Maximizing Opportunity with 2025 Healthcare Payer Technology Trends

What is on the horizon for healthcare payer technology in 2025? Reviewing the trending drivers – and associated opportunities – so health plans can innovate payment integrity while minimizing risk.

Generative A.I. scrutiny. Medical cost pressures. Security breaches. Regulatory shifts. Last year brought a fresh set of curveballs for those of us looking forward to the industry finding its level. But those organizations that kept pace with healthcare payer technology trends with a focus on mission and long-term strategy continued to weather the uncertainty and even thrive. In fact, 2024 made another strong case for health plans adapting with the help of technology.

If your health plan is like many others, you may be re-vamping your payment integrity strategic planning efforts to prioritize smart investments to drive cost savings and growth.

To that end, we gathered insights from industry thought leaders and our internal experts on the industry’s growing interest in and adoption of enterprise technology – and what that means for payment integrity’s strategic direction. We discovered 4 big trends for 2025 you should consider as you develop and execute your strategies.

Top Driver: MLR Pressure Prioritizes Payment Integrity Administrative Cost Savings

Before we discuss the trends, let’s first address the primary factors driving those trends. Higher medical loss ratios due to higher utilization of services, rising pharmaceutical costs, and inflation are affecting almost every health plan, across regions and lines of business. Medical loss ratios have increased dramatically, with some major payers reporting MLRs as high as 90-92%. This upward trend is expected to continue, likely increasing by one or two percentage points.

While payers attempt to address this challenge in a number of ways, a spotlight has been placed on payment integrity programs. Leaders are being asked to deliver growth in waste, abuse and error recoveries — all while demonstrating a considerable reduction in ongoing administrative expenses.

“When payers feel the squeeze on the medical expense side, payment integrity’s role in driving savings grows in importance.”
Nick Ridings, SVP Health Plan Relationships 

Payment integrity is one of the highest administrative cost areas for payers (behind claims adjudication), which puts it directly in the budget crosshairs. In the case of one payment integrity leader interviewed, her directive for 2025 is to cut administrative expenses in half – while continuing to grow payment integrity savings. As a result, the corresponding trends in 2025 all focus on optimizing this administrative spend.

However, as you evaluate opportunities, remember short-term cost or medical savings alone don’t necessarily lead to long-term sustainability. Each of these trends offers action plans to create year-one value as well as long-term returns on investing in your larger strategy. Bottom line, leveraging technology to grow avoidance and recoveries efficiently will set you up for success in 2025 and beyond.

“Payment Integrity increases in strategic importance alongside rising healthcare costs. In fact, in competitive environments, a modern PIO is a strategic advantage for payers.”
Jeff McNeese, CEO

Now, on to the trends.

Trend #1: Interest in A.I. Grows, but Adoption Remains Selective

The hype over A.I. is finally coming back down to earth, in line with traditional technology activation best practices: taking a problem-first, solution-second approach. And in the current cost-optimization environment, there are significant opportunities for payment integrity to take advantage of its still rapidly advancing capabilities. But an important shift is at hand.

As one industry analyst put it, “If 2023 was about generative A.I. experimentation and 2024 was about point solutions, 2025 will be about value delivery through end-to-end transformation.” In fact, we anticipate payer organizations will refocus this year’s efforts on practical use cases of A.I. integrated into larger operational processes to better ensure ROI.

For instance, payers are leveraging A.I. to make faster progress on internalizing clinical audits – even high-dollar claims – by increasing expert auditor efficiency and effectiveness with clinical audits. So-called “small language models” are particularly suited to these relatively niche use cases. With A.I. as a sidekick prioritizing cases for review and automatically tagging relevant documentation, even small teams can scale more effectively. Confidence scores for recoverability and denials further assist cost containment leaders in trusting results and reducing medical records requests.

“Finding more audit or cost avoidance opportunities with A.I. isn’t particularly helpful unless those results are integrated into a system to organize and work those findings.”
Tom Baggett, Director of Operations

Take action

Pursue with a focus
Without proper integration, even the most advanced A.I. tools can fall short. Payment integrity, along with IT and clinical teams, must collaborate closely to align A.I. initiatives with workflow needs. Limited budgets also mean that health plans should prioritize solutions that solve specific problems and deliver tangible benefits, especially in light of the A.I. solutions being deployed on the provider billing side. In payment integrity, that means areas where significant human effort and expertise is expended, like complex clinical claims review. Pursue A.I. project proof of concepts that meet this need with innovative vendor partners. And look for clear ROI in terms of both hard cost savings and increased efficiencies. But beware of solutions touting big savings with little data to support it.

