Contract Modeling: The Key to Fostering a Positive Health Plan-Provider Relationship

The ‘pay and chase’ model of reimbursement is prevalent in the health care industry. This means many health plans know and accept the fact that payments to providers are simply incorrect and will require remediation.

At HealthEdge, we’re asking lots of questions about this traditional model and challenging the status quo.

  • What if health plans modeled contracts before or during negotiations with providers?
  • What if health plans understood how contract terms would affect their claims before putting them in place?
  • Could health plans streamline contract terms and ensure that reimbursement methods pay correctly and automatically?
  • Could health plans remove manual processes and rework?

Getting to the root cause of conflict

The friction between providers and health plans is multi-faceted. Erroneous payments are simply accepted, allowing the pay and chase model to be normalized and standard. But consistent errors wear on both health plans and providers. Allowing a claim to be underpaid or overpaid by even a few cents, will become a substantial amount over time, increasing tension between health plans and providers.

The pay and chase model also takes time away from the individuals working to remediate the discrepancies. Rework requires time to be spent on the same tasks that could have been correct the first time. Overall, this leads to waste in the form of time and dollars.

What is contract modeling?

Contract modeling can be thought of as testing terms for reimbursement. This allows a health plan to gain valuable insights into impacts of the terms within contracts prior to applying them to production claims.

Contract modeling can build a comparison of ‘what if’ scenarios to help a health plan make important decisions when it comes to negotiating provider contracts.

The benefits of contract modeling: how it can resolve the abrasion between health plans & providers

Contract modeling can also be valuable to a health plan that is negotiating contract terms with a provider. It will allow for the health plan to understand the contract terms and their application to claims, while also bringing the same clarity to the providers, creating a strong and transparent relationship.

A comprehensive approach to accuracy & efficiency

Can we change the status quo of reimbursement with contract modeling? Perhaps the process of creating provider contracts is backwards. Instead of the traditional approach, what if we first know and understand the payment that providers are expecting and how contracted terms will behave on claims prior to negotiations? With a complete and transparent approach, we can stop the pay and chase model and start paying claims accurately and efficiently the first time.

Taking Growth Into Your Own Hands

We all get the emails – mid-year check-in, annual reviews. These performance reviews are designed to help us continuously grow and develop throughout our career. Your manager and/or mentor can provide you with the support to grow and evolve – but there’s only one person who owns your growth and how you invest in yourself.

Your personal development is your responsibility – and it comes with a host of benefits, including personal satisfaction, increased career opportunities, improved brain health, and the joy of continuous learning and mastering something new.

What does owning your growth mean?

Personal growth and development means developing a vivid vision of what you want your life and career to become and establishing goals and a plan to achieve that vision. And taking the personal responsibility and accountability to commit to achieving that vision.

An important component of owning your growth is feedback. Along your path, are you asking for feedback? A helpful 3-question framework is:

  • What am I doing well?
  • What do I need to do more of?
  • What do I need to do less or stop altogether?

It’s so easy to get off-track on our quest for personal development. Work, family, digital distractions, information overload, the feelings of failure/not progressing fast enough are demons lurking in the wings – waiting to derail us from our personal growth. This is why it’s so important that the drive for personal development comes from you – it has to be internally driven to stick. Develop a vision of your life that’s so compelling you can’t help but be pulled toward it.

Why invest in your personal growth?

What happens if you don’t invest in your personal and professional growth? One of the biggest risks is stagnation. Another is if you’re given feedback and don’t do anything about it.

A growth mindset coupled with personal development can lead to increased creativity, opportunities at work, problem solving, and even improved brain health. According to neurosurgeon Dr. Sanjay Gupta, learning new skills is one of the best ways to keep your brain sharp.

How do you invest in your personal growth?

There are many ways to learn – YouTube, classes, webinars, coaches, books. The options are nearly endless – but the key is to select what you want to learn, how you’re going to learn, how you’re going to immediately apply it – and make a commitment to yourself to see it through.

