#cost avoidance

Drug pricing reform has become a central focus in the effort to control Medicaid spending. As states confront rising healthcare costs, growing enrollment, increased utilization of specialty medications, and mounting program complexity, policymakers continue searching for strategies that can reduce expenditures while preserving access to care. Federal initiatives such as CMS's GENEROUS Model reflect this growing emphasis on pharmaceutical cost containment, but they also underscore a larger reality: meaningful Medicaid savings require a broader approach that extends beyond drug pricing alone.

For Medicaid agencies and managed care organizations, some of the most significant savings opportunities are not tied to future legislation, manufacturer negotiations, or demonstration projects. They stem from improving payment accuracy before claims are paid.

The Problem Isn't Always What Medicaid Pays—It's When Medicaid Pays

Much of the national conversation centers on reducing the price of healthcare services and prescription drugs. Yet a considerable portion of Medicaid's financial leakage occurs for a different reason entirely.

Claims are often paid using incomplete, outdated, or inaccurate coverage information. When Medicaid lacks visibility into a beneficiary's current insurance status, the program may incorrectly pay claims that should have been billed to another payer first.

In these situations, the issue is not necessarily the cost of the service itself. The issue is that Medicaid paid when another insurer had primary responsibility. As long as these coverage gaps exist, payment errors will continue regardless of future pricing reforms.

Unknown Coverage Remains a Persistent Challenge

Medicaid operates within one of the most dynamic eligibility environments in healthcare. Beneficiaries routinely experience changes that can affect insurance status throughout the year, including:

New employment

Employer-sponsored coverage enrollment

Marriage or dependent coverage changes

Loss of commercial insurance

Medicaid redeterminations

Movement between public and private coverage

These changes often occur faster than eligibility systems can capture them.

As a result, there is frequently a disconnect between a beneficiary's actual coverage status and the information available to Medicaid when a claim is adjudicated. During this period, claims may be processed without identifying existing commercial coverage or other third-party liability resources.

The outcome is avoidable spending that accumulates claim by claim across the program.

Why Recovery Alone Cannot Solve the Problem

Historically, many organizations have relied heavily on post-payment recovery activities to identify and recoup funds after improper payments occur.

Recovery efforts remain valuable and should continue to play an important role in a comprehensive program integrity strategy. However, recovering dollars after payment is fundamentally different from preventing those payments in the first place.

Once a claim has been paid incorrectly, administrative resources must be devoted to identifying the error, pursuing repayment, managing provider communications, and reconciling financial records.

More importantly, the improper payment has already occurred.

From a program integrity perspective, prevention delivers benefits that recovery simply cannot replicate. Stopping an incorrect payment before adjudication eliminates the need for downstream recovery activity while improving overall payment accuracy.

The Value of Better Eligibility and TPL Data

Effective cost avoidance begins with visibility. When Medicaid programs have access to more timely and accurate eligibility information, they can identify commercial coverage sooner, maintain more reliable third-party liability records, and coordinate benefits more effectively. This allows claims to be routed correctly before payment occurs rather than being corrected afterward.

Improved eligibility and TPL data support:

Earlier identification of commercial insurance

Stronger coordination of benefits processes

Reduced improper payments

Lower administrative recovery costs

Improved payment accuracy

Enhanced compliance and program integrity performance

Unlike many large-scale policy initiatives, these improvements can be implemented today and can begin generating results immediately.

Drug Pricing Reform and Payment Prevention Serve Different Purposes

Drug pricing reform and payment prevention should not be viewed as competing approaches. Both have value. Programs such as the GENEROUS Model seek to reduce the amount Medicaid pays for certain medications. Payment prevention focuses on ensuring Medicaid only pays claims for which it is actually responsible. One strategy addresses price. The other addresses payment accuracy.

Even substantial reductions in pharmaceutical costs cannot eliminate spending associated with unidentified commercial coverage, coordination of benefits failures, or inaccurate eligibility information. Likewise, improving payment accuracy does not diminish the importance of pursuing lower healthcare costs.

