Vendor Consolidation Reduces Payment Integrity Innovation

May 4, 2021

What steps should your health plan take to ensure you get the most value from your services vendors and payment integrity efforts in the face of vendor consolidation?

Will services vendor consolidation impact the success of your health plan’s payment integrity efforts? Health plans have long relied on third-party suppliers to supplement their own claims payment efforts, fill staff and expertise gaps, and push innovation forward. But the current trend of consolidation may necessitate a change to this strategy:

  • Cotiviti acquisition by Veritas Capital
  • Equian’s growth under New Mountain Capital ownership and eventual sale to United Healthcare
  • HMS acquisition by Veritas Capital
  • Change Healthcare acquisition by United Healthcare
  • Discovery Health Partners acquisition by Multiplan

What Vendor Consolidation Means for Your Health Plan

Vendor consolidation can streamline your health plan’s options. But it also may pose a significant threat. Will payment integrity leaders be able to continue relying on services suppliers as a source of innovation in the form of niche analytics? Will procurement and vendor management have the leverage they need to get the value they are accustomed to?

Let’s look at the different ways this trend could impact your organization.

Potential downside

Because the vendors merging are major players, many health plans include one or more of these in their supplier mix. In fact, you may find that the vendors you used in different pass positions and/or types of audits are now one and the same. As such, these vendors should be cognizant of the potential impact on your business. Expect them to provide communication around updated value propositions, cost and cost driver comparisons, technology and service roadmaps, and market strategy.

However, if you have questioned the different entities’ quality and value in the past, the new arrangement may not offer needed improvements – or the increased transparency required for you to make that data-driven judgment call.

Watch for potential downsides to these vendors consolidating:

  • Limited choices and differentiation of those choices could stifle the level of innovation you have come to expect because vendors are not incentivized to aggressively compete for your business.
  • With fewer options available to you, you may experience reduced rate negotiation capabilities.
  • You may have to rely more heavily on payment integrity services vendors that have traditionally served as competitors to your health plan.

Potential upside

If you have already targeted your vendor mix (or lack thereof) as an area of opportunity, the vendor consolidation trend may provide just the opening you need. Smaller or less established vendors offer a real challenge to larger players as they can be nimbler and more responsive, while also providing niche analytics that fill more gaps and drive higher-dollar value. Strategic sourcing combined with good supplier management is proven to reduce and control costs, particularly around cost avoidance.

However, onboarding new vendors can be costly. And evaluating supplier quality and effectiveness can pose its own challenges. To ensure you can take full advantage of opportunities this disruption may yield, now is your moment to take control of your payment integrity strategy. To that end, look to technology as an enabler of innovation.

Winning Strategies to Minimize Your Risk and Jumpstart Innovation

We have witnessed health plans respond to the risk and uncertainty vendor consolidation can bring in a variety of ways. These responses vary based on differing cost containment goals and where the health plan resides on the payment integrity continuum. While some plans will consider changing their vendor mix or tightly integrating all payment accuracy functions, others seek to internalize key payment integrity efforts.

But to realize the potential innovation, cost savings and effectiveness to the fullest, these strategies depend on enabling technology. Let’s explore the requirements and potential outcomes of each approach.

Changing your vendor mix

If the trend of vendor consolidation affects your current outsourcing strategy, the first option you consider might be changing your vendor mix. And rightfully so, especially if your health plan has set forth any of the following goals:

  • Extend payment integrity coverage over all lines of business and all types of audits
  • Move from few or no vendors to a multitude of vendors
  • Implement sophisticated vendor layering in single audit programs capable of accommodating multi-pass positions

Even in the current environment, strategic outsourcing will offer the quickest path to value – provided you possess the tools that reduce your administrative burden and support data-driven decision making.

An integrated technology platform – like that offered by Pareo Supplier Optimization – will allow you to more easily onboard and manage new vendors without a significant outlay of internal resources. Benefits like streamlined two-way data feeds, integrated workflows, overlap prevention, and automated invoicing and reconciliation create greater efficiencies and reduce manual workload. With a vendor management workforce able to focus on more strategic (and profitable) revenue drivers, your organization can confidently try out new and emerging niche vendors incentivized to bring greater innovation.