For example, if we think about learning a second language. There are so many things to learn – how do you learn without feeling overwhelmed by the magnitude of the task. We follow this framework and break down a big goal into manageable chunks:

  • Select what you want to learn: I’d like to learn Spanish and be proficient enough to have basic conversations.
  • How I’m going to learn: I’m going to take a weekly class, learn vocabulary with notecards for 15 minutes a day, and do Duolingo every day.
  • How I’m going to immediately apply it: I’m going to find a weekly Spanish meet up group, join it, and practice speaking.
  • Commitment: I commit to taking full ownership of this goal. I am responsible and will see it through.

A couple important notes include:

  • Make sure to give yourself permission to take the time. It can be so challenging with work, family, and life obligations to make the space for something that feels like an indulgence. But personal growth is not a treat – it’s vital to your life and career.
  • Turning your goals into daily habits is a great way to see success at something new. The book Atomic Habits is a great read on effective habit building. Comedian Jerry Seinfeld uses a calendar technique to keep his daily habits on track.
  • We don’t retain new information unless we apply it. Any time you learn something new you have to immediately apply it. The more you use your new knowledge the stronger those neural connections become.
  • There’s no one size fits all when it comes to personal development and/or learning. This is why it’s so important for you to own your growth.

Owning your personal growth

The feeling of mastering something new after a concerted effort is sublime – a potent combination of pride, accomplishment, and gratification. Leaving your personal development to only what is mandated by your manager robs you of the opportunity to feel this joy.

Give yourself permission to invest in yourself. To your success!

Big Changes in the Biggest Challenge Facing Health Plans Today

Managing costs and improving operational efficiencies jump to the top of the list in 2022 Health Plan Market Survey

Every year, we conduct a survey of hundreds of health plan executives. This year, more than 300 health plan leaders responded, and the full research results can be found here.  One of the biggest changes that surfaced in this year’s results was the sharp increase in the number of executives who are concerned about rising administrative costs. This blog explores the research results and some of the drivers that are impacting costs – along with some practical advice on how some of the most successful plans are taking the challenge head on.

Results Reveal Heightened Attention on Managing Costs

As “managing costs” jumped from near the bottom of the list in 2021 to the top of the list in the 2022 Health Plan Market Report, the shift reflects the monumental changes that are going on in the market today. Everything from aging technology that is not able to keep pace with market changes to increasing regulatory pressures, administrative costs have been rising. Let’s break down the key factors driving the heightened focus this year.

1. Aging technology: As member expectations of their health plans evolve to be more in line with what the experiences they have with other parts of their lives (retail purchases online, personalized service, price transparency), payers are being forced to respond with higher service levels. The growing number of regulatory requirements are also putting pressure on aging systems to make available data to members and other stakeholders. New market entrants with more innovative approaches to benefit plans and services are threatening the market share of traditional payers, resulting in the need to be more agile and creative.

Aging systems directly impact administrative costs. For example, systems without flexibility to support new payment models requires more manual work or results in missed opportunities. Legacy systems that are incapable of seamlessly exchanging data with other systems require manual data entry that increase labor costs and introduce the risk of human error. Also, systems that can’t facilitate advanced automation increase the cost per claim by adding even more manual intervention. In fact, in this year’s survey, we saw the cost per claim increase for more health plans this year – with 58% of survey respondents reported their cost per claim is $8 or more, compared with 44% the previous year.

Outdated, legacy systems were never designed to be flexible and open. They were mainly designed to process claims. As payers seek to respond to the market demands, they are having to make tough decisions about whether to continue to invest in their aging systems and more manual resources or move to more modern, open systems.

2. Workforce dynamics: The labor shortage is also driving up administrative costs. With fewer staff members and rising wages required to attract and retain qualified resources, operating expenses are increasing. In addition, when the technology is not easily adaptable, health plans are forced to hire more people just to cover the basics, like maintain compliance with new regulations and meet member and provider expectations. As backlogs build up and service levels go down, so does the health plan’s ability to positively impact member outcomes. The impact of having fewer resources available in a business that is heavily depending on manual processes has far-reaching effects on virtually every component of the organization.

3. Regulatory Changes: More regulatory changes have occurred in the past two years than in the previous 10 years. All of this change typically requires modifications to the underlying systems that generate the data and run the workflows. Without a modern, flexible system, health plans have to use manual resources and add more work to their already overwhelmed IT departments, which in turn, impacts costs.

