Payer Performance Examined

PayerView Reveals Payers are Getting Better.

Wouldn’t it be great if payers would own up to their part in the number of days your practice’s claims languish in account receivables? Or if you could see at a glance which payers denied more claims than the rest, and then compounded the hassles by sending back muddy explanations of their denials?

Now you can. In fact, if you’ve been reading Physicians Practice in recent years, you’d know that detailed information on payer performance has been a reality since 2006.

Like its predecessors, this fifth edition of PayerView details how well or poorly national and regional payers do in getting you paid correctly and on time for the services you perform. Using only hard claims data, PayerView is a top-to-bottom ranking of commercial payers, Medicare, and Medicaid that measures the level of “hassle factor” each payer represents.

Payers judge your“performance.” Now it’s your turn to judge them on theirs.

When the project started in 2006 in collaboration with athenahealth, the nation’s largest revenue cycle management company, the goal was twofold. First, by offering you vital intelligence (otherwise unavailable) on payer performance, you can make informed judgments about which payers you want to work with. Second, we hoped that over time the publicity from PayerView would prompt competition among payers to improve.

We knew that the second objective was a bit ambitious. But it’s worked. Many payers have improved performance in most of the categories PayerView measured this year. (To review past performance, read the 2007, 2008, and 2009 reports.) They paid claims faster and resolved more claims on the first submission. Even the sorest spots in provider-payer relationships, such as denial rates, showed improvements almost across the board.

Let’s look at the numbers.

Payers compared

What is PayerView, exactly? It’s a public ranking of 137 payers doing business in 45 states and the District of Columbia during 2009. The rankings are prepared by athenahealth and based on data from millions of claims submitted by thousands of providers, which are run through an algorithm athenahealth created that includes weighted performance metrics in key categories.

Not only does the trend from 2008 to 2009 show improvement, but payers are displaying competitive levels of performance between each other. This year, PayerView introduces the all-payers comparison, which allows comparisons across all categories of payers. When all 137 payers were examined, the top performer was Blue Cross & Blue Shield of Rhode Island, where claims averaged just 12.2 days in accounts receivable, and 98.5 percent of claims were resolved on the first pass. Close behind in the all-payer rankings was the national payer Humana.

How can tiny Blue Cross of Rhode Island outperform giant national payers? By making shrewd use of electronic transactions and by streamlining the claims process.

Even notoriously inefficient state Medicaid payers, perennial basement dwellers in PayerView’s rankings, took steps forward in performance, though they continue to lag behind.

 “It’s really become a game of who’s improving faster,” says Melissa Lukowski, director of payer outreach for athenahealth. Lukowski credits the widespread use of electronic transaction standards in helping companies like athenahealth guide users more precisely and improve payer performance.

“The payers getting to the next level in rankings are the ones who fully leverage electronic transaction,” she says. “They don’t just process a claim; they keep you informed about its progress through the entire chain of eligibility, claims status inquiry, and electronic remittance.”

(*To see our complete payer rankings broken out by payer and region, go online:

Key measures

How, exactly, does PayerView work?

Each payer is judged on how well it performs in certain areas that are important to physician practices — average days that a claim spends in accounts receivable (A/R), for example, or the rate at which it denies claims outright. The payer’s performance in all categories is tallied by the data crunchers at athenahealth to get a final score, which is then used to rank the payers against each other.

Some notes:

First, because some categories are more important to practices than others, the categories are weighted when athenahealth tallies up the final scores.

Second, athenahealth does not report the final score itself. It reports only the rankings and the payers’ performance on each individual metric.

Third, because PayerView data comes only from physicians using athenahealth for billing, it’s not a complete picture of each payer’s network. In fact, payers generally perform better inside athenahealth’s system than outside of it, due to the various steps athenahealth takes to facilitate payment — that is its business, after all — so we can’t say for sure that PayerView performance is precisely reflective of a payer’s performance generally.

Still, PayerView contains so much data that we consider it a representative sample. Working in nearly every state, athenahealth’s data represent more than 39 million charges worth $7 billion from more than 22,000 providers in 2009.

Fourth, to keep the calculations fair, athenahealth imposes some limitations on what it will include. Only payers on which athenahealth has a minimum of 3,500 claims per quarter for at least six physician practices were included in PayerView. Also, if any single athenahealth client contributed a disproportionate percentage of a payer’s claims, those claims were removed from the calculations. That exclusion may in turn have eliminated some payers from PayerView if there weren’t enough claims remaining to meet the 3,500 minimum.

The metrics included in PayerView were adjusted this year, too. Added was a measure gauging accuracy in determining insurance eligibility. Removed were measures on payers’ compliance with Medicare’s Correct Coding Initiative, and rates of claims kicked back with requests for documentation.

A metric showing the percentage of patient liability by payer was revised to measure “provider collection burden,” and was given more weight in the scoring. This metric now shows the percentage of charges transferred from the primary insurer to the next responsible party, such as the patient.

Payment processes: What’s next?

We asked executives at major payers what the future will bring to the physicians claims process. Their answer: more of the same, but faster.