Weigh build vs. partner options
Most A.I. solutions on the market for payment integrity are point solutions, in terms of either services vendors or stand-alone tools. And, long-term, payers seem less willing to outsource A.I., wanting greater controls over the models themselves. However, building solutions entirely on one’s own is a difficult prospect. In a recent survey, payer leaders cited insufficient data or tech infrastructure behind only risk considerations as a challenge to pursuing generative A.I. solutions and validating its capabilities. Selective strategic partnerships can bridge this gap, providing access to outside talent that can help configure appropriate solutions.

Trend #2: Payment Error Prevention Moves Further Left

Payment integrity leaders are well acquainted with the concept of payment error cost avoidance and its associated medical savings. But with the outsourced model, contingency fees remain high (particularly for complex audits), vendor options are limited, the process is disconnected from the post-pay program, and concerns about provider abrasion are sticky.

Nothing new here – except the motivation and technological capabilities to pursue internal-first strategies. As a result, the focus will shift even further left: to prepay self-serve secondary edits.

Payment error prevention depends on fast, accurate processes and access to a library of reliable content that’s easy to maintain and update. It’s delicately balanced claims data orchestration and expert technical resources, both of which come at a hefty cost when outsourced. But technology has advanced to support business users identifying aberrant provider behavior and creating and accessing associated secondary edits on their own. When integrated within payment integrity’s existing workflow, internal staff can more easily act on overpayment prevention opportunities at a lower fixed cost to more of payment integrity within your control while achieving $1.96 PMPY in prepay savings.

“The technology is finally advanced to quickly operationalize more improper payment prevention ideas and quantify the value.”
Ben Roberts, VP Client Engagement

Take action

Adopt integrated analytics 
Leverage the mountains of data collected through improved data analytics technology to empower real-time decision making. Now the compute power and advanced data science are available to surface areas of opportunity, connect those to your concept analytics development teams and partners who can configure and release within hours, and calculate the associated savings that result.

Seek cross-functional allies 
Payment integrity should engage partners across the organization by bringing their billing error insights to the table. Working with higher-level health plan leadership proactively on program goals for this shift is also recommended as recovery dollars shift to prevention savings. Your team should get credit for both overpayment avoidance and the administrative costs savings resulting from your efforts. And tangential stakeholders will benefit from access to relevant and timely reporting.  

Trend #3: Upgrades to Aging Technology Accelerate

A huge source of payment integrity’s administrative costs is associated with maintaining legacy technology solutions – $15 billion annually industry-wide, by some estimates. Moreover, 43% of payers in a recent poll noted legacy technology is not flexible enough to meet their specific needs, minimizing their ability to scale. Payers see that not investing in industry standard healthcare IT puts them at risk of falling behind on margins, efficiency and value to stakeholders.

As a result, payers across the spectrum expect to increase this investment by 3 to 5-percent by the end of this year. Payment integrity teams can align with this effort by pursuing ecosystem strategies with technology that gives them the greatest long-term control over their business model. However, not all technology platforms meet this brief. For example, there is a trend in claim adjudication platform providers moving downstream. But the pricing model for this is still largely contingency and emphasizes outsourcing, which doesn’t move the needle on modernization or administrative costs.

Leaders with a tech-first mindset – and the ecosystem to match – will have the strategic advantage.

“Over the last several years, health plans have a growing realization of the true costs associated with the highly customized processes they have created. Even their services vendors struggle to support those. That approach is giving way to prioritizing performance, reliability and lower ongoing maintenance costs.”
Shannon Brousseau, VP Health Plan Relationships

Take action

Shift to an enterprise mindset 
Payment integrity has historically received enterprise-level focus due to its impact on the bottom line. But the operational details and how productivity gains can be equally impactful are often overlooked. Enterprise technology platforms that support the multiple departments and external partners involved in payment integrity with cross-team collaboration and task division are fundamentally changing business models. The resulting workflow efficiency and integrated value capture can save a sizable amount in operational costs and free up the team’s bandwidth for higher value-add tasks like analytics and identification of new rules for generating additional savings. Health plans that aren’t embracing this mindset may be left behind.

