Payment Integrity Focus Shifts from Fraud to Preventing Overpayments in Healthcare

The Centers for Medicare & Medicaid Services (CMS) reported over $86 billion in improper payments in fiscal year 2024, predominantly due to overpayments. This figure highlights the importance of payment integrity (PI) efforts in healthcare, which focus on ensuring claims are paid accurately rather than solely targeting fraud. Distinguishing among fraud, waste, and abuse (FWA) is essential, as overpayments largely result from waste, which is preventable, unlike criminal fraud or subjective abuse.

Payment integrity involves detecting, preventing, and recovering overpayments where payments exceed contractual or clinical justification, while underpayments are generally addressed by claims operations teams. The traditional, reactive approach to PI is evolving into a proactive strategy utilizing data analytics and audit trends to pinpoint root causes and improve operational processes.

Integrating PI insights across various departments such as claims, configuration, utilization management, and provider network teams helps transform overpayment findings into sustainable solutions. This integration reduces rework, strengthens provider relationships, and enhances member satisfaction. Moreover, improving payment accuracy requires transparency and clear communication with providers through provider service representatives (PSRs), who play a key role in educating providers on audit results and expectations.

Benchmarking PI maturity through overpayment recovery rates offers a useful metric for health plans, with consideration for factors like business line, claim volume, and provider mix. As payment integrity matures into a strategic enabler rather than a back-office function, it fosters fewer errors, better provider engagement, and improved financial outcomes. The value of PI lies in preventing future issues rather than merely recovering funds, thereby supporting systemic accuracy and financial stewardship in healthcare payments.