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High Yields

How HMS’s holistic cost containment methods generated substantial recovery of overpaid claims

High Yields


Payers of all sizes feel the cost impact from overpaid clinical claims – an estimated $1.1 trillion-a-year problem nationwide. As many plans have discovered, it takes an aggressive stance by leadership and an experienced, qualified partner to counteract the losses and generate significant recovery opportunities.

One such plan serves about 140,000 Medicare Advantage members in a major southern U.S. metropolitan area. Firm believers in the power of audits, the executive team decided in 2013 to take the audit and recovery process beyond the minimum verifications required by the Centers for Medicare and Medicaid Services (CMS).

They chose HMS, with its established reputation for holistic health plan cost containment, as their partner to implement a suite of payment integrity audits. The value of the partnership is in the results. In under three years, HMS® helped this smaller payer recover over $43 million – and remains on the job keeping the recovery in motion.


Improper payment recovery requires detailed detective work to identify and analyze claims and corresponding medical records, then complete steps to recover the improper payments. Many payers like this client lack dedicated staff with this expertise.

With HMS as their expert partner, the plan’s executive team made decisions early on to define process and set the stage for success, including:

  • Payment integrity first. The client’s executive team believes that payment integrity is top priority. Throughout the audit process, they have been willing to accept reductions in their provider network in order to ensure a successful claims audit process.
  • Focus on large providers. Lacking in-house data mining capability to conduct claims audits on all providers, the client decided to pursue only high-yield recovery opportunities from larger providers – hospitals and healthcare systems.
  • Provider abrasion management. The plan provided incentives for participation to its in-network providers, and reduced the level of audit performed on a hand-selected group of providers who might be sensitive to aggressive recovery efforts.
  • Access to systems. The client and HMS have built a close relationship that is critical to effective payment integrity measures. HMS has direct access to their claims system to work directly with the documentation necessary to collect on incorrect claims.
  • Mutual communication. HMS actively seeks input from the client, and resolves any requested changes in process or procedure.

With this playing field established, HMS implemented audits on all of the client’s current claims in key categories:

  • Skilled Nursing Facility
  • Diagnosis Related Groups (DRG)
  • Place of Service

Place of Service audits achieved major success through analysis of Short Stay claims and verifying Inpatient Orders – a decision to admit a patient for inpatient rather than outpatient care. Early adoption of the Inpatient Order audit has been noted as an important contributor to the audit’s overall success.

The recovery process included audits of claims from non-participating out-of-network providers, allowing HMS to bring to bear one of its unique strengths.

Recovering overpayment from non-participating providers is less straightforward than for network providers. Per Medicare requirements, audited claims must first be reviewed by a Recovery Audit Contractor (RAC) for final determination. Having served as a RAC vendor in many states, HMS has an established track record, especially for timely submission of nonparticipant claims for external RAC review.


Implementing HMS claims audits and a close working relationship with the HMS audit team generated a major payoff for this smaller payer organization. The $43 million recovery was generated across five audit categories – at $32 million, by far the largest amount from Place of Service audits. Hefty repayment levels were generated in other categories as well: DRG audits to verify coding correctly netted more than $6.5 million in recovered overpayments, Skilled Nursing Facility audits recovered nearly $4.5 million.

Our payment integrity solutions can bring you high yields as well. Contact HMS today to find out more.