Reduce vendor and other system data feed costs 
Enterprise technology for payment integrity should connect systems, vendors, and PI teams in one solution to create an ecosystem effect. This includes built-in interfaces for effectively managing vendor information and claims editor results. Consolidating all claims and vendor information in one place makes it easy to access and manage while reducing data costs and administrative burden. For instance, in this model, health plans pay a single initial data feed expense for many vendors versus a fee for each vendor. Altogether, this reduces associated costs by 80-90%.

Consider configurable off-the-shelf standard technology vs. custom 
Move away from the vast array of homegrown and point solutions that has led to fragmented technology stacks. Savvy organizations are increasingly pursuing industry-standard enterprise technology platforms that reflect best practices. With predictable, subscription-based costs, configurable off-the-shelf solutions will prove more cost-effective than custom-built technology. The market lacks an array of enterprise technology options that payers can drive for payment integrity specifically. But a commercial solution that emphasizes industry standards, streamlines data sources, builds empathy with stakeholders, improves efficiency and reduces team frustration will pay dividends. For even greater peace of mind, seek out HIPAA-compliant technology vendors that pursue HITRUST CSF and SOC 2 certifications.

Trend #4: Appeal of “White Box” Vendor Model Grows

Whether the questions come from strategic leadership or clients – like ASO groups – looking for cost savings opportunities, payment integrity is increasingly called upon to prove its value. Are you getting the best value for the costs you are incurring? Are you making the most of opportunities – when they occur? Are you fully covering the gaps? But traditional structures where audits are primarily outsourced put program KPIs at a remove, limiting your insights to retrospective snapshots.

“Adding more vendors is a traditional approach to drive increased savings. For some payers, this can be the right choice to take advantage of exciting new vendors with niche offerings. But adding more vendors can come with hidden costs.”
Sara Thomas, VP Growth Strategy

Full transparency into every aspect of your program – including the outsourced areas – gives you greater control over the progress you can make and the value story you can tell. Modern vendors are cognizant of their contributions to administrative costs. As a result, you can expect the most partnership-focused ones to demonstrate greater transparency, including better information on analytics specifics. They should create confidence with the data access, strategic insights and measurable ongoing contributions to R&D they offer.

Take Action

Conduct value-focused reviews of outsourced partnerships 
At least quarterly, conduct evaluations of the highest-cost outsourced areas to keep a watchful eye on value and surface cost savings ideas. Whether or not you are positioned to fully internalize claims audit programs in the short-term, a strategic combination of insourcing and outsourcing activity based on health plan core competencies will optimize spend. A partner and technology that allows you the flexibility to decide – service by service – whether to outsource or insource based on your cost-benefit analysis will better poise your health plan to scale effectively.

Look to your peers for ideas  
Anywhere you find you are lacking expected value, the new ideas have stagnated, and/or you are limited in terms of vendor choice, the time is ripe to explore your options. A new vendor, however, often comes with a new array of setup and lead time costs. Network with your peers for proven data points on new partnerships. And consider partners that are already set up on existing networks to minimize your integration and ongoing maintenance costs.

Consider alternatives to contingency models 
While traditional contingency fee models seem cost-effective, they don’t provide needed economies of scale for payment integrity programs in growth mode. Vendors are increasingly offering tiered, fixed fee models that create win-win incentives for pursuing new audit opportunities that go beyond the low-hanging fruit. Variations on this model include an initial premium (e.g., for 18 months) followed by a flat fee to encourage constant innovation. More predictable costs reduce pressure and remove the cap on savings potential.

Partner to Make 2025 the Best Year Yet

Health plans can stay ahead of the curve by making strategic investments in change, particularly surrounding transparency. Enterprise technology and shifts in payment accuracy strategies set payment integrity up as a center of transformation and align with market pressures and opportunities around administrative cost reduction, PI transparency, and “shift left” initiatives.

“With high MLRs and high-profile data security breaches, 2024 saw a lot of technology investments put on hold in favor of short-term plays for quick win savings. But a shift is happening in favor of attacking not only medical spend but administrative costs.”
Tate McDaniel, Chief Revenue Officer

Extending your competitive advantage transcends trends. Fortunately, a comprehensive technology platform like Pareo® allows health plans to harness the power of A.I., scale and improve processes, decrease costs, and accelerate ROI. Talk to ClarisHealth about how Pareo can keep you aligned with healthcare payer technology trends – no matter what the future brings.