Payment integrity is the work of checking that a health plan pays each claim the right amount, neither too much nor too little. It covers checks before the plan pays, called pre-payment review, and checks after it has paid, called post-payment review. It is a large business in the United States. There, mistakes in both directions are worth hundreds of billions of dollars a year. Several payment integrity companies have engineers in Hyderabad and Bengaluru.
The mistakes are of many kinds. A hospital may bill a drug more times than it was given. A claim may be paid twice. Another insurer may be the one that should pay first, for example the patient's employer's plan rather than Medicare. A clinic may be paid at the wrong contract rate. Some mistakes are honest. Some are fraud. Payment integrity software looks for all of them.
Say a health plan in Detroit, Michigan, in the United States, receives a hospital's bill for $48,000 for a five-day stay. The claim has passed claims editing, so its codes are consistent. But its amount is high for this kind of stay, so claims adjudication sends it for pre-payment review. The software asks the hospital for the itemised bill, which lists every drug, test and supply separately. It compares the bill with the medication record. It finds an antibiotic billed 20 times when the record shows 10 doses. It also finds an intensive care day for a patient who was moved to a normal ward on the first night. Together these two errors are worth $6,300. A nurse reviewer in the plan's team checks the findings and approves them. The plan pays $41,700, and healthcare payments sends the money with an explanation of each reduction.
Post-payment review looks at claims already paid. The software searches months of paid claims for patterns. For instance, it may find that one laboratory was paid twice for the same test on 300 patients. The plan then asks the laboratory to return the money, and the recovery is recorded in the plan's health plan administration system.
Payment integrity also protects providers from underpayment. If a claim was paid below the contract rate, the same checks show it.
One special case is risk adjustment. It does not check a single claim. It checks the diagnoses that decide how much Medicare pays a private health plan for each of its members.