When asked what their top challenges were when it came to staying compliant with CMS’ frequent changes to quality standards and payment rules, the top two responses were:

1. Technology/infrastructure cannot keep up

2. Lack of IT staff or resources to make changes

3. Interoperability mandates

4. Post-Pandemic Care: During the pandemic, patients delayed care, creating gaps in care and sometimes costly complications. As those patients return to their physicians and hospitals for care, claims volumes have increased and so has the cost for the care. This surge in claims is putting further strain on inefficient and manual processes.

Digitization Can Drive Savings and Growth

To address these challenges, health plans are looking for ways to get more from less and finding investments in modern technology to be a smart solution. And when costs are reduced and efficiencies are gained, leaders are bullish on the future of the industry.

When asked what leaders would do with the savings captured from lowering costs and finding new operational efficiencies, the top three answers were:

  1. Invest in new geographies or lines of business
  2. Consider new partnerships or acquisitions
  3. Reallocate for further innovation

HealthEdge currently provides best-in-class solutions delivered on powerful, digital transformation platform that enables more than 100 health plans tackle these tough challenges today. Modern systems from HealthEdge provide the true integration capabilities, advanced automation, and access to real-time data that is necessary to drive down costs. Replacing outdated, legacy systems with modern technology made to support the demands of today’s market not only opens the door to new operational efficiencies, but also enables greater opportunities to increase member satisfaction and drive new revenue opportunities.

For more information on how HealthEdge can help your organization manage rising administrative costs, visit or email [email protected].

Digital Transformation: Research Reveals It’s a Top Priority for Health Plan CEOs and CIOs This Year

Each year, HealthEdge surveys hundreds of health plan leaders to better understand the market’s top priorities and business challenges. This year’s study captured data from more than 300 leaders and revealed a heightened priority among CEOs and CIOs when it comes to implementing modern technology to achieve organizational objectives. The full report can be accessed here.

Top Challenges Reported
Today’s healthcare insurance market is highly dynamic due to rising healthcare consumer expectations, workforce shortages, growing complexities of the regulatory environment, shifting payment models, and rising administrative costs. Survey respondents ranked the following as the top challenges they are facing this year:

  • Managing costs
  • Operational efficiencies
  • Alignment between IT and business
  • Member satisfaction

When asked about their plans are to overcome these challenges, more than half of respondents indicated they are focused on making significant investments in innovation (53%), modernizing technology (51%), and aligning the business and IT organizations (53%).

The most common theme across these approaches is technology, or as some experts describe it – digital transformation.

For those who can leverage modern technology to become nimbler and more efficient in today’s highly dynamic market, there is significant opportunity to creative competitive advantages, improve the member and provider experience, reduce administrative burdens, and ultimately increase profitability.

Aligning for Success

Health plan leaders also highlighted the need for better alignment between their IT and business resources. In 2021, survey respondents indicated aligning the business and IT organization was the lowest priority when it came to steps needed to achieve business goals. However, in 2022, this priority jumped to the top 3, only slightly behind managing costs and creating operational efficiencies.

The shift indicates that leaders are acknowledging the vital role technology now plays in their ability to achieve their business and revenue goals. Together, CEOs and CIOs can evaluate how technology can support strategic business needs:

  • How can our IT systems allow us to do more with less?
  • What more can we get out of our technology investments?
  • How can we adapt faster to changing market conditions?
  • How can we use technology to better connect our disjointed member and provider experiences?

The Answers are Clear

Three common themes have emerged among some of the most successful leaders leveraging modern technology today are true integration, advanced automation, and access to real-time data.

