- Key insight: Here's why forward-thinking advisers are pushing clients toward independent payment-integrity solutions.
- What's at stake: Employers who lose plan assets to undetected fraud, waste and billing errors.
- Forward look: Watch for how major insurance-owned third-party administrators respond to demanding brokers and employers.
Source: Bullets generated by AI with editorial review
Forward-thinking advisers are increasingly connecting their self-insured employer clients with independent payment-integrity solutions to better comply with price-transparency laws and regulations, and become better stewards of the benefits they offer.
Payment integrity combines technology, analytics, clinical expertise and auditing to ensure that healthcare claims are paid accurately by identifying and preventing fraud, waste, abuse, billing errors and contract noncompliance.
Leaning into this issue can also become a competitive advantage in landing clients that want to pursue more aggressive strategies for reining in rising health benefit costs. ClaimInformatics, for example, uses highly sophisticated AI-supported technologies to ensure claims are adjudicated correctly and flag ERISA and Consolidated Appropriations Act of 2021 violations.
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"It's incredibly important to have oversight of how claims are paid, and it's not just important from a dollars-and-cents perspective, but also from a fiduciary perspective," noted Stephen Carrabba, co-founder and CEO of ClaimInformatics, which provides a contract compliance tool that recently became available to brokers. "What I've been saying for the good part of a year is that 401(k) oversight is here for health plans."
Spotting red flags
Vetting who is part of the health benefits supply chain is critically important to understanding the importance of payment integrity. One of eight requirements a health and welfare benefits plan fiduciary faces under ERISA is the need to monitor service providers. Others include protecting plan assets, as well as ensuring fees are reasonable and plan documents are being followed to demonstrate prudence to be loyal.
Third-party administrators (TPAs) that are owned by Blue Cross Blue Shield, UnitedHealthcare, Cigna and Aetna (so-called BUCA plans) have stipulations in their administrative-services-only contracts that restrict the sharing of health plan data with their self-insured employer clients, according to Jack Tartaro, director of health and benefits for Willis Towers Watson.
"That in itself is a red flag," he said.
On top of that, most of those contracts allow for a 1% error rate in adjudicating claims, which is still a huge number if it's not being adjudicated correctly for clients of his that are spending $100 million a year on benefits. In contrast, independent TPAs are unencumbered by these obstacles or potential conflicts of interest associated with vertically integrated large health insurers owning their own TPA, stop-loss carrier, pharmacy benefit manager, or other entity.
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Tartaro noted that BUCAs are on the defensive as they determine how to amicably respond to brokers and consultants like him and their employer groups. He encourages employers to seek unbridled access to health plan data to ensure that claims are being paid correctly.
"If you have a lawsuit and can't even tell them accurately how your money is being spent, that is not defensible in court," he explained.
The prepayment trend
Payment integrity increasingly is emphasizing the need to properly adjudicate claims on a prepayment vs. post-payment basis. In recalling how one client berated him over a delay in recouping overpayments, Carrabba explained that it's a steep uphill battle if the carrier is unwilling to provide the necessary data or a provider resists efforts to claw back payments that were already made.
"This is why you need prepayment," he said.
His company started out in payment integrity on a post-payment basis with an entire recovery division in place, but has since morphed into a prepayment service that now also intercepts claims post-adjudication prior to payment.
BUCA involvement renders payment integrity impossible on the pre-adjudication side, Tartaro cautioned, noting an inability to review claims before the TPA they own actually pays them. While not yet a space that is fully operational, he is still optimistic about all the exploration currently happening in payment integrity.
Added Carrabba: "Independent payment integrity is here, whether the industry likes it or not. Contracts are going to change. The tools that organizations like ours are building, coupled with great ERISA attorneys really pushing back, are forcing that change. This is what the market is now demanding from the Fortune 50 all the way down to 100-life plans."
