How self-insured employers can curb rising healthcare costs directly through their administering payers or TPA

Healthcare costs for self-insured employers of all sizes and types continue to escalate at an unprecedented pace, placing significant financial pressure on organizations striving to provide quality benefits to their employees. Predictions indicate that medical and pharmacy expenses will increase by 9% in 2026, driven by factors such as increased utilization of high-cost treatments, a higher prevalence of chronic conditions, and rising rates of mental health and substance use disorders. Employers are looking for containment strategies to counter these trends, compelling them to seek innovative ways to protect every healthcare dollar without compromising the benefits and quality of care their employees receive.

Amid these challenges, self-insured employers are seeking new bold and actionable solutions for incremental savings from their plan administrators (i.e., healthcare payers/carriers) or third-party administrators (TPAs) accountable for outcomes, demanding solutions that improve care and enhance the employee experience. As healthcare spending continues to surge, payment integrity has emerged as a critical discipline for organizations looking to manage costs effectively and ensure every claim is paid accurately and appropriately.

What is payment integrity?

Claims payment integrity refers to the comprehensive process of ensuring healthcare claims are paid correctly, according to industry guidelines, contract terms, medical policies, and regulatory requirements. The goal is to maximize value, minimize inappropriate payments, and maintain compliance—all while preserving employee out-of-pocket costs and timely payments to care providers.

Prepay solutions

Prepay integrity involves analyzing and validating claims before payment is issued. By integrating automated claim editing, clinical coding validation, and advanced analytics, prepay solutions identify discrepancies and errors early, helping prevent improper payments and reduce overall healthcare costs. National payers leveraging robust prepay programs have demonstrated savings of 4% or more in annual professional and institutional claim costs in addition to that of their core processing and editing systems.

Postpay solutions

Postpay integrity focuses on reviewing claims after payment has been made to detect and recover improper payments. This includes retrospective audits, chart reviews, data mining, and targeted investigations of claims that may have bypassed prepay controls. Effective postpay programs ensure ongoing accountability and provide an additional layer of protection.

Coordination of benefits (COB)

COB solutions determine the responsible party for payment by reviewing eligibility and validating whether employees have other health insurance coverage. Both prepay and postpay COB interventions are essential to ensure primary and secondary payers are accurately identified, reducing the risk of duplicate or otherwise inappropriate payments.

Fraud, waste, and abuse (FWA) management and prevention

FWA prevention is a cornerstone of payment integrity. Advanced analytics and machine learning algorithms are deployed to detect suspect patterns—such as excessive billing or unnecessary testing—while expert investigators conduct manual reviews. By proactively identifying and addressing FWA, organizations can safeguard their healthcare budgets and promote ethical provider practices.

How can employers implement payment integrity?

Most plan administrators and some TPAs are uniquely equipped to administer comprehensive payment integrity programs for their plan sponsor clients for several reasons:

• Network ownership and contract access: Payers have established provider networks with specific contract terms, fee schedules, and policy manuals that all help guide proper claim payments. Internal and contracted vendor systems have access to this data, enabling them to verify payments and address billing discrepancies at the source. TPAs often lease these same networks.
• Provider relationships and education: Payers maintain the relationships necessary to educate providers, prevent future errors, and resolve issues efficiently—a key component to payment integrity.
• Scalable innovation: Payers—with their clinical teams, operations, partnerships, and vendors— have the robust clinical and technology expertise to continually invest in improving their payment integrity policies and solutions to counter emerging challenges in claims payment.
• FWA detection: Insurance carriers and sophisticated TPAs have dedicated payment integrity and investigative units and sophisticated analytics, market knowledge, experience, and tools to monitor and address patterns of FWA.
• Multi-layered intervention points: With the help of experienced, mature operations, long-standing investments, and contracted vendor solutions, payers can effectively operate across prevention, prepayment, and postpayment stages, using both automated claim editing and manual review of complex scenarios.
• Compliance and legal oversight: Plan administrators ensure their programs align with all applicable federal, state, and local mandates, reducing the employer’s legal liability.
• Thoroughly vetted, industry leading payment integrity vendors: Most payers and top TPAs bolster internal payment integrity programs by contracting with outside vendors, taking a strategic and thoughtful approach to ensure using the best and most experienced in the industry, often involving a rigorous request for proposal (RFP) process. This helps vet out vendors that make false promises and lack the ability to scale, also allowing for periodic re-evaluation.
• Efficient cost distribution: By managing payment integrity at scale across many employer clients, payers can efficiently share the costs and benefits of robust programs among all participants.  
  Fully insured employers using a reputable health insurance payer and many self-insured employers administering plans with these same carriers enjoy the cost saving value of these payment integrity programs as part of their contracts. Self-insured employers without specific payment integrity contract language should reach out to their carrier.

