Reimagining Payment Integrity: How Health Plans Can Optimize Using a Modern Operating System Built for the Future
The 1990s called. They want their Payment Integrity strategies back.
Are we living in the past when it comes to our payment integrity strategies?
It wasn’t that long ago that the Walkman and Motorola phones ruled our lives. We marveled at personal computers, the early days of the internet, and Friday night video rentals. In the 80s and 90s it seemed we were finally living in the future. How wrong we were.
In the ensuing decades, technological advancements have accelerated faster and faster, disrupting legacy industries and transforming how we work and live. However, payment integrity (PI) operations for many health plans have not kept pace with that progress.
Too many of today’s PI programs still rely – at least in part – on manual workflows, fragmented data pipelines, and inefficient vendor relationships that create high costs and limit agility. But here’s the good news: we are standing on the edge of a transformational opportunity. Armed with the right digital tools, process innovations, and a strategic mindset, health plans can finally take control and unlock the full potential of payment integrity.
This strategic brief explores four foundational concepts for building a modern PI operating model and provides actionable insights to help payment integrity leaders move from reactive oversight to proactive, strategic impact.
From Blockbuster to Netflix: The Urgent Need for Digitization
Remember the thrill of renting movies at the local video store? That nostalgia quickly fades when compared to the convenience of today’s on-demand streaming platforms. No more waiting or wondering if a chosen title will be available. Everything we’re looking for comes to us, when we’re ready to watch it.
That same evolution is needed in payment integrity. Specifically in the area of clinical record retrieval.
The Paper Problem
Today, many health plans still rely on:
- Manual letters and mailed boxes of records
- Physical CDs
- Secure emails (which are rarely secure or efficient)
- Multiple third-party portals and read-only EHR access
This fragmented process is slow, expensive, and creates provider abrasion. Industry estimates suggest it costs $25–$30 per medical record to request, retrieve, and process records for audit. And that’s before factoring in the provider’s cost to fulfill the request. When multiplied across millions of records, that $25 becomes hundreds of millions in unnecessary industry-wide spend.
The Digital Solution
Enter Qualified Health Information Networks (QHINs), part of the federal Trusted Exchange Framework and Common Agreement (TEFCA). These networks provide the technical rails for a seamless and secure exchange of clinical data between payers and providers.
While adoption is still early, forward-thinking plans can get ahead by:
Knowing the numbers
Calculate the number of records requested and the return rate.
Centralizing records
Build a single source of truth to avoid redundant requests.
Controlling the experience
Own the data exchange and reduce provider abrasion.
Partnering for pilots
Explore opportunities with QHINs to trial digital record retrieval.
When you own the record, you control the strategy, reduce costs, and create room for innovation.
From Cashiers to Kiosks: The Rise of Self-Service
We’ve all grown to love self-checkout at the grocery store, online banking, and mobile check-in at the airport. One tap and done. With all the information we need at our fingertips at every step. Self-service empowers us with speed and control. So why should payment integrity be any different?
The Legacy Model
In the early days of payment integrity, vendors generating “found money” for a cut of the findings was a real boon. And it was all too easy to let those vendors own the process and data, which leads us to today. $1.5 billion. That’s the estimated annual spend across the industry on vended prepay PI services alone. We would call it money well spent if the real cost weren’t even higher:
- Limited internal visibility into claims selection
- Fragmented workflow management
- Little control over cost per record, time-to-audit, or provider impact
- Lack of transparency in contingency fees and ROI measurement
All adding up to high administrative costs and low flexibility. Outsourcing itself isn’t the problem. Well-managed, transparent vendor relationships have a place in many sophisticated PIOs. Rather, over-reliance on third-party service vendors without clear cost-benefit analysis or control is where the trouble lies.
The Self-Service Model
Health plans need to reevaluate the economics of their PI models. Most are finding the best value in a “right-sourcing” strategy. In this model, PI leaders have greater strategic control over which projects are kept in-house vs. outsourced to vendors. They use in-house analytics teams to build and deploy edits and internal reviewers to manage select prepay and post-pay audits.
There’s double-digit ROI potential from internal clinical review teams alone. Overall, insourcing lowers audit costs, reduces abrasion, and speeds resolutions. All of which create more opportunities for PI to act as a strategic lever, rather than a back-office function.
This optimized approach is available to all PI leaders, not just those with large teams of on-staff experts. Use this process to begin taking greater control:
Evaluate total value capture.
Audit PI vendor contracts and administrative costs. Benchmark internal vs. external ROI by program, project, and analytic level.
Assess strengths.
Strong expertise, advanced technology capabilities, and well-documented processes each provide a solid foundation to build upon.
Consider technology needs.
Use A.I. to increase productivity before increasing headcount.
Start small and build.
Insource areas like itemized bill review or post-pay data mining. Give the program and team space to learn and expand.
Common Insourcing Concerns (and Why They’re Outdated)
“I don’t know which claims to select.”
Modern analytic platforms and A.I. tools eliminate this barrier.
“We don’t have the right systems.”
Today’s market offers proven technology solutions for inventory management and compliance.
“We don’t have the resources.”
With clinical auditor productivity increasing 3x through A.I. tools and automation, even a small internal team can drive significant results.
Payment integrity is no longer just a back-office operational concern. It must be strategically embedded across the enterprise.
From the Walkman to Spotify: Changing the Business Model
Back when we would pay $10-$15 for our favorite new album, sales of cassettes and CDs skyrocketed the music industry to $20B. Fast forward 25 years and the industry plummeted to below $7B due to singles-driven digital music formats. But today, with paid streaming subscriptions, it has rebounded to nearly $16B.
It’s time for payment integrity to take a similar journey of adaptability.
