Healthcare IT Today Podcast: 4 Opportunities to Ease the Tension Between Payers & Providers

When it comes to providers and payers, there’s no avoiding the tension that exists between the two. Ultimately, one’s revenue is the other’s costs. There’s also the fact that providers and payers are optimizing for different things. Providers want to ensure patients get the best care. Individual clinicians are incentivized to provide more care at the individual level to serve the patient and avoid malpractice suits; at the institutional level, more procedures mean more revenue, typically. Payers, on the other hand, face their own competitive dynamics as they sell to employers and individuals who want low premiums above all else. 

You might be surprised to learn that despite the inevitably of this tension, there also lies plenty of opportunity in the space between providers and payers. In a recent episode on Healthcare IT Today Interviews, Steve Rowe, Healthcare Industry Lead at 3Pillar, and host John Lynn discuss why this tension exists and what can be done about it. We’ve captured the four biggest opportunities below.

The first opportunity is around Revenue Cycle Management (RCM) and claims. Payers have all sorts of different rules around what they will approve and what they’ll deny to balance the tension between keeping premiums low and paying for medical coverage. These rules are sometimes even group-specific. 

The challenge? Providers don’t know what those rules are, which creates difficulties for the member. It’s not easy to understand at the moment what will be approved and what will be denied. That means patients may end up unhappy when a proposed treatment is denied or not paid in full (and they are balanced billed).

The opportunity here is for payers to expose that logic to health systems—essentially preadjucating payment (instead of doing it after the fact). The business rationale: make it easy for in-network providers to get paid in exchange for more competitive rates. Some companies are already doing this:  “Glen Tullman is doing it with Transcarent; he’s essentially trying to intermediate the payer to create a new network. His whole premise to providers is, ‘Join our network because we will pay you the same day you do service,’” notes Steve. “That’s how he’s building his network with the top healthsystem and doctors.”  

In Steve’s experience building an RCM startup and working with a regional Urgent Care chain, he observed that the expertise and institutional knowledge around claims processing was largely in the heads of the medical billing coders. 

There are two main forms of complexity in RCM he highlights:

1. Submitting the correct eligibility information (e.g. specific formatting of member ID numbers)
2. Matching the right diagnostic codes to the appropriate CPT codes, which can be a large and complex matrix.

The risk here is that this institutional knowledge will be lost when these experienced medical billers retire. The processes are very manual, with reimbursements not keeping up with labor inflation. 3Pillar is leveraging AI and data mining to reverse engineer each payer’s algorithm for approvals and denials. The goal is to systematize this knowledge and flag issues proactively, rather than relying on the institutional knowledge of the billing staff.

The vision is to integrate this RCM intelligence engine with clinical documentation tools. That way providers are alerted in real-time during the care planning process about treatments or codes that are likely to be denied by the payer. This will improve the financial experience for providers and patients alike.

There is a significant opportunity for data transformation as regional payers have data that lives in separate systems that don’t talk to each other. The pipes to connect these systems haven’t been built and the data isn’t defined in the same way. Regional payers are often at a technological disadvantage compared to national payers because they still have on-premise servers and haven’t moved to the cloud. The IT departments for these payers are swamped putting out fires. They simply don’t have the resources to take on the work associated with major technology modernization projects.

And here’s the rub: Self-insured employers want highly customized insurance products and plans that require flexible and configurable technology platforms. National payers have invested in modern tech stacks that can support this level of customization. However, regional payers struggle to match this same capability. 

So, there’s a real need for regional payers to create a unified data platform and operating system that can integrate data from various systems (e.g., claims, population health, PBM, etc.). This would result in a simplified member experience while enabling seamless workflows for call center representatives, who often have to navigate multiple disparate systems. This is an area where working with a partner who specializes in this capability would be beneficial. 

Speaking of member experience, it’s now the number one concern of Vice Presidents of Benefits at self-insured employers thanks to a tight labor market. Top-tier benefits are necessary to attract and retain talent. There’s no doubt that there’s plenty of room to improve. The experience is often fragmented and frustrating as members struggle to get accurate information about coverage, costs, and provider networks. 

There’s an opportunity for payers to make their medical policies and coverage algorithms more transparent and accessible to members at the point of care. Steve explains, “I’m excited about this opportunity because we’ve all been there where it’s like, ‘I just want to know if this particular provider for urgent care who is still open at 10 p.m. is in network. I can’t figure that out on the app. There’s not a search function and the call line doesn’t open until 8 a.m. tomorrow.”

What if patients could get real-time answers to their questions? 3Pillar is making that vision a reality through chatbots powered by AI and knowledge graphs. By using AI to combine data from disparate systems, members can get accurate, up-to-date information at any time, from anywhere.

These chatbots could also help to address the challenge of call center representatives needing to navigate multiple systems to piece together an answer for a member. Steve points out one key consideration: ensuring the chatbots are fed accurate data and avoiding hallucinations. Doing so requires careful design and integration with the underlying data sources. 