What do employers need to know about working directly with payment integrity vendors?

In response to rising costs, some self-insured employers have considered engaging niche, non-contracted vendors promising substantial incremental savings through retrospective claim reviews after the plan administrator paid them. However, some carriers have identified several critical risks associated with bypassing preferred, contracted vendors in favor of these niche solutions. Therefore, employers should be asking non-contracted vendors these types of questions:

• Do you have contractual rights with my carrier to administer payment integrity without provider friction and legal exposure?   Non-contracted vendors may inadvertently disrupt established provider relationships, increasing the risk of false positive results, litigation or regulatory intervention for employers. For example, non-contracted vendors may not have contractual rights to edit claims from the carrier’s network providers. Furthermore, when auditing paid claims, no vendor can accurately validate payments without integration into the carrier’s claims adjudication systems and access to provider contract terms, fee schedules, and unique payment policies. This ensures not overlooking medical necessity or contract-specific exclusions.
• Can you prove low false-positive rates? Issues like the lack of access to essential data can lead to high rates of incorrect findings, with some carriers reporting non-contracted vendors’ false-positive rates at 100% upon further investigation.
• How is clinical expertise used in your solution? If a non-contracted vendors relies solely on data analytics without the necessary clinical oversight, there may be an increase in the risk of inappropriate claim denials, which jeopardizes employee out-of-pocket costs.
• Will your system help or hurt administrative simplicity and ultimately costs? Some carriers have reported that the introduction of inefficient vendor programs can lead to higher operational expenses from plan administrators, counteracting the intended cost savings.
• Can you show material and sustained proven results? Look for analytic companies that may overstate potential savings and fail to generate the measurable return promised during the sales process.

These questions highlight the importance of selecting TPAs that have payment integrity strategies, capabilities, and partners that offer comprehensive, integrated solutions and proven expertise. In most cases, plan administrators have already done the hard work to deploy these types of programs on their fully-insured lines of business and can do the same with self-insured clients.

Best practices: Engaging with carrier-administered payment integrity solutions

Employers should proactively engage with their administering carrier or TPA to understand and expand payment integrity programs. Best practices include:

• Demand transparency: Employers should request clear reporting and transparency into opportunities and results of payment integrity initiatives.
• Insist on robust, end-to-end programs: Ensure that the carrier’s payment integrity offerings are comprehensive and competitive, leveraging both prepayment and postpayment controls.
• Evaluate ROI: Be willing to pay for pass-through services only when there is a proven return on investment.
• Collaborate on education: Work with carriers to support provider education, reducing future billing errors and administrative friction.

The way forward

Rising healthcare costs demand decisive action from self-insured employers seeking to maximize the value of their benefit programs, especially given their fiduciary responsibility to eliminate fraud and minimize waste and abuse. Claims payment integrity—anchored by comprehensive prepay and postpay controls, robust coordination of benefits, and proactive FWA prevention—is essential for curbing waste, ensuring compliance, and maintaining high-quality care for employees.

Third-party organizations may promise free consulting, novel reporting, and quick savings, but the risks of false positives, lack of data access, contextual knowledge, clinical expertise gaps, and increased administrative costs far outweigh the potential benefits. In conjunction with plan sponsors and TPAs, Cotiviti  offers a proven, integrated approach to payment integrity, delivering measurable results and peace of mind for organizations committed to managing healthcare spend effectively.

Engage with your plan administrator or third-party administrator (TPA) to discuss what payment integrity solutions they have available to protect your employees’ healthcare dollars. Take the next step to safeguard your healthcare dollars and ensure your employees receive the high-quality care they deserve at the appropriate cost.

Cotiviti’s approach to payment integrity

Cotiviti is committed to helping self-funded employers maximize the value of every healthcare dollar through industry-leading payment integrity solutions deployed through their plan administrators or TPAs. Read our Payment Accuracy brochure and learn how we work with payers to ensure claim accuracy, determine payment responsibility, and detect FWA patterns, helping to protect employees’ plan benefits and deliver a more sustainable healthcare system.