Payment integrity (PI) is an essential component of the healthcare ecosystem, ensuring that payers correctly process claims and avoid financial losses due to errors, fraud, or contract misinterpretations. In the current environment, major healthcare payers are facing significant financial challenges, which may lead to layoffs and increased scrutiny of how money flows through the system. The demand for highly advanced, balanced PI solutions has never been greater.
Getting PI right has never been more important.
The evolving IP landscape
PI solutions are critical to a payer’s long-term success. Some companies advocate a “turn left” approach: moving IP efforts to prepaid rather than postpaid. While prepayment validation is critical to preventing errors before funds are disbursed, focusing exclusively on prepayment fails to address a substantial portion of financial leakages.
Postpaid remains an indispensable component of cost recovery, as contract overpayments, duplicate claims, and algorithmic discrepancies often only become apparent after payment processing. A well-balanced approach that leverages prepaid and postpaid strategies is necessary to optimize financial results.
Post-payment reviews act as a second pricing engine by incorporating a customer’s supplier contracts and changing claim prices according to the terms of the agreement. This process can successfully identify millions of dollars in recoverable overpayments, proving that a postpaid approach has immense value. Most clients see a 20-40% increase in their overpayment IDs by having their setup system reviewed by a PI company that can reprice claims. Payers struggling with slow and stagnant production often require innovative cost-saving strategies to address IP challenges, especially considering that an organization says administrative waste from outdated PI solutions costs $15 billion each year.
The need for technological advancement
Applying innovative strategies remains a constant challenge in healthcare. While consumer retailers readily adopt multiple technologies to improve customer satisfaction and drive sales, the healthcare industry has yet to catch up. One of the industry’s persistent weaknesses when it comes to IP is its reliance on outdated technology and manual queries. There remains a significant reliance on database queries or similar manual data extraction approaches, which slow down the PI process and increase the risk of human error, leading to inconsistencies in results.
An advanced solution brings together technology and human expertise to support several processes that typically challenge PI accuracy:
- Supplier Agreement Modeling: Integrating hospital and facility contracts for accurate pricing.
- Automated Price Adjustments – Claims are repriced to align with CMS and Medicaid guidelines.
- Algorithmic Intelligence: Built-in tools to detect rule-based overpayments, duplicates, and other discrepancies.
- Automated prioritization: High-value claims are systematically triaged for resolution, improving efficiency.
By refining algorithms and automating processes, payers can reduce costs and the amount of time needed to detect financial discrepancies.
Balance between prepaid and postpaid
While pre-payment validation is crucial to preventing financial leaks in advance, post-payment authentication is vital for cash recovery. Errors, such as contract overpayments, algorithmic errors, or billing discrepancies, are not detected until claims have been processed. This involves substantial amounts of money.
Organizations that focus too much on prepayment risk losing millions in post-payment recoveries. A holistic approach, combining prepayment automation with robust post-payment audits, ensures the highest possible accuracy and financial profitability.
A technology-driven approach uses contract modeling, automated price review, and refined algorithmic detection to strike the perfect balance between prepayment prevention and post-payment recovery, ensuring optimal savings and efficiency.
Challenges in AI adoption
Many vendors promote artificial intelligence (AI) as the next IP frontier. While AI holds great promise, some companies lack real-world validation for their AI-based solutions. These vendors advertise exaggerated savings figures with no real use cases for customers, creating skepticism in the market. This is a genuine problem because AI, together with IP experts, can drive overall improvements through a comprehensive approach.
“The effects (of AI) could be particularly profound on payment integrity because PI capabilities depend on the rapid review and synthesis of a variety of data sources. Furthermore, even relatively small increases in the accuracy and efficiency of claims adjudication can represent a substantial financial impact for a variety of healthcare stakeholders due to the complexity and scale of the US healthcare payment ecosystem.” “Uh.” According to McKinsey.
However, much of the healthcare industry is stagnant and continues to move forward with a traditional approach (manually querying claims data to identify potential overpayments), which is slow and inconsistent. Different data analysts can reach conflicting conclusions about whether a claim is overpaid, leading to confusion, inefficiencies, and lost revenue.
In contrast, an algorithm-based framework backed by human expertise eliminates guesswork and ensures consistency, accuracy and efficiency in claims assessments.
The evolution of healthcare
As the healthcare landscape evolves, IP must be balanced between pre-payment validation and post-payment recovery. Healthcare payers must prioritize technological innovation, automation, human expertise, and algorithm-based accuracy to prevent financial leakages while recovering lost funds.
By using a unique approach—leveraging contract modeling, automated pricing review, and refined post-payment auditing—payers can position the organization as a leader in PI, while maximizing savings and improving financial performance.
About Robert Starman
Robert Starman is the senior vice president of payment integrity services at Sagilitya provider of technology-enabled healthcare solutions working with U.S. payers and providers. It leverages its deep expertise in healthcare operations and financial performance to help organizations reduce costs, strengthen compliance, and improve care delivery.