The Contingency Dependency
When our industry formed, the contingency model proved incredibly valuable. Health plans didn’t understand the level that was being overpaid, and sophisticated tools didn’t exist to identify overpayments. But despite those limitations, a few pioneering vendors recognized the problem and were willing to take the risk for the reward.
As a result, contingency-based pricing became the norm. However, this model poses a major challenge.
It does not incentivize both parties to work together to ultimately resolve overpayments.
Compounding this challenge are the new demands PI leaders contend with while seeing savings goals increase year after year:
- There is a clearer focus on partnering with providers to share insights to resolve issues at the point of care or billing.
- Commercial customers are becoming more sophisticated, demanding greater insights into the details of their shared savings programs, and ultimately wanting remediation of recurring themes.
- A.I. and other advanced technologies are making it more efficient to deliver these services and empowering payers to do more on their own.
The Predictability Era
In the next decade, we will see this entire industry structured and priced differently. But we don’t have to watch and wait. Take advantage of current capabilities to enhance cost predictability and ROI.
Leverage fixed-fee tools.
Ultimately, these will help drive down the cost of avoidance and recovery. Calculate the internal cost of avoidance or recovery based on a conservative return that provides at least the minimum ROI to support a technology investment. Whether delivered in a PMPY or license-based structure, incremental improvements and increasing targets further reduce average costs.
Connect downstream vendors.
Integrating into one system will support continuous error analysis and insourcing. Create a virtuous cycle where vendor findings can be examined at the error code level. From there, strategic stacking and insourcing further increases savings at the lowest possible cost.
Ensure partnership goes both ways.
Be transparent with vendors about insourcing goals, and set up incentive structures for innovation to reward and encourage new ideation.
Invest in research.
Make targeted investments in research roles embedded within the team to help identify how to enhance self-serve capabilities in these new business models.
The infrastructure already exists. The question is whether plans are ready to operationalize it.
From Taxis to Uber: In Pursuit of Transparency
For years, if we needed door-to-door transportation, a taxi was our only option. It wasn’t ideal. We had no idea how much the ride would cost, or if we were taking the most efficient route, and cash payment was the only option. Uber and Lyft upended that model.
They took a messy, opaque system and made it predictable, easy to understand, and fairer. And they did it all through technology providing transparency and accountability.
PI demands an equally transparent environment. One where data is used to showcase and benchmark PI accurately, demonstrate value to commercial customers, and better engage providers.
The Black Box
The manual processes, vendor-led models, and contingency fee-driven recoveries explored throughout this brief all add up to an overarching challenge: a black box of payment integrity that sows seeds of doubt with key stakeholders.
At the same time, PI leaders face an evolving environment that makes this lack of transparency untenable:
- Increasing regulatory scrutiny — particularly around overpayment recoveries, provider abrasion, and denials management
- Need to align with enterprise priorities such as reducing total cost of care, improving provider relationships, and enhancing member satisfaction
- Intense cost pressures and stakeholder-empowering technologies leading to detailed questions on PI accuracy
The Force Multiplier Effect of Tech
The answer starts with a two-fold combination of what has been prescribed here. Creating an integrated ecosystem that contains all PI value and re-positions the levers of control to make strategic and tactical changes that drive improvements to end-state customers. And improved business models that work toward supporting transparency and resolving issues.
Together, these shifts enable PI leaders to take steps toward extending trust and accountability:
Tell better stories with data, adjusted to each stakeholder’s needs.
Providers, government agencies, and ASO groups. Establish and educate on standard KPIs and report on them consistently to showcase trends.
Be responsive to stakeholder concerns and transparent with the results.
Provide proactive and regular updates on new programs, share performance dashboards, and answer questions.
Build transparency and defensibility into PI workflows.
Automate documentation of every step (e.g., audit trails, justification for edits).
Develop more transparent, real-time engagement tools.
Enable stakeholders to self-serve. The future of payment integrity is intelligent, adaptive, and real-time.
Transforming PI isn’t just about technology and business models. It’s about our role in driving trust and accountability.
The Time is Now
It is time for Payment Integrity to take its rightful claim alongside other industries and segments and reinvent itself to meet the new demands that are here today and on the near horizon. We’re at a unique inflection point. The technology is ready. The business case is compelling. And the stakes — controlling administrative costs, reducing stakeholder abrasion, and improving affordability — have never been higher. Payment Integrity doesn’t need a slight tune-up. It needs complete reimagining. A total overhaul of the operating model. This is our collective opportunity to go from Walkman to iPhone, from Blockbuster to Netflix.
- Integrate Payment Integrity into Strategic Planning: Ensure that payment integrity considerations are embedded in the organization’s strategic objectives.
- Invest in Technology: Adopt a platform and advanced tools that facilitate real-time monitoring and analysis of payment processes.
- Foster a Culture of Accountability: Promote transparency and responsibility across all levels of the organization concerning payment practices.
- Engage Stakeholders: Maintain open communication with all stakeholders to align expectations and objectives related to payment integrity.
Let’s build something better – together.
“Do more with less” is tired advice. Innovators are doing 10x more with smarter strategies and better tools.
About ClarisHealth
ClarisHealth provides health plans and payers with a better way to drive claims payment accuracy. Its proprietary, A.I.-powered enterprise technology platform Pareo® has been proven to help health plans streamline payment integrity operations, expand avoidance and recoveries, and reduce vendor and existing system spend for an industry-leading ROI. This return is achieved through a 10% increase in overpayment recoveries, 50% reduction in contingency fee payments on internalized audits, and 55% reduction in internal team time spent on inventory management. Pareo’s configurable platform supports claims overpayment inventory management, vendor optimization, auditor workflow and analytics, and business intelligence capabilities.
Now’s the time for total payment integrity
See the ClarisHealth 360-degree solution for total payment integrity in action.