Increased patient responsibility: “There will be more high deductibles and coinsurance in plans,” says Mark Smithson, a service vice president with Humana. “Providers can respond by building their work flow around a more retail-like environment for collections — real time adjudication, in other words.”

New rules and standards, like EHR data standards and upcoming rules for meaningful use, will serve change agents for payers and providers, says Tim Kaja, senior vice president of physician and hospital service operations for UnitedHealthcare. “Physicians will be increasingly reimbursed based on clinical and administrative quality data,” Kaja says. “If we don’t get to full transparency now with physicians with the existing claim process, it’s going to be very hard for the industry when we start paying for outcomes based on quality data.”

Increased transparency in the claims process. Paul Marchetti, head of Aetna’s national network and contracting services, says his company’s efforts to integrate claims status inquiries into billing applications like athena’s is part of an industry trend toward claims-process transparency. “Aetna has cut denials down to the point where from here on out the improvements will be incremental,” Marchetti says. “We will continue providing transparency into the billing process so when a physician’s office posts a claim, they will have a clear line of sight to where that claim is at all times.”

Major payers

When the eight national payers were compared, Humana scored a repeat appearance in the top spot. It led in fewest days in A/R (22.4) and was highest in claim denial transparency (96 percent), which measures how many denied claims required only one resubmission to get paid, indicating how well a payer explains its denials.

Sparking Humana’s performance, in part, was its ability to resolve claims in real time. Humana, as well as UnitedHealth Group, has integrated real-time claims adjudication with athenahealth’s system. Physicians who use this process get a determination of a patient’s liability within seconds of submitting a claim, and can collect what the patient owes immediately instead of waiting weeks for a final determination.

Mark Smithson, a service vice president with Humana, explains that real-time adjudication produces real savings for physician practices: it reduces days in A/R and saves staff time, postage and other collection costs. It also leads to fewer bad debt write-offs as many practices eventually give up trying to collect from patients who are reluctant to pay.

“We try to get providers to change their work flows a bit to make sure they are coding and submitting that claim while the patient is in the office,” Smithson says.

Medicare and Medicaid

Medicare’s development of the National Provider Identifier standard in 2007 and 2008 probably hurt its PayerView performance in those years, according to athenahealth’s analysis. But with that process mostly behind it, Medicare made solid performance gains in 2009.

The program averaged declines of 24 percent in A/R days and 25 percent in denial rates while leading all payers with an eligibility accuracy rate of about 99 percent.

Even Medicaid programs, traditionally the lowest performing, marked an 18 percent decrease in A/R days. Lukowski credits the improvements to increased efficiency and transparency stemming from the spread of standardized transactions.

Many Medicaid plans also reduced rates of denied claims.

“They are dealing with complex rules and specific eligibility information,” Lukowski says. “It’s not just, ‘Is this patient eligible?’ but ‘Is the patient eligible for this particular service at this time, with this provider?’”

Ready for 5010 in 2012?

The HIPAA-mandated standards for electronic transmission of healthcare transactions implemented in 2003 are poised to take another big step soon. Next year, everything from claims and remittances to eligibility and status requests between providers and most payers will move to the Version 5010 standard, which aims to resolve gaps in the current standard.

As an example of where the current standard falls short, take a look at the current state of electronic remittance advice. It directly affects your ability to manage denials — that is, to understand why a claim was denied or adjusted.

Melissa Lukowski, director of payer outreach for athenahealth, says many payers had difficulty converting from their proprietary remittance explanation codes to the standard HIPAA adjustment and remark code sets.

“Everyone’s struggled with it, especially the Medicaids, which had a very high level of specificity in their former, proprietary code sets,” Lukowski says.

Cloudy remittance advice means your staff must spend more time calling the insurance plan’s provider line or signing on to a Web portal. These extra efforts to resolve pesky denials can also introduce paper or nonstandardized information into the claims process. Physician offices may have to, or feel they should, send in portions of the patient’s record or other forms on paper to get the claim paid.

Indeed, this year’s PayerView report indicates that a fully electronic claims process — from initial claims submission to the transfer of payments to the physician’s account — shaves up to eight days from the claims cycle, with a similar reduction of average days in A/R.

Physicians and payers

Can the improvements seen in many of the PayerView categories continue? Yes, but more work needs to be done by physician offices, says Rosemarie Nelson, who consults with medical practices on technology-related issues for the Medical Group Management Association.

“Before you point your finger at the payer, ask if you are posting 95 percent of your claims electronically, because that’s what the better-performing medical practices do — and it works,” she says.

Nelson’s prescription for the electronically empowered medical practice goes beyond equipment. She suggests asking these questions about your practice:

Staff training: Is your front-office staff trained to be part of the revenue cycle team along with your business office?

Staff deployment: Has your practice’s check-out function moved from the cashier-at-a-counter model to a desk staffed by a “financial advocate” who completes real-time adjudication and collections?

Billing: Does your staff take time to set up every payer electronically — even your smaller payers?

Clearinghouses: Do you make good use of the information and services your clearinghouse provides, even if it costs a little extra?

Claims: Do you submit claims every day? “Sending claims in once or twice a week is old school,” Nelson says.

(*To see our complete payer rankings broken out by payer and region, go online: 

By Robert Redling


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