Availity Blog

5 Pain Points of Claims for Payers


6.15.2016 by CLAY ROBERTSON – Business Solutions Expert


As long as there’s been medical insurance claims there’s been a tug-of-war between payers and providers. Payers want clean claims and providers want to get paid promptly. Meanwhile, “dirty claims” --- those with errors --- are causing billions of dollars in added expenses for the healthcare industry because payers and providers have to retain extra resources to manage the rework and manual processes, among other factors. Experts agree that both payers and providers are at fault for the “calamity of claims” that exists today.

In this two part blog series, we first looked at five pain points of the claims for providers and in this post the focus will be on payers.

For payers, the pain points associated with claims span a wide spectrum. Some of their headaches are caused internally because of inefficient processes, others are caused externally by providers submitting claims with errors.

  1. Incorrect or missing patient and/or insurance plan information.
    A large volume of the claims payers receive from providers are missing basic patient information such as appointment date and age, or contain incorrect details about the patient’s insurance coverage. Health plans spend significant time and resources managing these issues caused by errors in submitted claims. Often the errors are not attributed to some of the more nuanced reasons for denials such as the wrong medical code or a new rule.
  2. Denied or pended claims.
    When a payer denies a claim it is one of the most expensive parts of the claims process. This is because a denial inevitability leads to an appeal by the provider and generates another cycle of back and forth unclear communication between the two groups. Pended claims are also a headache for payers. The ambiguity of not being able to categorize the claim into a specific status will likely cause inaccuracies in operational and financial reports for the payer.
  3. Queries, Appeals, or Missing required documentation.
    Providers query the status of a claim more frequently than other reasons for seeking additional information to determine when they will get paid. The amount of queries a health plan receives can add-up very quickly. Typically, a different query is needed for each claim. Multiply whatever that number is by the size of the payer’s provider network and the volume of queries can be huge. For pretty much every claim that is denied, a provider will file an appeal in hopes the payer will reconsider and eventually issue reimbursement. The rub for payers with appeals is it is another manual process that needs to be managed by someone on their team. If a claim comes into the payer without the required documentation of services that is yet another manual effort for the payer representative to contact the provider to supply the information.
  4. Manual rework.
    Manual rework rubs salt in the wound that payers (and providers) already have because of the sometimes painful claims submission and payment processes. As mentioned above, many of the most cumbersome pieces of the claims process (denials, appeals, missing documentation, etc.) are not automated. This means a significant budget item for a payer is attributed to staffing resources to contact providers in an attempt to gather missing information or explain why a claim was denied.
  5. Overpayments.
    Paying on an inaccurate claim and trying to recoup money after the fact can be an effort in futility for payers, yet this “pay and chase” recovery model will likely continue to occur for the foreseeable future. In an effort to collect the overpayment amount, health plans conduct several follow-up activities all of which are manual and increase a payer’s administrative costs. Action items such as letters, phone calls, and sometimes legal action can erode a claim’s original value and profit for the payer.

Final Thoughts.
As discussed throughout this list, the most significant cost of claims processing for payers and providers is labor. Ideally, each would spend the least amount of money possible to complete the claims process. Once a dirty claim hits the payer and is returned to the provider, the costs start adding up for both parties.

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