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How One Healthcare System Recovers Underpaid Claims

Karen Minich-Pourshadi, for HealthLeaders Media, March 16, 2011
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Hennigan explains that knowing that its contract management system had missed that much sparked interest in adding an additional tool, an underpayment recovery solution that could more effectively identify payment variances and expedite the time-intensive follow-up process?the interpretation and validation stages. Moreover, Presbyterian wanted real-time access to data to identify issues before they affected the bottom line .

?We already had a contract software solution but weren?t able to complete what we needed with that tool and it was letting the payer call the shots ? We can?t afford to operate that way, but we couldn?t hire enough people to deal with all the volume either,? says Hennigan. ?We decided to add the Apollo underpayment recovery solution because it would work with our existing information system.?

Instead of bringing in additional people to analyze all the claims, with the push of a button, the technology was able to cull through years of historical billing and account and clinical data to identify contractual payment anomalies and flag underpaid claims?both high- and low-dollar accounts. What the technology showed was that over an 18-month period, $32 million was missing due to underpaid claims.

To expedite the process and pursue the missing money, Presbyterian used a bulk automated appeal process to ensure its claims were paid based on contract specifications and was able to recover nearly $25 million of that money.

?Many hospitals don?t have technology to validate being paid accurately?the vast majority don?t?and right now they are losing an unknown amount of money with patient validation due to their contracts? complexities,? says Jason L. Adams, FACHE, vice president of revenue cycle for MultiCare Health System based in Tacoma, WA. ?If an organization doesn?t have the technology to check by exception for underpayments and overpayments, then from a profitability perspective, they?re missing out. But we are also talking about finding clinical variations and documentation and the type of care that?s provided to each patient, which feeds into accurate claims data.?

MultiCare is a not-for-profit, integrated health organization consisting of four hospitals, numerous primary care and urgent care clinics, multi-specialty centers, and hospice and home health services. It began using predictive analytics more than a year ago to find lost revenue in its charge capture process and also found it helped with underpaid claims. ?At first I didn?t think we?d find anything in lost revenue due to charge capture. We went live and three months later we had already realized $1 million in missed charges.?

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