Despite revenue growth, healthcare payers have faced increasing margin pressures over the past year as healthcare costs continue to climb. Introducing new efficiencies into key operations such as claims processing will be critical for payers seeking to buck worrisome industry trends and outperform competitors.
Traditional claims audit processes tended to be reactive and labor-intensive, making them inadequate to meet the demands of a complex healthcare payments ecosystem where mistakes can lead to financial losses totaling millions if not billions of dollars. Today, there’s an urgent need to ensure accuracy and compliance in claims processing.
By leveraging innovative technologies — including robotic process automation, advanced workflow management, analytics and AI/GenAI — leading payers are overhauling their claims audits to create revolutionary new efficiencies, driving business value by minimizing error and reducing the need for post payment audits.
Current Claims Auditing Challenges for Payers
Claims audits have traditionally been manual, an approach that’s not scalable. With large health plans processing millions of claims each year, audit volumes can quickly overwhelm claims audit teams. The sheer volume makes it difficult to conduct thorough reviews, compromising quality and increasing the likelihood of errors. According to industry estimates, between 10% and 15% of claims are initially denied, often because of documentation or coding errors that could have been caught earlier. Healthcare providers spend more than $10 billion each year overturning claim denials.
Not only are manual audits prone to error, they’re also time-consuming. Manual reviews can delay the processing of claims and add operational costs. This approach is usually reactive, seeking to identify errors only after payment has been made.
Regulatory complexity adds another layer of difficulty to the process. Keeping up with ever-evolving federal and state mandates governing medical coding and billing is a daunting task, and payer-specific requirements bring even more challenges. The Department of Health and Human Services estimates that Medicare and Medicaid made a total of $100 billion in improper payments in 2023, most involving administrative error or a missed step. Fraud, waste, and abuse remain a persistent problem, too, costing the U.S. healthcare system approximately $100 billion per year.
Transforming Claims Auditing With Automation and AI
Leveraging technology to standardize claims audit processes will create unprecedented efficiencies, enabling payers to catch more errors earlier and identify opportunities for continuous improvement. Automating repetitive tasks will save time and effort while minimizing the potential for human error. Gathering business intelligence on day-to-day audit operations will make it possible to identify opportunities for process improvements or for infusing automation into workflows.
Payers can also implement big data analytics platforms and large language models/generative AI (GenAI) to give stakeholders a consolidated view of claims audit operations across the organization, further enhancing visibility and control.
Payers are driving business value by deploying innovative technologies to:
- Identify process bottlenecks: It’s traditionally been difficult to achieve process consistency across claims auditors’ manual review cycles. A process intelligence solution can create transparency here, revealing gaps that can be addressed through training, automation or data integration.
- Streamline audit processes: Automating repetitive manual tasks such as data entry and document verification can save time and enhance audit quality by freeing up human auditors to focus on more complex issues that demand critical thinking.
- Improve claims data integrity: Real-time integration and data management can ensure that data is accurate and complete before processing begins, while advanced data-validation techniques make it possible to detect errors early in the claims life cycle.
- Implement real-time monitoring and alerting: AI-driven alerts can make auditors aware of potential issues before payments are made, while monitoring systems can provide immediate feedback as claims are submitted and audited. With access to dashboards and reporting, stakeholders can identify trends, monitor compliance status, gain insights into performance and leverage insights to enhance auditing practices.
- Use predictive analytics: By identifying patterns and trends in claims data, health plans can proactively identify issues before they escalate. When claims auditors know which claims are most likely to contain errors, they can prioritize those for review to avoid inaccurate payments.
- Take advantage of AI Agents: AI can assist human auditors by suggesting appropriate codes based on clinical documentation, or it can perform simple audits on its own. Partial automation of more complex auditing saves time and improves accuracy while maintaining regulatory compliance.
- Train auditors: Insights gleaned from AI-driven process intelligence systems can drive ongoing training for human auditors to enhance their expertise and improve audit quality. Feedback loops incorporating results from previous audits can be used to refine processes and continuous improvements.
The Future of Claims Audits: How the Right Technology Partner Can Help
Sutherland has developed a multilayered approach to digital transformation for payers, one that begins with an Intelligent Automation Operating Model that enables rapid ROI by automating manual processes within a secure, IT-approved framework. Implementation begins with a comprehensive Opportunity Assessment that identifies the areas of the business that are best suited for automation helps in building builds a robust business case for each automation opportunity. Payers can also layer on workflow management tools and smart analytics to help auditors be more efficient and effective in day-to-day operations, and they can even implement next-generation data-mining and AI tools to further enhance visibility and control.
Infusing automated technologies and continuous-improvement strategies into claims audit processes can result in operational cost savings of up to 30%, improved error detection and accuracy, and simplified compliance. With faster and more accurate claims processing, payers can provide their members with better experiences and enjoy stronger relationships with providers.
