Health insurance doesn’t come cheap. With private companies making the highest number of health insurance providers, prices are bound to increase significantly. It explains the growing number of people choosing to live uninsured every year. A study conducted in 2018 found that 8.5% of people living in the US lived without health insurance during the year. In a bid to make health insurance more affordable insurance companies and health providers have introduced health insurance claims repricing. The premise is to make health insurance more affordable to citizens encouraging them to sign up for coverage. However, the process of repricing insurance claims is complicated due to the obvious lack of standardization and the emergence of large PPO networks. The article looks at some of these challenges and possible methods to mitigate the issues surrounding the effectiveness of this concept.
What is Health Insurance Claims Repricing?
The development of managed care has led to significant healthcare industry changes affecting insurance companies, healthcare providers, and the insured. The most prominent managed care practice is the PPO (Preferred Provider Organization), which recruits group health providers and institutions to provide services at a discounted rate in exchange for a fee called steerage. The process of discounting each procedure in the claim to the contractual amount agreed between the physician, and the PPO is called repricing.
Challenges Facing Care Network Repricing Insurance Process
While this invention is designed to reduce a patient’s out-of-pocket health costs, it is challenging to implement. This is because each group health provider uses a different methodology or repricing software. As such, the ABC PPO network and XWY PPO network use different data in different formats when repricing claims. In addition, the contracts PPOs have with healthcare providers are different, making the determination of the discounted amount applied to specific procedures difficult.
Another issue is the varying arrangement schedules and structures PPOs use. The differences make it difficult for the health claims administrators to determine the corresponding claim’s appropriate discount rate. For example, an insurance company has signed repricing contracts with 100 PPO networks. The agent would need to work with each PPO’s software to reprice each claim. Existing health insurance claims repricing systems hardly provide an easy way of dealing with multiple PPO networks.
Another challenge with repricing claims relates to secondary processing claims. While members are encouraged to utilize doctors in their PPO network, they can also visit doctors within a secondary network. In such a scenario, the repricing agent would still be required to reprice the claim for service providers who don’t belong to the primary network. Bear in mind, there’s no outlined procedure for repricing claims in secondary situations.
Methods to Mitigate Health Insurance Claims Repricing Challenges
Creating Standardized Databases
The premise is to develop one or more databases with a standardized set of medical procedures identified using Common Procedure Terminology (CPT) codes. As such, the processing software can quickly cross-reference a medical claim against the codes and the service provider to determine a suitable charge for the procedure.
Using Medicare as the Basis for pricing
To ensure an apples-apples comparison PPO, insurance companies and members should only compare the allowed amounts and disregard the discounts. In this case, the allowed amount is the amount paid after all the discounts but before the plan’s provisions are applied. This method may still lead to a variance in prices from one place to another. Thus, there’s a need for a health claims administrator to use a benchmark that all pricing can be compared. Medicare has proved to be a reliable benchmark as it accounts for regional and specialty-based differences when establishing a resource-based relative value scale pricing.
Eliminate Balance Billing Practices
Balance billing is the process of recouping the monetary difference between the allowable amount covered by the plan and the negotiated rate. The practice causes some members to receive greater discounts than others. As such, providers should consider doing away with balance billing practices for payments within a reasonable multiple (except for co-payments, deductibles, and co-insurance payments).
Care network repricing insurance is a viable means of reducing health insurance costs. However, the stakeholders need to look for ways of dealing with the challenges presented to realize all its benefits.