Many health plans are looking for ways to maximize their performance in the new year. Payment integrity can help plans and other healthcare organizations operate more efficiently. But where to begin?
Looking at the health of Medicare Secondary Payer (MSP) validation and premium restoration program can offer an easy and quick financial success story. For most Medicare Advantage (MA) plans, group health plan mandatory reporting and premium reimbursement practices result in millions of dollars of underpaid premium revenue. In fact, on average, a 50K-life MA plan could be missing more than $7 million in underpaid premiums due to the MSP provision -- and it's often much more.
Why it happens
At the core, it's a problem with eligibility data. Member information that changes hands between commercial payers, CMS, and Medicare Advantage plans is often inconsistent. If a commercial plan claims a member as primary, then Medicare assumes that information is correct. In this situation, CMS pays the MA plan a lower (secondary) premium for that member. Meanwhile, the MA plan data may show Medicare as the primary payer and the plan pays claims for those members as primary. It's a double financial hit for MA plans.
Since many plans don't realize how often MSP records are wrong in terms of payer primacy, they don't realize how much revenue is impacted by reduced premiums. And while most plans complete one part of the process with validation, if the plan doesn't track the record through to completion, they aren't identifying opportunities to restore premiums. It is a worthwhile effort - we've calculated that on average, 4 percent of a MA plan's membership has open records and that 50 percent of those records have premium restoration potential.
How to solve the problem
MA plans should examine the potential impact of their MSP program on revenue. Then, take a look at how MSP is currently being addressed to identify process gaps that prevent full identification and/or restoration of premiums, with automated and streamlined work flows.
Underpaid premiums can be restored in a matter of months, and if eligibility is fixed, claims will be on track to be paid correctly going forward.
It's actually not too hard to get started once a plan has identified the necessary MSP and eligibility files. Many plans realize savings in a matter of a few weeks and in fact, most receive their biggest restorations within three months. Efforts to restore premiums can go back to 36 months of reductions.
Laura Cohen is vice president of operations at Discovery Health Partners.