Lyric CEO Rajeev Ronanki, M.S., on the Drawbacks of Contingency Payment

In this second segment of an interview with Managed Healthcare Executive, Rajeev Ronanki, M.S., CEO of Lyric, a payment integrity company, discusses the drawbacks of such companies being paid on a contingency basis in contrast to Lyric's subscription model.

"There are hundreds of vendors that say, 'Hey, we'll do something and find some obscure thing in your claims data that you can recover,' which sounds attractive and [there's] no effort on the customer's part. They're shipping their claims and getting something for it," he said. Ronanki called it a "free lunch" as far as the health insurers are concerned.

But Ronanki said the contingency payment removes incentives to educate providers and to get "to the root cause of why these errors happen in the first place, fixing the errors and inaccuracies." The current system is not sustainable, in his opinion, and needs to get "fixed and reimagined."

"That reimagination is to get the right transaction right in the first place," Ronanki added, "get it right in real time, make the provider experience better, make the member experience better and, in the process, make the system more efficient."

Ronanki added after the interview that although contingency-based payment models can present challenges, Lyric recognizes that for "some customers, they align well with their financial frameworks." In those instances, he said the company takes a "consultative and transparent approach" to ensure customers have clear options and "can choose the path that best supports their goals, such as a transition from contingency to a fee-based model once a savings baseline has been established."