  • True Integration: Through a fully integrated ecosystem, digital payers can lead the way in shaping the member-centric, connected healthcare ecosystem of the future. Continued innovation is enabling digital payers to break down siloes and improve access to real-time data among payers, providers, partners, and members. Next-generation payers are investing now in platforms that facilitate this heightened level of connectivity across their own organizations as well as the entire healthcare delivery system.
  • Advanced Automation: Automated processes improve accuracy, while reducing manual intervention and operating costs. Investing in modern technology with automation capabilities to improve claims accuracy and remove manual processes that often prohibit health plans from being nimble enough to explore new market opportunities.
  • Real-time data: By enabling greater access to the real-time data, whether it be claims data, benefits information, and eligibility checks, or provider performance metrics, all stakeholders will be better equipped to improve the way care is delivered and paid for. In fact, survey respondents say that lack access to real-time data is the number one issue negatively impacting provider relationships. With better, more timely data comes better outcomes and a better experience for all. Health plans leading the way in delivering real-time data improve clinical and business outcomes for all.

Accelerating your Digital Transformation Journey

Learn more about why health plan executives are prioritizing modern technology investments and how HealthEdge supports the digital transformation for payers in our latest white paper: Annual Market Survey Reveals What 300+ Health Plan Leaders are Thinking.

Becoming a Digital Payer: Constantly Reducing Transaction Costs

HealthEdge has identified five key attributes that drive digital payers, enabling them to rise above the competition and lead the way to better outcomes across the entire healthcare delivery system.

Digital Health Payers focus on:

  1. Improving end-user and member centricity
  2. Achieving higher levels of quality
  3. Increasing transparency
  4. Advancing customer service
  5. Reducing transaction costs

In this five-part blog post series, we’re diving deeper into each attribute, delivering resources, information, and insights to enable health plans to transform into digital health payers. As we continue the conversation around what it means to be a digital payer, this discussion focuses on reducing transaction costs.

Constantly Reducing Transaction Costs

Transaction costs are a true indicator of the level of efficiency that exists within a health plan. Typically, the higher the costs, the lower the efficiencies. In HealthEdge’s Annual Market Survey of more than 300 health plan leaders, managing costs and operational efficiencies topped the charts as this year’s biggest challenges leaders are facing.

According to McKinsey & Company, “The rising cost of claims and the complexity of claims management are among the most pressing challenges health insurance companies and other private payers face today. Digitizing every step of the claims process, from data input to payment, has the potential to streamline claims management, as well as boost its efficiency and accuracy. When done right, the result can be both lower costs and better customer experiences.1

Digital payers are in tune with the challenges driving the costs of transactions and are focused on identifying new, innovative solutions to reduce them.

Identifying The Causes

There are a variety of factors to blame for rising costs – from skyrocketing claims volumes following the pandemic, to rising costs due to long delays in care, and outdated systems that require manual intervention and hefty investments to meet industry demands. As workforce shortages continue to plague the market, health plan leaders are evaluating every opportunity to reduce costs and administrative burdens.

In the 2022 Annual Market Survey [link to published white paper] conducted by HealthEdge each year, more than 300 health plan leaders revealed that transaction costs continue to rise. In the study, respondents indicated the average cost per claim increased this year, with 58% reporting that their average cost per claim is $8 or more, compared to 44% in 2021. However, according to the most recent CAQH Index, adoption of electronic claims submission is high – at 97%.2 So, if plans and providers already have electronic systems in place, what is driving the increase in transaction costs?

Transaction Cost Drivers

Experts indicate the increase in transaction costs is partially being driven by inaccurate claim payments and manual rework. In fact, only 26% of respondents said that greater than 80% of their claims were paid accurately the first time. Both result from disparate systems involved in the process and the complexity of continuous changes associated with claims processing. This occurs even with electronic solutions in place.

The fact that many organizations are using multiple tools to manage claims, all with limited connectivity, is to blame. When updates are made – which frequently happens – chaos and inaccuracies are likely to follow with outdated, disconnected systems. For example, providers, government agencies, state programs, and Medicare make pricing updates at different times. Each solution from a different vendor involved in claims management is also updated at various times, further complicating the process. That’s why using multiple, outdated technology systems can increase costs.

