About our customer

Our customer in this case study is a 299-licensed bed hospital with a mission is to provide compassionate medical and nursing care as well as advanced diagnostic and treatment services. The hospital provides the highest quality of healthcare to a densely populated community which includes industry leading spine and orthopedic practices, a radiology center, and an extensive outpatient services center. 

Getting started

To analyze underpayments, we first analyzed the payer mix and then focused on top payers – BCBS, Humana, United, Cigna, Aetna & Meridian. We zeroed in on $25.7M in payer payments for underpayment analysis.

Health Sigma then analyzed a pool of $26M of payer payments. Less than 1% of claims had underpayments. However, those underpaid claims accounted for $291K in underpayments. 

Underpayments Analysis

What we found:

  • Accuracy of payments varied significantly
  • UHC, BCBS and Meridian had low underpayment rate (~0.2%)
  • Humana had 1% underpayment primarily due to erroneous DRG downgrades
  • Cigna had most egregious rate – primary root cause was due to continuing to apply special discount clause that termed 5 years ago

In addition to incremental revenues, Health Sigma’s analysis identified

  • Coding best practices that would generate incremental revenues
  • Contract issues including:
    • Products that did not have rate increases for last 5 years
    • Rate comparisons across payers – so the hospital could renegotiate with payers paying significantly lower than other payers
  • Process to track DRG downgrades – so they can be appealed, and correct payment realized
  • Understanding and interpretation of Experience Files from BCBS – a unique payment process Blues apply in certain markets

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