Payment integrity (PI) is an essential component of the healthcare ecosystem, ensuring that payers correctly process claims and prevent financial losses due to errors, fraud, or misinterpretations of contracts. In today’s environment, major healthcare payers face substantial financial challenges, which can 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 PI Landscape
PI solutions are critical to a payer’s long-term success. Some companies are advocating for a “shift-left” approach: moving PI efforts to pre-payment rather than post-payment. While pre-payment validation is critical in preventing errors before funds are disbursed, focusing entirely on pre-payment fails to address a substantial portion of financial leakage.
Post-payment remains an indispensable component of cost recovery, as contract overpays, duplicate claims, and algorithmic discrepancies often only become apparent after payment processing. A well-balanced approach is necessary, leveraging both pre-payment and post-payment strategies to optimize financial outcomes.
Post-payment reviews act as a second pricing engine by ingesting a client’s provider contracts and repricing claims according to the terms of the agreement. This process can successfully identify millions of dollars in recoverable overpayments, proving that a post-payment approach is of immense value. Most clients see a 20-40% increase in their overpayment identifications by having their configuration system reviewed by a PI company that can reprice claims. Payers struggling with slow, stagnant production often require innovative cost-saving strategies to address PI challenges, especially when taking into account that one organization says administrative waste from outdated PI solutions costs $15 billion every year.
The Need for Technological Advancement
Bringing innovative strategies to bear remains a constant challenge in healthcare. While consumer retailers readily adopt multiple technologies to enhance customer satisfaction and drive sales, the healthcare industry has yet to catch up. One of the industry’s persistent weaknesses when it comes to PI is relying on outdated technology and manual queries. There remains significant dependence on database queries or similar manual data-mining approaches, which slow 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:
- Provider Agreement Modeling: Integration of hospital and facility contracts for precise pricing.
- Automated Pricing Adjustments: Claims are repriced to align with CMS and Medicaid guidelines.
- Algorithmic Intelligence: Built-in tools to flag overpayments, duplicates, and other rule-based discrepancies.
- Automated Prioritization: High-dollar claims are systematically ranked for resolution, improving efficiency.
By refining algorithms and automating processes, payers can reduce costs, and the amount of time needed to detect financial discrepancies.
Balancing Pre-Payment and Post-Payment
Although pre-payment validation is crucial in preventing financial leakage upfront, post-payment authentication is vital to cash recovery. Errors, such as contract overpays, algorithmic mistakes, or billing discrepancies, aren’t detected until after claims have been processed. This adds up to substantial amounts of money.
Organizations that focus too heavily on pre-payment alone risk losing out on millions in post-payment recoveries. A holistic approach, combining pre-payment automation with robust post-payment audits, ensures the highest possible accuracy and financial return.
A technology-driven approach uses contract modeling, automated repricing, and refined algorithmic detection to strike the perfect balance between pre-payment prevention and post-payment recovery, ensuring optimal savings and efficiency.
The Challenges in AI Adoption
Many vendors promote artificial intelligence (AI) as the next frontier of PI. While AI holds significant promise, some companies lack real-world validation for their AI-powered solutions. These vendors advertise exaggerated savings figures without actual client use cases, creating skepticism in the marketplace. This is a genuine issue because AI, coupled with PI experts, can drive across-the-board improvements through a comprehensive approach.
“The effects (of AI) could be particularly profound in payment integrity because PI capabilities depend on the rapid review and synthesis of a variety of data sources. Furthermore, even relatively small increases in accuracy and efficiency of claims adjudication can represent substantial financial impact for a range of healthcare stakeholders because of the complexity and scale of the US healthcare payments ecosystem.” according to McKinsey.
Nevertheless, much of the healthcare industry is stuck and continues moving forward with a traditional approach—manually querying claims data to identify potential overpayments—which is slow and inconsistent. Different data analysts may reach contradictory conclusions about whether a claim is overpaid, leading to confusion, inefficiencies, and lost revenue.
By contrast, an algorithm-driven framework supported by human expertise eliminates guesswork and ensures consistency, accuracy, and efficiency in claim evaluations.
The Healthcare Evolution
As the healthcare landscape evolves, PI must be balanced between pre-payment validation and post-payment recovery. Healthcare payers must prioritize technological innovation, automation, human expertise, and algorithm-driven accuracy to prevent financial leakage while also recovering lost funds.
By utilizing a unique approach—leveraging contract modeling, automated repricing, 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 Sagility, a technology-enabled healthcare solutions provider that works with U.S. payers and providers. He leverages deep expertise in healthcare operations and financial performance to help organizations reduce costs, strengthen compliance, and improve care delivery.
