Billing Best Practices for Health Plans to Maintain Financial Sustainability

Updated on April 10, 2021
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By Dr. Gary Call, Chief Medical Officer at HMS

A 2020 report from Deloitte that surveyed health plan CFOs found that the biggest concerns for 53% of respondents were financial viability and planning at their organizations. This concern has only grown since, as the economic impact of the COVID-19 pandemic devastates organizations in healthcare along with businesses, individuals, and state governments across the board.

The financial well-being of healthcare organizations remains uncertain for both payers and providers as they navigate the ongoing effects of the pandemic. Although COVID-19 cases have dropped recently, many uncertainties remain. It is unclear what impact vaccine hesitancy may have on herd immunity necessary to return to normal. In addition, the emergence of more contagious variants is a concern for immunity from previous infection and the currently available vaccines. It is very possible that the current drop in cases and the resultant optimism about an economic recovery may still face headwinds in 2021. Two other variables increase the economic exposure of healthcare payers in 2021, the care deferrals seen in 2020 will have a negative cost impact to payers from both poor chronic condition outcomes and costs from pent up demand for healthcare services.

As these organizations struggle to cope with the financial fallout of the pandemic, health plan leaders are looking for new ways to maintain the financial sustainability of their organizations and address inevitable budgetary shortcomings. One approach being adopted by many health plans, and that seems to work remarkably in their favor, is adopting the method of pre-pay clinical claim reviews within billing services.

The Advantages of Pre-Pay Clinical Claim Reviews

Clinical claim reviews identify coding, location, level of service and reimbursement errors by comparing claims against medical records, which enables payers to identify improperly billed services. These claim reviews can be done either before or after the health plan has paid the provider. This is a decision every heath plan must make, and for those facing financial hardship, it is an important one. 

There are many reasons why payers should conduct reviews early in the claims process before payments are made. In this instance, the central advantage is that pre-pay claims can maximize savings for payers, uncover more funds and speed the payment process, but the benefits don’t stop there.

  • As briefly mentioned above, pre-pay clinical claim reviews expedite savings and recover more funds, which helps to improve health plans’ payment integrity efforts, compared to traditional post-payment reviews. The time savings are significant as well- going from the typical 6 months to a year timeframe that’s required for post-payment claims, to generating savings within one months’ time. Additionally, health plans across the U.S. recover between 80% and 90% of post-pay identifications on average, whereas in the pre-pay setting, the savings realized is 100% since claims errors are identified prior to payment.
  • Pre-pay reviews avoid the time intensive and costly tasks for payers that are required for post-payment claim reviews. Payers can eliminate tasks like sending multiple letters, paying lockbox fees, managing lockbox inventory and monitoring accounts receivable and collections.
  • Conducting clinical claim reviews before payments are made aligns payer and provider incentives, and with pre-payment communication, this often helps to reduce provider abrasion. Providers are more motivated to submit medical records in a timely manner to support rapid completion of claim reviews. This is important because for payers, teams must review claims and charts quickly to comply with strict payment guidelines.
  • With pre-pay reviews, technical denials are eliminated. In a post-payment claims review model, health plans often experience a high percentage of technical denials from facilities that fail to submit medical records. Technical denials are typically in the range of 15% to 25% but are eliminated in the pre-pay model.

The financial advantages of following a pre-pay process rather than a post-pay process present a significant opportunity for payers, and many are already reaping the benefits. In one real world example, a health plan with a large Medicare Advantage population recently experienced more than $20 million in savings over nine months. Savings were recognized within 20 days of medical record receipt and appeal rates were lower than traditional post-payment clinical claim review programs.

Advice for Payers to Establish an Effective Pre-Pay Clinical Review Program

There are a few foolproof strategies that payers should follow to establish a successful pre-pay program at their organizations. First, focus on findings of the highest quality. Using advanced machine learning algorithms that target claims with a high chance of improper payment have a lower rate of appeal overturns, experience higher dollar amounts recovered per claim while also seeing lower levels of provider abrasion. Accurate targeting of these claims also lessens the need to receive medical records from providers reducing cost and administrative burdens for everyone involved.

Second, foster partnerships that are collaborative, communicative, and mutually beneficial. When health plans and technology providers are working together on pre-pay clinical claim reviews, communication must flow between both parties seamlessly and consistently. Reoccurring meetings to discuss key components of the review process, such as implementation and reporting procedures, help keep the process moving smoothly. Additionally, health plans’ payment integrity partners should provide proven systems, workflows, and the support of clinical experts in the field. To guarantee a successful review program, it is important that health plans ensure that their partners fully understand key components of the claims process, including prompt payment guideline compliance, Medicaid reclamation and flexible program configuration. Provider engagement during the implementation process and appropriate provider support during the program increases provider acceptance and cooperation with pre-pay clinical claim review programs.


The months ahead will test the financial stability of organizations across the healthcare sector. Health plans must try to gain control during times of uncertainty, by closely monitoring their finances and developing ways to avoid budget shortfalls whenever and wherever they can. Adopting a pre-pay clinical claims review process within the billing services of a payer organization is one way to uncover more funds, more quickly, while using less resources, and bolster continued financial sustainability during the ongoing effects of the pandemic.

Gary Call, M.D., is senior vice president and Chief Medical Officer at HMS, where he leads the company’s clinical program development and execution. Dr. Call has more than 25 years of experience in the practice of medicine and managed care. He is a board-certified family physician.

The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.