The strongest financial outcomes occur when both approaches operate together.

A More Immediate Path to Savings

While policymakers continue evaluating long-term reforms, Medicaid agencies and managed care organizations already possess an opportunity to improve financial performance through better data, stronger eligibility processes, and proactive identification of third-party liability.

The technology, analytics, and operational tools necessary to support these efforts are available today.

Rather than waiting years for policy changes to mature, organizations can begin reducing avoidable expenditures immediately by improving visibility into coverage and preventing claims from being paid incorrectly.

Drug pricing reform may ultimately reduce spending in certain areas of Medicaid, but it cannot address every source of financial leakage within the program. Some of the largest and most immediate savings opportunities stem from improving eligibility accuracy, identifying third-party liability sooner, strengthening coordination of benefits, and preventing improper payments before they occur. While policymakers continue pursuing long-term pricing initiatives, Medicaid agencies and managed care organizations can improve program integrity and generate measurable savings today by ensuring claims are paid the first time correctly.

Stephen Konsin Jr. from Syrtis Solutions, a solution provider at the Marcus Evans Value-Based Care Summit 2026, discusses the growing need for proactive Medicaid payment accuracy and cost avoidance strategies.

Interview with: Stephen Konsin Jr., Vice President of Sales, Syrtis Solutions

“The window for demonstrating proactive prevention of improper payments before the 2030 mandatory Federal Medical Assistance Percentage (FMAP) reductions is narrowing with each fiscal quarter. Organizations that act now will be positioning themselves to meet federal compliance expectations while realizing multi-year operational benefits. Those that delay it will have limited time to demonstrate sustained improvement trends, reducing options for mitigating FMAP consequences,” says Stephen Konsin Jr., Vice President of Sales, Syrtis Solutions.

Syrtis Solutions is a solution provider at the Marcus Evans Value-Based Care Summit 2026.

What is changing with the One Big Beautiful Bill Act? What do healthcare leaders need to plan for?

The One Big Beautiful Bill Act (H.R. 1) converts improper payment performance from a compliance benchmark into a direct funding trigger. Beginning in FY2030, states will face mandatory FMAP reductions when Medicaid improper payment rates exceed three percent. This represents a paradigm shift from discretionary oversight to automatic financial penalties, with only limited waiver authority available to states demonstrating good-faith corrective action. FMAP reductions are triggered by error rates at adjudication, not by net financial impact after recovery efforts.

For healthcare organizations, unknown primary commercial insurance coverage represents a significant preventable category of improper Medicaid payments. When beneficiaries have unreported or recently activated commercial insurance, Medicaid systems lack real-time visibility at claim adjudication. Traditional third-party (TPL) liability infrastructure cannot close this gap. TPL programs mostly rely on member self-disclosure, delayed batch feeds, and periodic data matching that structurally miss coverage changes between verification cycles. What was improper at adjudication remains improper in Payment Error Rate Measurement (PERM) calculations regardless of later corrective action.

Why is the compliance clock ticking? What strategies could they implement to reduce improper payments before they occur?

We address this structural constraint through real-time access to nationwide commercial payer eligibility data. The platform verifies primary coverage by identifying previously unknown commercial insurance, enabling prevention before Medicaid payment occurs. This directly addresses the compliance metric triggering FMAP reductions. For Medicaid agencies and managed care organizations facing mandatory FMAP consequences, the compliance timeline is compressed. Organizations implementing real-time prevention capabilities now can demonstrate multi-year improvement trends before 2030 consequences take effect, thus creating the operational track record that limited waiver authority requires.

