Most employers are bracing themselves for another round of rising healthcare costs, according to a recent survey by Willis Towers Watson consultants. Responses indicate that over the next three years, 7 out of 10 employers plan to prioritize curbing their rising healthcare costs.

The fact that rising healthcare costs may require some companies to cut back on healthcare benefits is a difficult pill to swallow. But it doesn’t have to be this way. While some employers are considering strategies like reallocating funds from other benefit plans or even docking pay to offset increasing healthcare costs, there are more effective strategies that offer more help than harm for all parties involved.

If you’re an employer who’s seeking ways to reduce healthcare spend without sacrificing the quality of benefits you provide your employees, implementing a claim negotiation strategy as part of a self-funded plan could be the solution you need. As a cost containment method that relies on principles of payment integrity, an effective claim negotiation strategy could significantly mitigate increasing healthcare costs by identifying errors in medical bills and repricing claims.

• Common sources of error
• Claim negotiation strategy for lower costs, higher payment integrity
• Industry expertise

Medical Billing Errors Are Far Too Common

An unfortunate fact of the healthcare industry is that medical billing errors are alarmingly frequent. Upwards of 80% of all medical bills and 100% of inpatient claims contain errors or overcharges. Some can be as simple as charging for too many painkillers during an emergency room visit. Other mistakes are much larger, like an error recording how much anesthesia was used and for how long.

Even if they’re small, the errors add up—especially with larger medical claims. Moreover, some errors turn out to be unnecessary charges for procedures or medication a patient never received. Studies show that anywhere from $760 billion to $935 billion is wasted on billing errors every year, which amounts to nearly 25% of all U.S. healthcare spending.

But why are such errors so recurrent? Let’s take a look at some of the most common sources of billing errors such as:

• Duplicate charges. Unfortunately, charging patients for the same medication or service is quite common. The overall cost of medical bills snowballs with such duplicate charges. If, for example, morphine costs as much as $80 per tablet, and a facility accidentally duplicates charges for each dosage, the charges for medication alone could easily exceed thousands of dollars for an extended hospital stay.
• Coding errors. Medical facilities often use a coding system that links treatments and services with symptoms and tracks services. Because these systems are complex and often convoluted, errors arise when incorrect codes are input or numbers get transposed. Some of these mistakes are the product of administrative errors while others could be caused by financial incentives.
• Network errors. Private insurance firms use a vast array of healthcare provider and facility networks, each with its own set of discounts and co-payments. This abundance of networks can cause errors if medical practitioners bill insurance companies or patients at improper rates. For comparison, think back to a time when your internet service provider forgot to bundle part of your plan, or included a service you never consented to buy.
• Upcoding: To make up for an ostensible intensity of care and resource requirements, hospitals sometimes “upcode,” or raise the cost of services or resources. However, this rarely leads to greater availability of essential equipment, but can often result in bigger profits for providers.

Effective Claim Negotiation Strategy: Increase Payment Integrity and Contain Costs

Now that you have a better understanding of why medical billing errors are so common and how they can drastically inflate your healthcare spend, you’re probably wondering how a claim negotiation strategy can reduce your costs.

Claim negotiation is a payment integrity solution designed to remedy rampant medical billing errors. An effective strategy begins by reviewing claims before they are paid to identify errors or inconsistencies that should not be paid, like duplicate charges, undelivered services, and prices that seem suspiciously higher than average.

This pre-payment process allows for the negotiation of more reasonable prices. It is often available as an itemized bill review, or as a Diagnosis-Related Group (DRG) validation to ensure the correct medical codes are used.

Editing claims in this way prevents overcharging patients for medical services and also ensures accountability on the provider’s end.

The main benefits of a claim negotiation strategy are:

• Significant savings potential
• Increased medical billing transparency
• Integration with existing health plans
• Combination with other cost containment solutions

Negotiating healthcare claims is a complicated process that’s a lot like reading an entirely different language. While it certainly is possible for members to identify a duplicate charge or a service they never received, they will not be likely to identify medical coding errors or upcoding without extensive medical billing knowledge.

Instead, leave the medical detective work to the specialists. Leveraging the experience of industry experts to negotiate claims on your behalf will help maximize your savings—in terms of both money and time.

Recognizing the benefits of partnering with a claims negotiation expert is just one step along your journey to healthcare savings. The next step is deciding who you want in your corner to ensure you get the most out of your claim negotiation strategy.

6 Degrees Health is an Industry Leader in Claims Negotiation

For over a decade, 6 Degrees Health has been at the forefront of cost containment solutions and payment integrity trends. We were founded by a team of industry veterans with the vision of helping employers reduce their healthcare costs without sacrificing the quality of care provided to their employees.

As experts in our field, we use Clean Claim Reviews as a part of our payment integrity solutionsto provide detailed analyses of medical billing. This allows us to identify and eliminate billing errors, bringing you huge savings and helping you better understand the healthcare reimbursement process.

Interested in learning more about claim negotiation strategies? Speak to a representative today to find out how 6 Degrees Health can help you realize true cost savings in healthcare.