The issue of fraud, waste and abuse in healthcare spending is a major challenge for both payers and providers with some estimates that it accounts for as much as 10 percent of overall healthcare spending. Now one new entity is hoping to relieve payers by strengthening their processes for payment so that only proper claims are paid.
The new entity focused on payment accuracy and integrity, is spearheaded by private equity firm New Mountain Capital, which has $55 billion in assets under management. It involves the merger of three separate New Mountain assets — The Rawlings Group, Apixio’s Payment Integrity business and Varis. The entity is so new that it currently lacks a name, said David Pierre in a recent interview. Pierre, who will become the combined company’s CEO, previously served as chief operating officer of Signify Health, which had a successful IPO before eventually being sold to CVS Health in 2023 for $8 billion.
Pierre explained that in the past, insurers have had to go through a first pass of claims and then second and third pass to accurately determine whether processes have been followed correctly for claims and how much is needed to pay. To do this, they have had to rely on multiple different vendors.
“What we’re able to do by bringing together the three kind of best in class companies that are all complementary to each other, but they offer different solutions in the market,” Pierre said, reinforcing the notion that purchasers of health tech want comprehensive solutions and not point solutions.
Varis provides recovery audit services and overpayment identification services to more than 30 companies that insure more than 35 million people. The Rawlings Group offers recovery services including a pharmacy claims recovery program and legal services. Apixio’s payment integrity services leverage AI to streamline and automate pre-payment claim reviews. The net result, the company’s website claims is increased accuracy, efficiency and transparency.
Having all of these services under one roof will then eliminate the need for a “first, second, and third pass because that was all based off human error in the past. Now you have technology, machine learning, AI that can look at things, serve it up to the experts so they can actually make the decision,” he added.
Pierre also noted that he believes that leveraging technology this way will “really change the trajectory of healthcare spend across the U.S..”
One area where the technology can help in especially is making sure that providers coded claims properly according to the terms of the contract between provider and payer. Normally, this would require people to pore over reams and reams of paperwork.
“It’s thousands and thousands of pages of and documents that have to traditionally had to be synthesized by a human and then determined should this be paid or not? With technology, you’re now able to, in artificial intelligence, you’re able to read through all this. You’re able to go through medical claims, medical records and summarize it very quickly and be able to say, you know what? This payment should be made immediately without even human intervention,” he explained.
The combined capabilities of New Mountain’s new company can also decide something needs human intervention and then gather up and organize all the data for the person to be able to decide, Pierre said. He noted that the 1,900-person company has years of claims data, clinicians and a lot of attorneys so the product has been built by experts.
While the unnamed entity is is hoping to bring what it bills as a comprehensive solution to insurers, the claims management space has some big names as competitors like UnitedHealth Group’s Optum and Cotiviti. And also a plethora of smaller point solutions.
“Oftentimes we go in to major clients, the large national health plans, and we’ll go into them and they’ll be using 10 to 14 different vendors in this space. So that’s why think about the administrative complexity and the amount of people it takes to manage those types of relationships, let alone use those systems. So that’s why we were so excited about this, and just the opportunity to bring in, really be the main point of contact for them on their payment to make sure that they’re paying correctly and accurately.”
Pierre added that the three entities have 60 health plan clients that currently cover over 160 million lives but declined to name any. He added that the technological prowess that the new entity brings should be welcomed by both providers and payers.
How payers are benefited is pretty clear but how do providers benefit? In two ways, Pierre said. One the company’s technology makes sure that payers get paid quickly because the technology can easily answer questions about why one claim was coded a certain. The second benefit is that it reduces administrative burden and reduces the time that a provider is underpaid.
“I think if you talk to a provider group or if you talk to a health insurance plan, they’ll tell you their goal is accuracy. Who wants to upcharge? Nobody wants to upcharge. Nobody wants to get paid less than they deserve either and [both are equally] very big problems in this industry. So we view it as kind of a win-win-win,” for payers and providers, he said.
Photo: nito100, Getty Images