Then, all along the way, you can see real-time information on vendor performance, based on metrics that go beyond the basic dollars recovered. Including: How often are they delivering new concepts? How many overpayments are they identifying and recovering relative to the numbers of medical records requests? Are they stacked correctly based on pass order and relative effectiveness?

With these insights in hand, you also can identify the highest opportunity overpayments to potentially insource. And continuously drive ongoing identification of areas to move to avoidance.

Pareo Supplier Optimization Saved Highmark 8000 Hours

See how this savings improved claim resolution times and allowed for reallocating resources to higher-value activities including flexing to help other teams.

Integrating Payment Integrity with FWA

Vendors aren’t the only ones recognizing the benefits of consolidation. In some health plans, payment integrity and anti-fraud initiatives aren’t just separated by function, they actively compete against each other. For everything from resources, to advanced technology investments, and even credit for cost savings. You may have seen for yourself just how this disconnect can hold you back from reaching your avoidance and recovery potential.

If your health plan experiences barriers to innovation due to limited resources and data insights, breaking down claims cost containment silos can offer a path forward.

One of our clients – a top 10 health plan – was able to eliminate 10 aging self-developed systems by replacing them with the continuously enhanced Pareo platform. They built their business case on the improved productivity among auditors and reduced IT lift, which offered enough ROI to justify the purchase.

An integrated technology platform that provides a single source of truth for all payment accuracy functions also gives a shared view of valuable data. For payment integrity and the SIU, for instance, these insights can prevent unnecessary provider abrasion and help identify problematic providers even sooner. As a result, you can accomplish more with less, which can further reduce your dependence on third-party service providers.

L.A. Care Quadruples Recoveries

The nation’s largest public health plan built an integrated payment integrity function from the ground up and quadrupled their recoveries. And it all started with Pareo Supplier Optimization.

Internalizing key payment integrity efforts

Ultimately, many health plans have been goaling toward internalizing much of their audit function to avoid paying excessive contingency fees, especially on claims work that is more easily identifiable or costly. But the need for strong analytics and subject matter expertise can hold back this transformation. Fortunately, ClarisHealth offers a few avenues to resolving these deficiencies.

First is a unique outsource-to-insource capability enabled by Pareo. In this non-traditional arrangement, ClarisHealth provides the analytics and IP to assist you with claim selection and can even provide SMEs to augment internal resources. Our expertise can address the limiting factors that inhibit your owning data mining and clinical audits. Moreover, all work is conducted in Pareo for a seamless experience.

When you’re ready to shoulder more of this effort, Pareo Audit and Clinical provide health plans the same level of advanced technology their most sophisticated vendors use. And each solution houses a library of proven concepts and can accommodate IP from multiple sources to more quickly scale these programs. Configurable workflows, automation, visual reporting and A.I.-powered insights can triple auditor productivity and reduce expenses by 50-70% over traditional outsourced vendor fees. All while allowing you to take more control over your overarching payment integrity strategy.

Additionally, this functionality equips your health plan to potentially crowdsource analytics to drive improved ideation at reduced contingency rates, or leverage new forms of contracting based on case or FTE rate. All capabilities can lower overall operational costs while maximizing avoidance and recovery opportunity.

Pareo for Progressive Health Plans

The direct effects of vendor consolidation may not be felt for a while by some health plans. But this unprecedented era of consolidation and disruption holds the potential to foster tremendous strides in health plan innovation. Depending on your goals, this shift at your organization could take the form of increased internalization strategies through enhanced analytic capabilities, rapid adoption of end-to-end technology platforms, and further development of subject matter expertise.

With disruption as a catalyst for innovation, there is no better time for your health plan to assert more direct control over your payment integrity destiny. And that starts by creating a robust ecosystem to maximize avoidance and recoveries at the most optimized cost – like that enabled by Pareo. From there, you can more quickly move on new payment integrity strategies that will cement your status as a progressive health plan and bolster your competitive advantage.

Now’s the time for total payment integrity

See the ClarisHealth 360-degree solution for total payment integrity in action.

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