The FY2030 FMAP reduction mandate transforms prevention from operational “best practice” to fiscal imperative. States can no longer rely on recovery performance to manage TPL compliance. The PERM methodology measures error rates at adjudication, creating permanent advantages for prevention approaches that stop improper payments before they occur. Recovery programs remain necessary components of comprehensive TPL operations, addressing improper payments that evade prevention systems and managing historical claims. However, recovery alone cannot achieve FMAP compliance when error rates exceed three percent. Only prevention capabilities that reduce gross improper payment rates can protect federal medical assistance funds under the One Big Beautiful Bill Act requirements.

Why can’t traditional approaches solve this?

The fundamental constraint is data availability at the time of claims payment. The traditional pay-and-chase model is a rational response to ensure beneficiary access through prompt payment. However, this model cannot prevent FMAP reductions as it addresses errors after they occur.

Prospective prevention eliminates improper claims payments before occurrence by verifying coverage at payment decision and routing all future claims appropriately. A claim correctly routed to commercial insurance never appears as an improper Medicaid payment in PERM audits. It requires no identification, investigation, recovery or reconciliation. It creates no provider friction, member confusion or administrative burden. Cost avoidance is permanent and the improper payment never exists. This is not incremental improvement to recovery but a structural shift from retrospective correction to prospective prevention.

Does it work with their existing infrastructure?

Syrtis does not replace disclosed coverage already captured in eligibility systems, traditional carrier feeds or batch matching processes. It supplements existing infrastructure by addressing the specific gap those systems structurally cannot close. It identifies commercial coverage never disclosed to the state, coverage that changed since the last data match and coverage resulting from recent life events not yet in batch systems. Typical deployments reach full operational status within three months of project initiation, well within the window needed to begin building a measurable compliance track record before 2030 consequences take effect. The platform is designed to minimize implementation risk while maximizing operational resilience.

Any final thoughts?

In an environment where FMAP protection depends on preventing improper payments rather than recovering them afterward, the difference between prevention and recovery is the difference between maintaining federal matching funds and facing mandatory reductions compounding with every fiscal year.

Federal auditors will increasingly differentiate between programs that have embedded real-time prevention into operations versus those reliant on retrospective correction. The operational track record of implementing real-time verification in 2026, processing millions of claims over subsequent years, and identifying thousands of previously unknown commercial policies with measurable TPL-related improper rate declines presents a fundamentally different compliance profile than maintaining robust recovery while continuing payment without real-time verification.

Contact: Sarin Kouyoumdjian-Gurunlian, Press Manager, Marcus Evans, Summits Division, [email protected]

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About the Value-Based Care Summit 2026

The Value-Based Care Summit aims to foster innovative thinking, share inspiring ideas, and promote community connections. Our continuing mission is to curate an engaging program featuring visionary keynote presentations, real-life case studies and interactive forums delivered by compelling speakers and expert moderators. To achieve this vision we choose our collaborators with great precision – we seek out professionals who have deep expertise and hands-on experience, and can present cutting-edge insights that spark conversation.

About Syrtis Solutions

Syrtis Solutions was founded in 2011 after seeing payers of last resort – Medicaid, Medicare and Marketplace plans – struggle to properly identify third-party liability (TPL) information quickly and accurately. Still today, health plans rely on stale data mined from millions of other health insurance (OHI) coverage records that are incomplete, often expired, and frequently for the wrong member. This poor-quality data leads to member disruption and provider abrasion at the pharmacy counter, OHI overrides, and claims paid in error which fuels ineffective “pay and chase” recovery solutions – returning less than 17% of dollars attempted for recovery.

