Since 2000, the price of medical care in the United States has increased by 121.3%, significantly outpacing the rate of general inflation. At the same time, health insurance coverage has become significantly more expensive, with average annual spending on healthcare by insured employees reaching $6,705 per person in 2023 — a 75% increase from just a decade ago.
In many cases, the culprit can be found in the increasing prevalence of high-cost claims, which represent a growing share of total healthcare spend in the U.S. And, while legislation like the No Surprises Act aims to reduce balance and surprise bills stemming from expensive out-of-network (OON) claims, the protections aren’t always comprehensive, leading to substantial costs when members are forced to or unknowingly seek out care from OON providers.
All this places a heavy burden on health plan members, as well as the plan payers and sponsors ultimately footing the bill for those high-cost claims via higher policy premiums.
To combat this trend, today’s healthcare plans must incorporate more innovative payment integrity solutions that minimize these costs before they’re paid.
In this guide, we’ll explain how smarter, data-driven claims repricing services can save self-funded employers and their members significant money with defensible, market-sensitive reimbursement calculations — and how the payment integrity team at Vālenz Health® is leading the way with proprietary solutions that contain costs across the entire healthcare journey.
In a traditional, fully insured healthcare model, the initial billed charges for a service are rarely intended as the final cost to be paid. Instead, insurers and providers undergo a process known as claims repricing to determine a final payment amount.
There are two major types of claims repricing used in American healthcare: the network-based (PPO) model and the reference-based pricing model.
In a PPO model, claims are priced based on contracted discounts. Initial charges of a procedure may vary based on geographic location, facility, provider, and other factors, with the contracted discounts rates subject to variation, as well.
As a result, the ultimate price paid by both insurer and patient lacks standardization, leading to significant variation in costs and the risk of substantial out-of-pocket costs for members who are enrolled in a high-deductible health plan or have an outsized coinsurance responsibility.
A reference-based pricing (RBP) model, on the other hand, uses a standardized dataset to determine allowable payment amounts for certain procedures. In theory, this allows for more consistent, transparent pricing; however, using a single source of data (most commonly, Medicare rates) can leave providers at the mercy of rates that may not accurately reflect the average costs of their region — or take care quality and patient outcomes into consideration.
For this reason, RBP acceptance rates may vary by provider, further complicating care access for members and increasing the risk of balance billing.
While traditional PPO and RBP models are commonly used by fully funded insurers and Medicare beneficiaries, neither are a perfect fit for self-funded employers — and, indeed, may open those employers up to significant financial risks.
By design, employers who select a self-funded insurance plan are financially responsible for all related plan and claims costs. In paying for most or all of their employees’ claims costs directly, self-funded employers can save significant money by avoiding the high premiums and administrative costs of a larger, fully funded plan.
Unfortunately, because traditional claims repricing services operate within the parameters of those larger PPO networks, they often don’t serve the unique needs of self-funded employers. As a result, many self-funded employers find themselves at a disadvantage and can end up paying inflated prices meant for fully insured plans.
While traditional RBP models can deliver more consistent pricing for self-funded employers, the increased risk of balance billing from Medicare-based models can put self-funded employers at legal risk of violating the No Surprises Act and Transparency in Coverage regulations.
In short, without strong alternative repricing strategies, self-funded employers that rely on traditional claims repricing services put themselves and plan members at risk for overpayments, disputes, and noncompliance penalties.
Barring a significant overhaul of the current American healthcare system, cost-containment services designed for claims repricing remain necessary for both fully funded and self-funded employers to avoid overpaying for medical expenses.
Specifically, self-funded employers should prioritize two types of claims repricing strategies:
This two-pronged strategy is the most cost-efficient way for self-funded plans to work within a PPO-dominated environment, but not all solutions are made the same.
To maximize savings without compromising member care quality, self-funded employers (and the brokers and third-party administrators who serve them) should seek out the following in claims repricing services:
The traditional claims repricing approach is a reactive one, where insurers and providers negotiate on terms after care is provided and initial charges are levied. In a healthcare system where claims adjudication costs upwards of $25 billion per year, this approach is no longer sustainable, especially for self-funded employers.
For a more effective approach, seek out claims repricing strategies that work both proactively and reactively across the entire care journey (and as part of a larger cost-containing plan design) to reduce costs before and after a member receives service and any initial charges are billed.
The Valenz Claim Cost Arc℠ illustrates this strategy in action.
Proactive cost containment (in the form of navigation to specific providers within an optimized network) sits in the prospective phase, during which members are directed to high-value, low-cost care options early in their search. By building networks of rigorously vetted, top-performing facilities and providers, Valenz In-Network (IN) Repricing makes high-value care the default — removing the risk of balance billing and delivering an average 20–40% savings compared to BUCAH plans.
