaction technology eliminatesany possibility of a person or software illicitly obtaining the imageor OCR results for PII fields.In this model, the fragment containing PII can be routed to atrusted onshore location for exception processing while the non-PII fragment containing provider and service lines can be routedto 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 eliminatedfor claims during all human-based exception processingactivities.• The promise that critical PII information does not leavethe U.S. and is processed at HIPAA-compliant onshoreprocessing locations.• The price advantage and quality guarantee that comes fromprocessing non-PII sections of the claim at a less costlyoffshore labor location.Benefits Go Beyond Traditional BPO SolutionsAutomation solutions provide health plans with the best options forpaper conversion, EDI claim cleaning and disaster recovery. Manyfind that high-quality technology simply delivers the best value atthe lowest cost for accurate claims processing.Healthcare payers and benefit administrators are providedwith pre-adjudication technologies that replace error-pronehuman processes and provides applications for PPO networkmanagement, document management, workflow and overpaymentprotection. These solutions improve adjudication rates, increasepayment accuracy and enhance customer service.When a health plan or benefit administrator uses a BPO providerto manage its core pre-adjudication process, related services likemailroom and clearinghouse integration can become significantlyless expensive to conduct since the core claim data is cleanedand indexed.The technology creates faster cycle times and meets specializeddemands of leading healthcare organizations, achieving a balancebetween solving industry challenges and compliance restrictionswhile improving the bottom line and the customer experience.It is important to find a BPO provider that can incorporate specificbusiness rules and customize its system capabilities to align withthe client’s business needs. The technology must be scalableto quickly ingest new groups and business lines into the claimsadministration. A customizable and scalable solution can beprovided to increase data accuracy with a technical infrastructurethat provides 99.9-percent system availability.We’re better at managing the distribution of ourworkload, our overhead costs are down and ourauto-adjudication volumes have climbed.- Director of Operations, TPA
  9. 9. The Claim Quality MythThe health insurance industry uses a claims processing metric called claim-level quality, but traditional OCR providers scan a claim andprovide 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 guaranteeincludes 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 claimprocessing 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 healthcareclaims 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 isderived 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 anorganization’s adjudication rate, the more advanced pre-adjudication technologies can help.About BancTecBancTec helps clients around the worldsimplify the process of managing theirinformation.Founded in 1972, the company providesfinancial transaction automation and documentmanagement services for organizationsseeking to drive efficiency in their financial andback-office processes. Operating 21 BPOcenters in the United States and worldwide,BancTec utilizes a common technologyplatform to deliver reliability, security, andconsistently high levels of performance.For further details, visit www.banctec.com

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