Today, we are helping solve this problem for health plans – looking for OHI on 42% of the Medicaid managed care lives covered by 83 different health plans. If you are looking for a better OHI discovery solution that reduces your reliance on “pay and chase” efforts – we invite you to meet with us. With as few as 5,000 member records, we can show you the opportunities you are missing and the quality of your current OHI data. Within just a few weeks, you will see your OHI cost avoidance efforts increase due to better quality OHI data, and we bet you will see less OHI override calls to your member services and pharmacy help desk as well!

www.syrtis.com

About Marcus Evans Summits

Marcus Evans Summits are high level business forums for the world’s leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, case studies, roundtables and one-on-one business meetings. For more information, please visit www.marcusevans.com

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As states begin developing fiscal year (FY) 2027 budgets, Medicaid programs are operating in a more constrained financial environment. Revenue growth has slowed, healthcare costs continue to rise, and federal policy changes enacted through the 2025 budget reconciliation law have added new uncertainty around future funding. Even with enrollment leveling off, spending pressures remain intense, driven by higher-need populations, increased utilization of long-term services and supports, rising pharmacy costs, and expanding behavioral health demand.

In response, many states are revisiting traditional cost-containment options. Discussions around provider rate adjustments, limits on optional benefits, and other short-term budget controls are becoming more common. While these approaches can deliver immediate relief, they often carry unintended consequences—restricted access to care, provider instability, and outcomes that conflict with CMS’s broader goals of coverage continuity and population health. As fiscal pressures mount, states and Medicaid managed care organizations (MCOs) are being forced to rethink how savings are generated and whether benefit reductions are a sustainable solution.

Heightened Consequences for Payment Errors

At the same time, Medicaid payment accuracy has become a focus of federal oversight. Improper payments exceeding the 3 percent federal benchmark now result in direct financial consequences, regardless of whether those dollars are eventually recovered. States that exceed the threshold face reductions in federal funding, with far fewer opportunities for exemptions than in the past.

This policy shift represents a fundamental change in risk management. Under the current framework, recovering funds after payment no longer protects states from financial exposure. A payment made incorrectly remains improper even if it is later recouped, requiring states to prioritize prevention rather than post-payment recovery.

Preventing Errors Before They Occur

A significant portion of Medicaid improper payments stem from claims that should have been covered by another insurer. Traditional recovery-based strategies address these issues only after the fact, offering limited impact on improper payment rates and no protection against future penalties.

Prospective cost avoidance addresses the issue upstream. Real-time identification of other health insurance and third-party liability ensures Medicaid consistently pays only when it is truly responsible. Each prevented improper payment helps states remain below the 3 percent threshold and protects federal funding for essential services.

Efficiency as a Cost-Containment Strategy

Administrative inefficiencies often magnify budget challenges. Manual workflows, fragmented eligibility systems, and delayed coverage verification increase error rates while adding operational expense.

Automating eligibility checks, claims review, and coverage validation reduces both administrative burden and financial risk. These efficiencies allow Medicaid agencies and MCOs to meet federal accuracy standards without shifting costs onto providers or members.

Program Integrity as Budget Protection

Program integrity has evolved into a critical fiscal safeguard. Proactive oversight, continuous monitoring, and advanced analytics allow states to identify vulnerabilities earlier and prevent recurring payment errors.

When integrated with real-time cost avoidance, program integrity efforts reduce financial leakage, strengthen audit preparedness, and support long-term budget stability—even during periods of economic uncertainty.

A Sustainable Alternative to Benefit Cuts

As Medicaid budgets face increasing strain, reducing benefits should not be the default response. The best way to manage fiscal pressure is to ensure claims are paid correctly the first time.

By preventing improper payments, maintaining compliance with the 3 percent federal standard, and modernizing operational infrastructure, states and Medicaid plans can preserve access to care while protecting limited program resources. In today’s environment, effective cost avoidance is not optional—it is foundational to Medicaid’s financial sustainability.