While proactive network optimization and member engagement does reduce costs for plans earlier in the care journey, high-priced charges can still emerge after care is delivered, most often from OON facilities or providers. Therefore, self-funded employers must also invest in more traditional, post-claim repricing services that sit in the retrospective phase of the Claims Cost Arc.
Valenz OON Repricing serves that purpose, using our proprietary Valenz Market-Sensitive (VMS®) repricing methodology to achieve savings beyond those delivered by other industry players. By using multiple market-based datasets, our methodology determines fair and reasonable reimbursement rates that meet NSA and TiC compliance requirements, delivering average employer savings of 70.6%.
In tandem with the other strategies in our payment integrity solution suite, the Valenz claims repricing services ensure data-driven, defensible payments that reduce friction and costs for all involved (and at a much higher level than those that take only a reactive approach).
Simply put, by selecting comprehensive optimization and repricing strategies that work throughout the care and billing processes to identify cost-containment opportunities, self-funded employers ensure payment accuracy at every step of the care journey — saving significant time, effort, and money wasted with traditional claims repricing strategies alone.
Much has been said about the promise of analytics-driven automation in the healthcare industry, with one report estimating AI application could create $150 billion in annual savings for the industry by 2026. For many, however, the ethical deployment of these solutions has been a much slower process.
Today’s healthcare leaders are taking a measured approach to this integration, combining data-driven analytics and AI with expert, manual clinical overview for the most accurate, HIPAA-compliant results.
This is especially prudent in the payment integrity space — and for self-funded employers who hold a significant financial stake in the related cost-containment outcomes.
The best claims repricing services use a combination of advanced analytics and clinical validation by human experts to identify patterns and uncover savings opportunities. The more data fueling those decisions, the better; Valenz OON Repricing, for example, uses multiple datasets (including years of robust claims data with industry-leading sources of payment-, cost-, and charge-based datasets, as well as biometrics and clinical data) to calculate defensible reimbursement rates when repricing claims.
At the same time, those advanced analytics allow our INN Repricing teams to build networks based on a combination of personalized data points: plan performance, utilization, geographics, member demographics, and more — resulting in “friendlier” networks that minimize the complexity of the claims adjudication process.
In combining all that analytics data with manual clinical review by those with decades of experience, our claims repricing strategies minimize the risks associated with entirely automated systems, delivering better results for all involved.
Finally, a key component of successful claims repricing in a complex healthcare environment is the degree of collaboration involved between stakeholders.
Historically, claims repricing has been a siloed process where each party holds its internal pricing data close to its chest with the goal of maximizing or minimizing payments (depending on which side of the system they’re on). In many cases, this stagnates the process and inflates the costs of associated administrative work, which can be reflected in higher billed charges.
Claims repricing services that encourage collaboration between parties, on the other hand, can eliminate these challenges, speeding up the entire process for more amicable (and cost-effective) resolutions.
At Valenz, our payment integrity team prioritizes “friendly” networks, comprised of those we have vetted and trust to provide high-quality care at a market-defensible, mutually agreeable rate, streamlining the claims repricing process and minimizing final costs for the plan. Our investment into these provider relationships pays off in dividends, delivering not only better cost containment for our clients but also, on average, a less than 1% provider appeal rate for claims.
It’s also a key reason why stakeholder collaboration is central to our integrated healthcare approach. The more data that is shared between parties, the more open communication becomes — and smarter, better, faster healthcare is made easier for all involved.
By integrating these factors into our claims repricing services, Valenz has developed an industry-leading solution suite that delivers smarter cost containment, reduces operational inefficiencies, and improves transparency for self-funded employers and members alike.
We go beyond the basics of traditional claims repricing to support defensible, market-sensitive reimbursements that satisfy both providers and plan payers, thanks to our extensive datasets, thoroughly vetted “friendly” networks, and innovative VMS repricing methodology.
As a result, we consistently deliver higher savings and a better care experience than other industry leaders — such as $900,000 in savings for a single, high-cost brain surgery claim:
As healthcare prices continue to rise, it’s crucial that self-funded employers invest in innovative claims repricing services as part of their larger payment integrity strategy. By identifying cost-containment opportunities across the entire length of the Claims Cost Arc, employers can put themselves in a strong position to minimize overall plan costs while ensuring a better claims processing experience for all involved.
To learn more about the end-to-end, integrated approach that Valenz employs within our Payment Integrity solution suite — and how it helps to deliver smarter, better, faster healthcare as part of our larger integrated system — contact one of our team members below.