Recent cost increases have also been driven by new and added complexities to claims management. Not only is pricing continuously updated, but drastic changes in healthcare over the past two years have introduced new challenges. According to the most recent CAQH Index, the rapid increase in use of telehealth and the introduction of COVID-19 further exacerbated transaction complexity. The 2021 CAQH Index explained, “Providers had to submit new information related to telehealth and COVID-19 and often engaged extensively with health plans using manual methods which increased the time and cost to conduct a manual transaction.”2

How Digital Payers Reduce Transaction Costs

Digital payers are laser-focused on these problems and are constantly seeking new ways to reduce costs by using modern technology to automate more of the claims processing workflows and eliminating many of the time-consuming, error-prone, manual processes they’ve typically followed. By doing so, they are able to eliminate the IT and business burdens associated with bolting together multiple, disconnected solutions with a single, fully automated platform to achieve payment accuracy.

A single digital platform enables digital payers to:

  • Centralize data so it can be shared across the healthcare ecosystem, minimizing the impact of frequent updates
  • Consolidate claims processes and streamline workflows to save time and reduce errors
  • Eliminate limitations associated with linear claims processing, allowing full automation, and minimizing manual intervention

As a result, digital payers ensure claims are paid accurately the first time, which in turn, reduces rework and improves productivity that leads to lower transaction costs.

To learn more about how HealthEdge can help your organization lower transaction costs, visit or email [email protected].

1McKinsey & Company. For better healthcare claims management think “digital first.” June 19, 2019.

2 2021 CAQH Index. Working Together: Advances in Automation During Unprecedented Times

Optimize Payment Accuracy with History-Based Editing

40-cents per professional claim. That’s the average savings payers generate after turning on a single feature in Source, HealthEdge’s payment integrity solution.

How is that possible? The process is  complex, and the rules change often, but the History-based Editing capability embedded within Source automates the entire process – identifying any claims over the past three years that may be impacted by current claims during the normal editing process. It then returns the accurate claim amount prior to the payment being made.

On average, health plans that use history-based editing report a savings of 20% per impacted claim. And this comes at a time when managing costs and creating new operational efficiencies are the top two most important issues facing health plans today, according to the latest Annual Health Plan Market Report that surveyed more than 300 health plan leaders.

Let’s look at a real-world example.

The Source professional services team recently partnered with a large payer to perform a data study to determine the impact of this functionality on the organization’s 3.9M professional claims. The team was able to quickly identify $1.5M in savings.

Here are the raw stats:

  • Average savings per all professional claims: $0.40 per claim
  • Average savings per impacted claim: $38.26 per impacted claim
  • Average % savings on impacted claims: 20.9%
  • Most common edits: Multiple surgeries, multiple E&M, NCCI, improper billing

While exact ROI depends on a payer’s unique claims, payers have the potential not only to save money on the claims themselves, but also save on the costs associated with downstream efforts that are often necessary when history is not applied upstream in the adjudication process.

With Source, complex situations like the Medicare 3-day rule suddenly become simple. This rule requires all diagnostic services and items that are tied to an inpatient procedure three days prior to be captured and bundled on the same professional claim. Too often, items are not tied to the proper claim, and the claims get paid twice. But with History-based Editing, Source identifies this issue prior to payment being made.

Here’s how it works.

Embedded in Source is the capability for payers to more accurately assess a claim that is currently in the adjudication process based on historical claims. Source securely houses a rolling 39 months’ worth of historical member claims in an isolated, encrypted-at-rest database. The system identifies claims in history that may impact current claims during the normal editing process. It then returns editing and pricing data for the current claim in real time.

Additional details on specific historical claim line items affecting the current claim are saved to an audit database that is readily accessible to assist in reconciliation and provider relations.

History Based Medicare


Evaluating the Value: What’s Your Potential Savings?

To demonstrate the value of the Source history-based capabilities, the Source professional services team assesses three months of your data and re-runs the claims after applying optimized configurations that utilize a claim’s history. The results are compiled and reviewed with your team to estimate long-term savings and opportunities.

Optimize Your Accuracy with History-Based Editing: Getting Started

Once your team fully understands the potential savings from the data study, your organization follows these four, easy steps to start realizing the benefits.

  • License the solution from Source
  • System configurations to the system are made to utilize the feature
  • Three years’ worth of historical data is submitted to the system via one-time transfer to initially populate the history database which informs edits
  • A new data feed is established to keep the history data up to date.

To schedule your data study and determine what Source’s history-editing capability can do for your organization, visit or email [email protected]