Medicaid COB represents one of the most effective strategies available to states seeking to balance budgets without diminishing member benefits. As the Medicare Rights Center notes, states are already taking drastic measures: North Carolina is reducing provider reimbursements, and Nevada’s Medicaid costs consume roughly 25 percent of the state’s total budget. With projected federal cuts of $1…

Cost avoidance through Medicaid COB has become one of the most effective strategies for protecting state Medicaid programs from growing fiscal pressure. Across the nation, states are confronting rising healthcare costs and tightening budgets. The Medicare Rights Center reports that several states have already reduced provider reimbursements and scaled back optional services. At the same time, federal projections indicate that Medicaid funding could decline by $1 trillion over the next decade. Faced with this financial reality, states must identify more effective ways to manage costs without compromising coverage or quality. Strengthening coordination of benefits (COB) and third-party liability (TPL) processes provides a proven, data-driven solution — one that prevents waste, enhances payment accuracy, and preserves access to care while ensuring long-term program integrity.

One of the most significant drivers of waste and inefficiency is the persistent problem of improper payments. As a result of these payments, billions of dollars each year are spent on claims that should have been covered by other payers. Medicaid is meant to pay last, but incomplete or outdated coverage data leads to costly errors.

The old “pay and chase” model attempts to recoup funds after payment, but the yield is small and the process cumbersome. True savings come from preventing the error altogether. That’s why states and MCOs are turning to ProTPL, Syrtis Solutions’ real-time COB and TPL technology. ProTPL identifies other active insurance coverage before claims are paid, ensuring Medicaid dollars are spent only when appropriate.

This proactive approach does more than improve payment accuracy—it strengthens accountability and frees resources for direct patient care. With improper payments representing over $31 billion in annual losses according to CMS, the potential impact is enormous. Nearly 80 percent of these errors result from documentation issues, not fraud. That means they are preventable through better data and smarter systems.

Real-time Medicaid COB transforms this challenge into an opportunity. By integrating advanced analytics and multi-payer data, states can ensure that every claim is properly coordinated. Instead of reacting to waste, they can eliminate it before it happens. The result is a stronger, more sustainable Medicaid program that preserves coverage and improves financial stewardship.

At Syrtis Solutions, our mission is to empower states and managed care organizations with the technology to do just that. ProTPL helps shift Medicaid from reactive recovery toward proactive prevention. As budgets tighten, states must focus on solutions that achieve savings without cutting services. Medicaid COB provides a proven, technology-driven way to achieve that goal—protecting members, reducing waste, and preserving the long-term stability of one of America’s most vital healthcare programs.

With billions in Medicaid funding at risk under the latest House budget proposal, state programs are facing serious financial threats. To sustain critical healthcare services, Medicaid agencies and Managed Care Organizations (MCOs) must take immediate action to safeguard every dollar. A key step in this effort is addressing the ongoing issue of improper payments—an issue that drains over $80 billion from Medicaid annually.

The Hidden Crisis: Medicaid’s Inefficient Payment System

For nearly two decades, Medicaid’s improper payment problem has kept it on the Government Accountability Office’s (GAO) high-risk list. While fraud garners much attention, the real culprits behind these financial losses are outdated data systems and inadequate coordination of benefits (COB).

Medicaid is legally required to be the payer of last resort, meaning other insurance coverage should be billed first. However, systemic inefficiencies prevent this from happening effectively:

Undisclosed Third-Party Liability (TPL): Over 13% of Medicaid beneficiaries have unreported private insurance, leading to avoidable Medicaid payments.

Disorganized and Outdated Data: Eligibility records are scattered across multiple systems, making it difficult to verify primary insurance coverage before processing claims.

The Flawed “Pay and Chase” Model: Medicaid agencies attempt to recover improper payments after the fact, but they recoup only a fraction of the money lost.

With looming budget reductions, these inefficiencies are no longer just an administrative issue—they are a direct threat to Medicaid’s long-term sustainability.

The Solution: Cost Avoidance with Smarter Data

Instead of continuing to lose money on improper claims and struggling with post-payment recovery, Medicaid programs must adopt a cost avoidance strategy—ensuring primary insurers are billed before Medicaid pays a claim. Achieving this requires real-time access to accurate eligibility data to verify other health insurance (OHI) coverage upfront.

