The Story of Healthcare Claims

Well, this episode became extremely relevant again after that Cigna case bubbled up in the news.

Here’s the “too long, didn’t read” version:

Attorneys filed a class action lawsuit against Cigna, alleging that the carrier is overcharging for lab services or did overcharge for lab services. The plaintiff is an individual member of a Cigna plan.

The complaint tells a pretty wild story. On the Explanation of Benefits (EOB) that this member received for lab services, the amount billed was over $17,000. My understanding is, this member went to Labcorp to get those lab services.

Cigna claimed it had negotiated a discount of over $14,000 for those lab services, meaning the remaining balance was something like $2700.

OK … good news, I guess. Instead of the lab services costing $17,000, they cost $2700 to the plan and member. Except Cigna said to this member that they were only gonna pay $471 on the member’s behalf. This left the member with the responsibility to fork out over $2000 in deductible and coinsurance payments. I’m rounding the numbers here for brevity.

So, in sum, member’s told she owes $2000+ out of pocket for charges that were allegedly originally over $17,000.

Now, a couple things: The cash price for an uninsured customer at Labcorp for the same services was $449, according to the complaint. Also, weirdly, on the Explanation of Benefits, Cigna allegedly said that the lab services provider was not Labcorp. It was “Health Diagnostic Lab” (or everything I just said in all caps with some letters missing) instead of the actual provider Labcorp.

Then the plot thickens …

The lawsuit alleges that this “HLTH DIAG LAB” is a pseudonym for Cigna Healthcare of Arizona and that this Cigna affiliate used their pseudonym to create a fake invoice. This is also a quote from the complaint.

Bottom line, and this is the real point I wanna make here, the actual out of pocket to the payer was something less than $500, $600, you would think. But it appears that the plan was hoping to get almost 5x that out of the plan member. And had this plan member met her deductible that year, I would speculate that this 5x would have come out of the pocket of the plan sponsor. Either way, 5x margin? That’s some pretty sweet returns.

Look, the point I’m making here isn’t about this particular case. It’s about the totality of the thing. This case just got a whole bunch of attention because, as Julie Selesnick put it on LinkedIn recently, “This case … hits all the high notes—overcharging, keeping the spread, fraudulent billing.”

But think about this for a second. You think this was an isolated incident? That someone in Arizona had a brainstorm to juice their quarterly earnings and set up a whole company to jack up one person’s lab payments? I don’t know. What do you think?

As Lee Lewis mentioned on LinkedIn, while this case has a lot going on, a member getting charged $2500 for what should cost $450 or whatever … he wrote, “I’ve seen worse.”

I say all this to say: Plan sponsors? Hi there. Are you getting your claims data, and are you having it audited for stuff like this? And by whom are you having your claims data audited for stuff like this? And that’s not a rhetorical question. I mean, here we have a well-respected payer opening up (allegedly) a reseller of lab services sending allegedly fake invoices. That’s one way to vertically integrate, I guess.

Here’s another way you can vertically integrate that maybe we all should be aware of: companies that provide audit services that many plan sponsors use to check if claims have been paid properly. Those same auditing companies, these same companies oftentimes have another book of business besides their auditing claims for plan sponsors work. They also work with provider organizations doing revenue optimization. Right. They help providers maximize their revenue, revenue that is coming from … claims they send plan sponsors.

Sometimes when I talk about this stuff, I feel like I’m in a cartoon—like that meme with all the Spider-Men pointing at each other and nobody knows who is actually Spider-Man because everybody is dressed up in the same costume pointing and saying the other guy is the one causing the problems here.

As Dawn Cornelis says in this episode today, approximately 30% of healthcare spending (ie, healthcare payments) are some combination of fraud, waste, and/or abuse. It’s a $1-billion-a-day problem.