While none of these opportunities have “easy buttons” to press, they all provide means for payers to differentiate themselves and better serve patients and providers. You can discover even more areas for payers and providers to win in the full podcast episode. 

The Future of Digital Product Engineering: Building AI-Infused Strategic Software for a Rapidly Transforming World

In today’s digital economy, software isn’t just an enabler—it’s the core of competitive differentiation. Companies across industries, from healthcare and finance to retail and media, are facing a common challenge: how to build and scale software that delivers strategic business value. This is where digital product engineering comes in.

Digital product engineering is an advanced discipline that integrates product, technology and org strategy, user experience (UX) design, software architecture, development, testing, deployment, and continuous improvement into a holistic approach. Unlike traditional software development, which often focuses on one-off projects, digital product engineering is about building scalable, adaptable, and market-driven software products that evolve over time.

3Pillar’s approach to digital product engineering is unique. We sit at the intersection of product engineering and AI computing, helping companies that lack deep software and AI expertise execute strategic software development initiatives that fuel business success. Our focus is on building market-driven, customer-centric, AI-native or AI-enhanced applications that are designed for long-term impact.

The need for digital product engineering has never been greater. Several market forces are converging to drive demand:

• The acceleration of digital transformation: Companies are moving away from traditional software packages (ERP, HRIS, CRM) in favor of custom-built applications that allow them to differentiate and compete in real time.

• The rise of AI and the rebirth of cognitive computing: AI-native and AI-enhanced applications are becoming the norm, automating processes, improving decision making, and delivering personalized experiences.

• Cybersecurity challenges: According to the Global Cybersecurity Outlook 2025 from the World Economic Forum, the complexity of cyber threats is increasing, requiring companies to embed security within their software development lifecycle.

• The evolution of product development: The shift toward AI-powered design, automated testing, and real-time market feedback loops is transforming the way companies build and iterate on digital products.

• New metrics for ROI in software investment: Software-driven companies are measuring success in new ways, prioritizing adaptability, AI-driven cost efficiencies, and customer experience over traditional cost metrics.

Software companies don’t build for a single client; they build for a market that’s rapidly morphing. This principle applies even to internal enterprise software. Product managers must gather insights from multiple sources, their market, analyze ROI for every feature, and create roadmaps that anticipate future needs. The software must rapidly iterate to meet the end-user needs.

Every digital product must deliver a seamless and engaging customer experience. Whether the end user is an employee, a business partner, or a consumer, intuitive design is key to adoption and long-term success.

A well-architected product is designed for change. Companies that build rigid software risk expensive rewrites and disruptions. By leveraging modern cloud architectures, microservices, composable business objects, and API-driven designs, products can evolve with business needs.

The role of AI in digital product engineering goes beyond chatbots and recommendations. AI accelerates the software development lifecycle (SDLC) by optimizing planning, automating code generation and its maintenance, enhancing security, and streamlining DevOps and associated ModelOps.

With cyber threats becoming more sophisticated, security can no longer be an afterthought. DevSecOps integrates security from the outset, ensuring that applications are resilient against emerging threats.

Companies like Amazon deploy thousands of code changes per day. Achieving this level of agility requires automation at every stage—testing, deployment, and monitoring—so that businesses can respond to market demands in real time.

At 3Pillar, we recognize that software engineering is no longer just a technical endeavor—it’s a business strategy. Our approach to digital product engineering aligns with the modern realities of our clients, who are increasingly looking for:

• A strategic partner: Clients no longer want multiple vendors for consulting, development, and maintenance. They need a single partner who can guide them from advisory services to development and operations.

• Integrated data & AI expertise: Applications are expanding in scope to include AI-driven insights, features, decision engines, and automation. 3Pillar’s AI capabilities help clients accelerate these initiatives.
  
• Modernization services: Many companies struggle with legacy applications. Our modernization frameworks help them transition to cloud-native, AI-enabled architectures.

• Accelerated development with proprietary tools: Our assets and accelerators, including NEXUS™ for AI-powered applications and Lightwave for governance and process, enable faster time-to-market and better quality.

Looking ahead, digital product engineering will continue to evolve in response to:

• AI-powered autonomous software: AI will take on a greater role in writing, testing, and optimizing code, reducing the need for manual intervention.

• AI-powered software features and agents: New features and agents are being baked into existing products, and AI-native software product development is accelerating.

• Multi-modal user interfaces: Applications will increasingly process voice, video, and text inputs simultaneously, creating more natural interactions.

• Composable software architectures: Instead of monolithic applications, companies will adopt flexible architectures that allow them to swap in new capabilities without disrupting core systems.

In an era where software is the primary driver of business success, digital product engineering is not just a technical discipline—it’s a strategic imperative. Companies that embrace this approach will be well-positioned to compete, adapt, and thrive in the new digital economy. At 3Pillar, we are committed to helping our clients navigate this journey with expertise at the intersection of product engineering and AI-driven innovation.

