The complexity of the healthcare system and health plan claims processing leaves room for many errors. Unfortunately, such errors can cause operational inefficiencies, increase administrative burden, and indirectly put patients’ health at risk.
As such, health plan administrators must identify likely sources of these errors and enact strategies that reduce the occurrence of payment integrity issues.
Understanding Payment Integrity in Claims Processing
Payment integrity (PI) in healthcare is the process by which payors ensure that health plan claims are processed and paid accurately while reducing risks of fraud, overpayment, or underpayment. It ensures that the right claim is paid to the right provider for the right service and amount.
Payment integrity is the bedrock of the healthcare delivery system. Without processes that scrutinize claims, fraudulent activities and wasteful spending can occur with consequences spanning financial and legal domains.
In 2016, Aetna denied a health insurance claim of $30,000 because it deemed the treatment unnecessary. It wasn’t until the patient tweeted about it that Aetna responded, reviewed the claim, and made payments.
Aetna would have prevented the poor PR and frustration both for the patient and the insurer if they had complied with payment integrity processes.
Key Causes of Payment Integrity Issues
Payment integrity issues aren’t always a result of intentional fraud. Sometimes, they stem from inaccurate information, coding errors, or manual adjudication mistakes. Some of these causes include:
Billing Errors and Coding Mistakes
Billing errors and coding mistakes look similar however, they are distinct. Billing errors can show up as:
- Duplicate billing
- Wrong patient information,
- Billing the wrong insurance company, and
- Billing for services not rendered to the patient.
Coding mistakes are inconsistencies that occur when services are translated to clinical codes (ICD-10-CM, ICD-10-PCS, CPT) and include:
- Upcoding: using a more expensive code for a service
- Unbundling: charging separately for services that come as a single package.
- Use of expired or wrong codes.
Ultimately, these can cause claims denials, underpayment, or overpayment of claims.
Fraud, Waste, and Abuse in Claims
Fraud, waste, and abuse (FWA) are activities that cause extra costs to the healthcare system. While fraud is considered an intentional and criminal act, waste and abuse are considered unintentional yet illegal.
Fraud includes duplicate billing, billing for services not provided, and falsifying diagnoses.
Waste and abuse show up as unnecessary lab tests and services, upcoding, and unbundling.
According to the National Healthcare Anti-fraud Association, 3% of healthcare expenditure is lost to fraud and wasteful spending, amounting to $300 billion yearly. This results in higher premiums for patients, increased running costs for insurance companies, and the denial of legitimate claims.
Lack of Proper Claims Auditing
Every claim goes through processes such as eligibility, prior authorization, coverage, plan design, and claim check. These processes ensure that claims are legitimate and authentic before reimbursement occurs. Payment integrity issues in healthcare result when loopholes in the adjudication process cause poor insurance claims auditing.
Often, this leads to overpayment, underpayment, and denial of legitimate claims. Sometimes, patients might even forego care due to previous insurance disputes, causing severe health complications.
Strategies to Reduce Payment Integrity Issues
Reducing payment integrity issues goes beyond catching fraud and medical billing errors. It’s about ensuring increased efficiency with claims processing, reimbursements, and dispute resolution for providers and payors. These strategies include:
Implementing Automated Claims Review Systems
Artificial intelligence helps to reduce payment integrity issues in healthcare claims processing. Machine learning and data analysis can help with:
- Provider credentialing
- Eligibility checks
- Ensuring provider data accuracy
- Flagging suspicious and fraudulent claims.
- Verifying if claims match clinical guidelines and codes.
Traditional claims processing is manual, time-consuming, and prone to errors. However, automation helps reduce these risks and increases operational efficiency.
Enhancing Provider and Payor Collaboration
Payment integrity issues in healthcare occur when there’s a disparity in communication between providers and payors. Delayed processing times, abuse of resources, denied claims, and general dissatisfaction between parties often result.
Improving provider and payor collaboration involves ensuring that both parties understand coding and billing guidelines and creating shared channels to resolve disputes. Ensure that providers and payors have access to a shared dashboard for tracking claims processing status.
Strengthening Compliance and Regulatory Oversight
The healthcare industry is governed by strict regulations — and for good reason. Staying compliant with these laws is essential for maintaining payment integrity.
Key regulations include:
- HIPAA (Health Insurance Portability and Accountability Act): Ensures secure handling of patient information in claims.
- False Claims Act (FCA): Holds organizations accountable for knowingly submitting dishonest claims and is responsible for fraud, waste, and abuse prevention.
- CMS Guidelines: The Centers for Medicare & Medicaid Services set standards for medical billing accuracy and claim submission.
By embedding compliance checkpoints within the claims workflow and conducting routine audits, organizations can avoid costly fines, reduce legal risk, and ensure they’re only paying for what’s medically necessary and accurately documented.
Improving Payment Integrity for Sustainable Healthcare
Lack of payment integrity in healthcare has far-reaching consequences for providers, patients, and insurance companies. However, with the right strategies, fraud, wasteful spending, and medical billing errors can be reduced.
Implementing these strategies doesn’t have to be overwhelming. Verisys provides comprehensive healthcare payment integrity solutions—alongside provider credentialing, claims-processing automation, and robust data analytics—to maximize your operational efficiency. Spend less time chasing payment errors and resolving disputes, and more time on proactive claims management and strengthening payer–provider collaboration.
Sources:
The Guardian.
https://www.theguardian.com/wellness/2025/feb/26/health-insurance-claims-social-media
NHCAA.
https://www.nhcaa.org/tools-insights/about-health-care-fraud/the-challenge-of-health-care-fraud
