Avoidable Claims Denials and the Road to Payer/Provider Collaboration

All right, Joe and I are back together today. Welcome back to GovTechs In Case You Missed It, our weekly livestream that dives into the latest trends, news, and best practices in the world of government technology. Today we're talking about improving Medicaid claims management and reducing avoidable denials. We'll be discussing the current state of Medicaid claims processing, the impact of avoidable denials on both providers and payers, and exploring how technology and collaboration can modernize the process for increased efficiency and satisfaction. So grab a seat and let's dive into this exciting and informative discussion. Let's welcome back to the show Optum's John Campbell, Director of Product Management for Optum State Government Solution. John, thanks so much for carving some time out today. All right.

Hello.

So first, for those that missed your last episode back in November, can you tell us a little bit about yourself and your public and private sector background.

Sure. Thanks again for having me back. I appreciate it. So I've been with Optum about 7 and a half years now, working primarily on the Medicaid space and offerings that Optum has in that area, mostly about modernizing Medicaid programs and identifying products that are being used and innovated in the commercial space and seeing if they are applicable to the Medicaid space, and then when they are, helping to mature those products and bring them to that market. Prior to my tenure here with Optum, I was with the state of Utah, where I was the director of Medicaid Enterprise Systems. And in that role for about 7 and a half years also, about half of it I was working on the legacy claims payment system, administering that, and managing the improvements to that process. And then for the last 3 and a half years, I worked on the Medicaid Claims Payment Replacement Project and led the technology components of that solution. So all from the state side. Now, prior to my government work, I worked in a variety of sectors in technology, principally in database management and leadership. Worked in pharmaceuticals, finance, supply chain management, telecommunications, and probably one or two other industries that, that are escaping my memory at the moment. So.

All right, well, that's, that's super helpful, and thanks for that. Now, given your experience in, in the Medicaid space, maybe you could break it down for our audience. How are governments currently managing the Medicaid claims process, and, and what do you mean by avoidable denials?

Sure, it's a great question. It, it probably comes up a lot when people see these words together. So our focus really is on claims for services which are rendered and have been billed in good faith. Now, we're not talking about claims which might fall into the fraud, waste, and abuse categories. Those are what I would call legitimate denials. But really, those claims where services were rendered, The member and the provider did all of that in good faith. And so we want to get ahead of that process. So when we're talking about how Medicaid programs are currently billing and addressing claims of this nature, we're looking— there isn't really anything special about how the claims engines are adjudicating claims. They are applying the rules as they're published and programmed within them. The issue here really is that Medicaid programs are necessarily complex programs, and the billing and reimbursement rules are equally complex. So getting ahead of that complexity can be achieved through transparency, and that is the transparency of those program rules and the reimbursement requirements. And getting that in front of providers in a way that they can utilize and leverage as they're building their claims claims to send them forward to the program for reimbursement. And what we've identified through some recent academic studies is that about 86% of all claims that are denied are avoidable in one way or another. The remaining denials, the other 14-ish percent, are those legitimate claims— are denied claims that probably shouldn't have been billed in the first place. So we want to identify how— techniques and processes and systems that we can implement that would allow us to reduce that 86% down to a much more reasonable number. And this has a substantial impact on providers and their performance within the program. So kind of going back to that academic study that I mentioned, that same study has shown that Medicaid claims themselves are denied at a substantially higher rate than Medicare or commercial claims. In fact, about 25% of initial claims submitted to Medicaid programs are denied on average, and that's about nearly 4 times the initial denial rate for Medicare and commercial. Now, the reasons for the denials, they range all over the map, and they're pretty universal. So, things like eligibility issues, missing or invalid claims data, coding errors, services not covered, things of that nature. all fall within this 86% that I'm referencing. Now, what the impact of this is, is that— pardon me— providers have to— there is an impact on both sides. You know, payers, the program itself has to handle providers when they are calling up and inquiring about why a claim was denied. Similarly, a payer, the provider themselves, has to pursue reimbursement of that claim after it's been denied and they feel they are actually due the reimbursement. So providers in the Medicaid space though, they have an outsized burden in terms of recouping their expected reimbursements from the payer. And this is due to the fact that the cost of going through the reimbursement or— sorry, the cost of going through the appeals process Siphons away about 17.5% of their expected but already low revenue. So on average, we see that Medicaid providers are losing a substantial portion of their revenue due to these, these anticipated or improper denials, I guess I should say. And, and that creates such a burden on them that That ultimately has an impact on providers' willingness to remain in the program.