Syrtis Solutions delivers a game-changing solution with ProTPL, a proprietary technology that leverages ePrescribing data—the most precise and up-to-date source of commercial insurance coverage—to:

✅ Identify up to 40% more TPL cases than existing processes. ✅ Provide real-time OHI data at the point of claim submission, preventing improper payments before they happen. ✅ Eliminate the need for costly and ineffective “pay and chase” efforts.

Why Immediate Action is Critical

Medicaid funding is at risk, and failure to act now will lead to deep cuts that could impact essential healthcare services. Every dollar lost to an improper payment is a dollar that could have been spent on patient care.

Cost avoidance isn’t just an efficiency measure—it’s an urgent necessity in the face of financial uncertainty. Syrtis Solutions provides the most effective and immediate solution for reducing waste and securing Medicaid’s future.

Take Control—Protect Medicaid Today

Don’t wait for budget cuts to dictate change. Be proactive. Strengthen Medicaid’s financial foundation now.

Contact us at [email protected] to learn how ProTPL can help your organization save millions and ensure Medicaid dollars are used where they’re needed most.

Syrtis Solutions, a leading service provider of real-time Other Health Insurance (OHI) coverage information for payers of last resort, just recently accomplished a notable milestone by being identified as a preferred vendor for the Association for Community Affiliated Plans (ACAP). This achievement is a reflection of Syrtis Solutions' commitment to decreasing costs and improving operational efficiency for government-funded health plans.

The Significance of Cost Avoidance in Medicaid

The Medicaid landscape is complicated and continually evolving, with state and federal guidelines mandating strict cost-control measures to ensure the program's sustainability. One of the fundamental methods for managing costs in Medicaid programs is avoiding improper claims payments, which entails identifying third-party liability (TPL) and ensuring that Medicaid is the payer of last resort.

Without effective cost avoidance mechanisms, Medicaid programs can suffer from unnecessary expenditures, driving up costs and diverting resources away from other vital healthcare needs. This is where Syrtis Solutions has been making a significant impact.

Syrtis Solutions: Leaders in Real-Time Cost Avoidance

Founded in 2008, Syrtis Solutions has been at the leading edge of developing innovative solutions to deal with the challenges of OHI identification and cost avoidance. Their flagship product, ProTPL, is a real-time pharmacy cost avoidance solution that provides Medicaid and other government-funded health plans with immediate access to actionable data. By quickly identifying whether a member has other insurance coverage, ProTPL helps plans avoid paying for claims that should be covered by liable commercial plans. This not only helps Medicaid plans comply with federal regulations but also dramatically reduces the time and effort required to manually identify third-party insurers and recover costs retroactively.

The ACAP Preferred Vendor Designation: What It Means

ACAP is a national trade association that represents 78 nonprofit Safety Net Health Plans, covering more than 25 million individuals through Medicaid, Medicare, and other public health programs. ACAP's Preferred Vendor program is designed to highlight companies that offer valuable services to member health plans and have a proven track record of improving the quality and efficiency of care.

By becoming an ACAP Preferred Vendor, Syrtis Solutions has joined an elite group of companies that have exhibited a strong commitment to serving community health plans. This designation demonstrates Syrtis Solutions' expertise and reliability in the Medicaid space, as well as its dedication to helping ACAP member plans improve cost avoidance efforts.

Looking Ahead

As healthcare costs continue to increase and Medicaid plans face increasing pressure to control expenditures, the role of payment integrity will only grow in value. With its newly cemented status as an ACAP Preferred Vendor, Syrtis Solutions is well-positioned to help all payers of last resort get through these challenges, making certain that limited healthcare dollars are used efficiently and effectively.

Syrtis Solutions' innovative real-time cost avoidance technology, combined with its proven expertise, offers an essential resource for Medicaid plans seeking to enhance their operational efficiency and reduce unnecessary spending. This partnership marks a significant step forward in improving Medicaid cost management and patient care across the nation.