Pankaj Chawla

Chief Innovation Officer

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What Payers Need to Know: Adapting Commercial Offerings Under the New Administration

Over the past decade, payers have experienced substantial growth as they’ve branched out beyond their traditional focus on the commercial sector. Shifts in public policy and the increased role of private insurers in government programs led to massive expansion in these markets. As the individual family plan (ACA), Medicare Advantage, and Medicaid MCO segments expanded, payers invested heavily in capabilities to manage these lines of growth. 

However, the growth of these markets is now over. With Republicans taking control of the White House, Senate, and House next year, payers are facing a new reality: a shrinking government market. 

Here’s what payers can expect under the new administration.

The ACA market is set to contract after the expanded subsidies expire at the end of 2025. Premiums are estimated to increase by an average of 79%; in some states, premiums will more than double. According to the Congressional Budget Office (CBO), the enrollment of the ACA marketplace will drop from 22.8 million members to 18.9 million by 2026. 

The Medicaid MCO marketplace is facing tremendous uncertainty, making it highly risky for payers. We can expect states to receive waivers to restrict eligibility through work requirements. That will increase the difficulty of qualification and registration. This isn’t a growing segment for payers any time in the near future. 

The glory dates of Medicare Advantage are over. Nearly half of all seniors are already enrolled in private MA plans. So, there’s limited room for new enrollment. Plus, changes in reimbursement methodology from CMS are squeezing margins. 

With the government markets stagnating, there’s an opportunity for payers to shift their attention back to the commercial segment. This market has undergone a profound transformation over the last decade. Two-thirds of all employers are self-insured now. This shift has altered the dynamics of how commercial insurance is structured.

This is a big difference from the profitable business models payers followed for years. Employers paid payers premiums to manage their employees’ healthcare costs. As long as claims were lower than premiums, there was profit. This system drove growth without requiring a lot of innovation.

With most employers being self-insured, payers are getting the fee for administering the plan, but they’re not receiving the premiums. 

Here are the three big implications for the payer business model:

1. Risk of losing commercial business: Now that employers are bearing more of the risk, they want more flexibility in the design of their plans. Specifically, they’re looking for tailored options that suit their employee base and budgets. A tech company with a primarily younger workforce may want to offer fertility treatments to attract talent. A manufacturing company with an older workforce may want to provide cheaper telehealth services. If payers can’t offer modular, customizable plans, they risk losing business to competitors, particularly national carriers that have already adapted to these expectations.
   
2. Risk of eroding margins: Due to lower margins per employee in the ASO market, payers need to find new ways to generate revenue. National carriers have already combated this issue by offering competitively priced baseline ASO products and then up-selling additional services (e.g. wellness programs or health management tools). Regional plans can adapt by building systems that allow them to offer services beyond the baseline and increase margins as a result.
   
3. Risk of Intermediation: Unable to handle these levels of customization, many payers have put their ASO business in the hands of third-party administrators (TPAs). This approach has resulted in a loss of control over the customer experience and plan customization. Payers still control the provider network, but they don’t have the ability to differentiate themselves with local offerings or innovative experiences. If payers continue to rely on TPAs, they risk being squeezed out by competitors who offer more control and flexibility. 

Payers are now realizing that as they work to refocus on the commercial segment, they need to retake control of their ASO offerings. The key to doing so comes down to these three changes:

1. Modernizing the claims system: The legacy, mainframe core claims processors that most payers have were designed to process claims based on medical policy logic. However, they’re not built to handle the complexities of modular plan design and customizable features. Conciliatory tasks (e.g., plan configuration and group onboarding) require IT to hard-code changes onto the mainframe using old languages such COBALT. The opportunity for payers here is to move these functions to the cloud and build no-code applications. That way sales teams can configure plans without involving IT. 
   
2. Connecting Disparate Applications and Data: It’s not enough to create modular plan designs within the core claims system. These plans need to be operationalized across the organization. This requires a common operating layer that connects all applications and data sources. This layer ensures that information is consistent and up-to-date across the entire organization, from claims processing to customer service. For example, a member app needs to know whether an individual is eligible for specific services based on their employer’s plan.
   
3. Creating Modular Customer, Provider, and Member Experiences: In order to offer customizable plans, payers must create user experiences that are flexible and configurable. This means developing applications that can adapt based on the underlying plan configuration (whether for members, providers, or external partners). These applications should integrate seamlessly with backend systems to ensure real-time updates, allowing changes in benefits, pricing, or coverage to reflect instantly. By adopting modular architecture and leaning on data-informed insights, payers will be able to enable personalized interactions. 

In 2025, payers will shift their focus back to the commercial segment, which now demands a flexible, modular approach to plan design. Meeting these demands will require the modernization of technology stacks, in-house ASO platforms, and greater control over offerings.  

At 3Pillar, we’re here to help. We’ve spent the past decade helping payers gain a competitive edge in the marketplace by modernizing their systems. If you’re ready to take the next step and assess your own technology stack, reach out to our team. 

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