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Why Isn’t the Payment Error Rate Closer to 0% for Health Plans?

Claims Payment Accuracy Hasn’t Significantly Improved in Recent Years

Today the overall claims error rate is at 6.26%. In the past decade this error rate has reduced by >1%, representing miniscule improvement compared to previous years. For example, in 2010 to 2013 error rates dropped from 20% to 7%.


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Payment Inaccuracies are Costing Health Plans Millions

With millions of claims processed annually, lack of improvement in error rates this past decade significantly impact health plans’:

  • Bottom line and financial health
  • Ability to effectively serve populations
  • Capabilities of forging trusting partnerships with providers

Erroneous claims also cause massive under or over-payments to providers and add up to hundreds of thousands lost per year for health plans.

Causes of Payment Inaccuracies

If the decline of error rates kept dropping as they had from 2010 to 2013, it would be nearly 0%. Why isn’t this the case today?

Error rates have plateaued due to:

  1. Providers submitting inaccurate and duplicate claims, causing administrative errors.
  2. Enrollment and prior authorization checks that require manual reviews and inaccurate payment calculations.

How to Significantly Improve Error Rates

In the next five years, top health plans will realize unprecedented improvement in their error rates through the implementation of claims automation technologies.

By automating tasks, these technologies will remedy:

  • Administrative errors
  • Manual reviews
  • Inaccurate payment calculations

Automation technology will prove to be especially helpful for health plans serving the 18.4% of the nation’s population covered by Medicare and the 17.8% covered by Medicaid.

This is because Medicaid and Medicare plans operate on payment policies and fee schedules predetermined by governmental programs, or through payment methodologies and fee schedules negotiated between payers and providers.

Payment success must involve vetting vendors

Many health plans continue to invest in solutions that rely on legacy technology and cobbled-together solutions. These complicated tech stacks result in limited interoperability and continued error rates.

To realize payment success, payers should partner with vendors offering comprehensive solutions designed for cloud-based delivery, interoperability, and automation.

Learn more about reducing incorrect payments between payers and providers here.