Yeah, I think that's great insight there. I mean, as we look at avoidable denials, it's hard to just, you know, think about all of the implications of that. But as you said, you know, this is a compounding problem that has a lot of different impacts for the, you know, the payer and the provider. Now let's kind of shift gears and talk about, you know, how people are solving this. So modernization is kind of one of those top-of-mind things that we often hear at the state, you know, level where they're taking, you know, archaic, you know, on-premise, old-school technology infrastructure and looking at modernizing it. So I'd love to kind of get your thoughts on how state governments can leverage technology to modernize this claims process, you know, looking at solving that avoidable denial dynamic and also improving provider satisfaction and program efficiency in the process.

Right, yeah. So, um, when I want to focus on, um, the technology aspects of it, we, we don't want to get hung up on some of the things we can't control. And I like to refer to those as gravity issues. So as a technologist, I can't really control how the legislature is going to allocate program administration and operations funds, which directly drive reimbursement rates. But we can work on technical solutions that really come in at essentially a low cost that can both improve that anticipated revenue or the real revenue that a provider gets back. I mentioned a minute ago, they have that drain of about 17%. So by reducing that, we can improve provider satisfaction in the long run. So what we're suggesting here is that Medicaid programs need to look at technologies that can provide transparency of the program rules and policies and procedures to the provider at the point where they need it. And we feel that the point that the providers need that transparency is when they're building their claims for— prior to submission for reimbursement. Now, this has typically been performed through the use and deployment of newer, better, more efficient provider portals that have the program rule documentation published in a way that providers can get to it more easily. But that does not address the kind of fundamental issue of these programs are complex and providers need to have a more simple way of getting to that data. And, and as I mentioned in the previous question and response, these same claim types are not being denied at the rate that they are in, in, in commercial Or sorry, let me rephrase that. The same claim types that are denied in Medicaid are not being denied at the same rate in commercial and Medicare because those programs are more transparent in what the payer is expecting from the provider. So we want to get to that kind of level of transparency so that when providers are constructing their claims, that they know how to do it in a much more simple and clear manner based off of the member's eligibility and the program rules that that member's eligible So, what we are suggesting is that Medicaid programs look for solutions that can provide that level of transparency either directly to the provider as they're building the claim or in the EDI stream prior to that claim hitting the adjudication engine and denying. And technologies exist on the market that can provide both of those solutions. And we feel that those will benefit Medicaid programs in a much greater way than the traditional published documentation and hope that they read it method that we've worked with for so long.

So, you know, one of the things that our audience loves are these examples. They wanna know who's doing it, who's doing it well. You've made a series of kind of recommendations and suggestions now for states to look at. Can you share with us an example of maybe a jurisdiction that's done, you know, these recommendations, that's integrated the technology that you've talked about, and what outcomes they've observed?

Absolutely. So I've got 2 examples that I'll use. One of them, I'm not sure that I can name the jurisdiction due to contractual reasons, but that is a state Medicaid agency who's using one of these tools that I was suggesting, one that Optum produces, and it's It's actually working within the EDI stream to report back to providers when a claim is likely to deny and tell the provider exactly why, as opposed to a traditional CARC or RARC. It's a very plain English kind of message. What I can say though is that we have deployed the same tool in the Medicaid space— sorry, Medicare space. And in fact, all Medicare MACs today are utilizing this product which is providing this messaging back to providers. And this is nationwide. So any provider that is a Medicare provider and submitting claims via EDI has the capability of receiving these messages back depending on their provider type and some other factors. But all Medicare MACs in the country are currently using this. And we're seeing a lot of positive feedback from the MACs themselves, as well as from the providers that are utilizing it. Because of the clarity of information that they are receiving from their payer, which is specific to that claim and the rules surrounding that member and the date of service and all the other factors that go into adjudication. It's just very clear messaging back, and they're able to act on it in a matter of, in some cases, minutes, but more realistically within a day and get that claim cleaned up and back to the payer before, with no lag would be a better way, best way.

Great, great results there. Now, you know, I know sometimes there's some carryover innovations and maybe some other interesting unexpected use cases that you might have witnessed with these implementations. Anything top of mind that, you know, maybe stands out to you as additional unforeseen benefits of this modernization work?