In this episode, we dig into the three main issues that Dawn tends to find when looking at the claims that were going to hit the checkbook of a plan sponsor as per their payer or TPA (third-party administrator):

1. Claims that were not paid correctly: Turns out, 5% to 10% of claims just aren’t paid right. There’s a whole motley crew of errors that can transpire, but bottom line, the bill was for $10 and somehow the plan sponsor was gonna pay $15. Or they double paid.

2. Things that, if we knew about them, we could do better in the interest of the member: Jeff Hogan put this really well on LinkedIn the other day. He wrote, “Today’s purchaser fiduciary needs great analytics to prioritize the needs of their members … including wasteful and abusive vendors, site of care, cost/quality variation in health systems.” Do labs that the plan is being charged $2500 instead of $450 go here or in the next problematic category? I’m not sure.

3. Claims that are just wrong: They should never have been sent in the first place.

We also talk about kind of a different issue entirely: the hidden fees that are buried in some of these payer contracts, which felt like a reprise, frankly, of the conversation I had with Paul Holmes a few weeks ago in episode 397 talking about PBM (pharmacy benefit manager) contracts and all the hidden fees and, ultimately, probably costly provisions buried in them that plan sponsors are on the hook for—a lot of times very unknowingly.

You can learn more at claiminformatics.com or by emailing Dawn at d.cornelis@claiminformatics.com.

 Dawn Cornelis is a professional in healthcare cost containment with 30+ years of dedication to combatting improper payments, fraud, waste, and abuse. She has led the industry in developing healthcare transparency technology platforms and services. As a result of her efforts, hundreds of millions of dollars of improper payments were delivered through pre- and post-payment technology programs. She is an expert in the field of healthcare claims data, with an emphasis in audit and recovery, and has navigated the payment systems of all of the national healthcare carriers. Furthermore, she approaches each project with integrity and attention to detail while cultivating long-term client relationships.

In 1993, Dawn cofounded the first audit and recovery firm and served for 17 years as the chief operating officer of Claim Recovery Services while representing some of the best Fortune 100 companies. In 2017, Dawn cofounded ClaimInformatics, a healthcare technology company that offers a SaaS-based solution product to support health plans in the marketplace that addresses the new transparency regulations. She developed and trademarked multiple technologies and has a United States Patent Pending named CONTINUITY OF CARE (Publication #20150127370). Dawn currently serves as a member of the Self-Insurance Institute of America’s price transparency committee, which focuses on legislation and education for self-funded entities.

Over the course of her career, Dawn’s efforts have supported national and local organizations spanning financial, healthcare, union, and government sectors. With her years of healthcare knowledge, Dawn is a proven expert, consistently delivering excellence.

06:57 The story in the data.

07:33 Who’s submitting these claims?

08:04 The three problems with the data.

10:54 The varying factor between carrier systems to stop fraud, waste, and abuse.

11:32 Why carriers don’t push for better systems to stop inappropriate dollars.

13:28 The difference between fraud, waste, and abuse.

14:46 “When it becomes the norm, that’s what’s very bothering.”

15:10 The barriers or hurdles in the marketplace.

17:38 What we don’t know about but could do better at when looking at the data.

19:10 “It’s not so much the health system and what they are charging. It’s about … what the contracted rate is agreed to. That’s what drives our costs.”

20:04 “Data’s fixed for itself.”

22:49 Identifying and eliminating fraud.

22:54 The lack of enforcement behind preventing illegal billing.

26:01 How providers ensure they aren’t inadvertently harming employers and patients through billing.

You can learn more at claiminformatics.com or by emailing Dawn at d.cornelis@claiminformatics.com.

Check out our encore #healthcarepodcast with Dawn Cornelis of @claiminformati1 as she discusses saving billions through healthcare billing. #healthcare #podcast #digitalhealth #healthtech #healthcarebilling

Recent past interviews:

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Stacey Richter (EP399), Dr Jacob Asher, Paul Holmes, Anna Hyde, Dea Belazi (Encore! EP293), Brennan Bilberry, Dr Vikas Saini and Judith Garber, David Muhlestein, Nikhil Krishnan (Encore! EP355), Emily Kagan Trenchard