Pitfalls of the “Pay and Chase” Model: How to Maintain Better Payment Integrity

Payers within the healthcare ecosystem understand the complexities and importance of maintaining integrity when submitting or evaluating payments for medical services rendered by providers. Payment integrity ensures healthcare payments are made only for services that are necessary and appropriate and that providers are reimbursed fairly for their services. Maintaining the highest payment integrity standards helps payers avoid unnecessary payments, recover overpayments, and prevent fraud, waste, and abuse (FWA) in healthcare billing. It also serves to protect patients/plan subscribers who rely on payers to make sure they aren’t subject to fraudulent or abusive billing practices.

But yet, many payer organizations continue to rely on the “Pay and Chase” model to uphold payment integrity standards. In this model, healthcare claims are paid upfront, and then potential errors, overpayments, or fraudulent claims are “chased down” after payment has been made. This means payers must rely on post-payment reviews and audits to identify those errors, overpayments, and fraudulent claims. While the “Pay and Chase” model results in fewer delays in reimbursements to providers, it has considerable drawbacks that payers should be aware of.

What’s Wrong with the "Pay and Chase" Model?

  1. High costs and time-consuming: “Pay and Chase” is often more expensive than conducting pre-payment reviews because it requires payers to invest significant resources in post-payment audits and investigations. Recovering funds can be a lengthy process that commonly involves legal action.
  2. Delayed recoveries: Because recovering funds after a payment has been made is a lengthy process, payers can expect delayed recoveries, as well as more money and resources spent to identify, correct, or recover these payments.
  3. Reliance on Special Investigations Units (SIUs): Special Investigation Units are responsible for detecting, investigating, and preventing fraud, waste, and abuse in healthcare payments. However, SIUs have limited access to data and resources, and disparate compliance sources can impact data visibility and accuracy. This can have a negative effect on the SIU’s investigation, which may result in more errors and further delays.

Strategies to Improve Your Payment Integrity

One of the biggest issues with the “Pay and Chase” model is that it’s reactive rather than proactive. Fraudulent claims, errors, and overpayments are paid without immediate investigation, and they are only discovered and investigated after payment has been received by the provider. It begs the question: why submit payments upfront for a fraudulent or erroneous claim?

One way payers can improve their payment integrity is by conducting clinical claim reviews before payment has been made. By conducting reviews earlier in the payment process, payers can identify fraudulent or abusive claims sooner and avoid paying out funds incorrectly, therefore circumventing the time-consuming and costly process of recovering those funds.

Conducting pre-payment clinical reviews will also expedite savings for payers. A recent Gainwell pre-pay clinical review of 500,000 Medicare members resulted in more than $55 million in calculated savings in just 10 months, with savings recognized within 18 days of receipt of the first medical record.

Pre-payment clinical reviews can also help payers identify potentially fraudulent or abusive billing practices like upcoding, as well as identify potential errors or discrepancies in healthcare claims, which will help payers reduce the risk of financial loss within their organization.

There are many more reasons why conducting pre-payment clinical claims reviews is an important step in improving your payment integrity, including lower appeal rates and greater overall efficiency within your claims review process. Ultimately, the benefits of pre-payment clinical reviews make it an important step for payers looking to improve payment integrity and optimize their claims review process.

Remove the Guesswork with ProviderTrust

Payers should consider elevating their payment integrity into a core, strategic function— either by establishing an internal Payment Integrity Office or by hiring a vendor to streamline the claims review process with automated, leading-edge technology that will catch fraudulent or erroneous claims before they’re ever paid.

At ProviderTrust, we work with the Payment Integrity department ahead of claims editing to ensure providers are eligible for payments. This lessens your organization’s need to involve an SIU, and it means payment is never issued to a non-eligible provider in the first place. We offer accurate and continuous provider network monitoring so you can spot claims from ineligible providers before they are paid. We also ensure constant compliance with state and federal regulations by maintaining an up-to-date directory of eligible providers, so you and your team can spot provider ineligibility in real-time.

See how we’re reimagining Payment Integrity workflows for more proactive protection against FWA.

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