Oh, yes. In fact, one of the— that jurisdiction I couldn't mention brought about an innovation that, frankly, I never would have thought of. It was just outside of the— very much outside-of-the-box thinking. And what they've done is use this tool within the EDI stream to get in front of claims that are being submitted to their managed care organizations. And in this context, they're performing some oversight and collaboration with the managed care organizations to, to get what are essentially real-time metrics about provider claim submission patterns and MCO response to those claims. So with this tool, we're able to give the Medicaid agency a view into managed care organization performance in what is a near real-time model, whereas prior to that, the lag with oversight of those organizations could be at best a month, but more likely it's going to be several months looking in arrears. But we're able to give this state and jurisdiction a view that they previously had no insight into, and this allows them to take corrective actions or provide reporting to their legislative bodies and stakeholders much more rapidly and meaningful than they ever were in the past.

So how should our IT audience, public sector IT leaders, address this as a priority and Is there a typical champion for managing these avoidable claims denials in a Medicaid agency?

Yeah, so, I mean, the first thing about addressing anything is recognizing that there is a problem. And the problem, this particular problem is one that I feel has flown under the radar forever, essentially. And that's, now that we have tools that can help rectify it, I think is why we're starting to see chatter about it. So in terms of, IT professionals and what we can do as an organization is to champion the problem and then also help provide solutions for that problem. Now, the one— the solutions that I'm espousing are ones that are very IT-centric, and we can get behind them and show the benefits and the costs that are associated with it. Now, in terms of a typical champion for such a solution. It really ranges across the spectrum. The first people that I look to are those that are in the provider enrollment and management space, because providers are the ones that are most negatively impacted by avoidable claims denials or claims— improper claims denials. They're impacted in their pocketbook. And as I mentioned, we've got studies that are showing conclusively that this is having a negative impact on provider enrollment. within Medicaid programs. And that's the last thing we need is providers leaving because of cost reasons. So we need to reduce the impact that providers are feeling from that. So provider enrollment and management team members and leaders would be my initial choice for champions. But then on the flip side of that, the claims teams as well, because by reducing, improper claims denials, we're also improving the performance of the claims system itself by increasing auto-adjudication rates, obviously decreasing denial rates. And this also has a follow-on effect of improving or reducing the suspend rates within the claims system, which brings the overall workload of the operations teams down.

So, you know, one of the other things that we often hear is around how do you know what you're doing is successful? So, you know, I've made the decision to kind of follow your best practices. I've modernized this infrastructure. You know, what are the metrics that both payers and providers can use now to track progress and evaluate that success in reducing or eliminating those avoidable claims denials? Any thoughts on that?

Right. Yeah. So when it comes to metrics, there's a few obvious ones. You're going to have your auto-adjudication rate, your denial rates. Those are easily tracked over time. They're probably being currently tracked in all claims systems. So those will give you— those particular metrics will give you an objective view over whether we're seeing a trend down in or a trend up, depending on which metric we're looking at, over time, after— before, during, and after the implementation of one of these solutions. Now, each payer is going to be different, and What they're looking for in terms of metrics to track performance of claims is— will change depending on their own environment and what they're— what's important to them at that point in time. Now, many of these reports are already being run, so suspend reports would be anything around claim suspension would be very interesting to review. as we're implementing one of these programs. Similarly, anything on the fraud, waste, and abuse side, because these tools, because they're getting ahead of the curve of claim submission, are also able to communicate proper billing expectations from the payer to the provider. And we would be able to see— we should be able to see a trend down in fraudulent claim activity. So those are some Interesting metrics that should be pursued by anybody implementing these solutions. But then of course there's going to be a whole host of custom metrics that each payer implements on their own.

So the easiest question you're going to get from us all episode, but where does our audience go to learn more about Optum solutions?

Well, I think we've got a ticker on screen right now. So we have a URL that will tell you specifically about the Optum solutions that I'm talking about. talking about, optim.com/stategovace. And then, of course, I'm more than willing to talk to anybody about these solutions. I'll talk your ear off if you let me. And you can find me on LinkedIn. I think the ticker there has my LinkedIn address and an email if you're so inclined, john.campbell@optim.com. I'd be more than happy to talk about these solutions day or night. Great.

Awesome. Well, John, thank you so much for coming on In Case You Missed It and joining Dustin and I this week to talk about, uh, this very important topic.

Great. Thanks for having me, Joe, Dustin. Great to see you guys again.

All right, everyone, have a wonderful weekend.