Rethinking payment coordination in an era of unprecedented financial pressure

The math no longer works for health plans. Costs are rising faster than ever—national health expenditures are projected to have reached $5.6 trillion in 20241—and traditional cost containment strategies can't keep up. Employer-sponsored health plans face a projected 8% medical cost trend for group coverage and 7.5% for individual plans this year, up from 7.5% and 7% in 2024, respectively.2 Margins are tightening and CFOs are under pressure to uncover savings in places they’ve never looked before.

Payment coordination is often treated as an afterthought, but it is emerging as one of the biggest untapped opportunities for savings. Industry estimates suggest up to 25% of recoverable claims go unpursued, especially in third-party liability cases.3 A Milliman study also found that health plans miss out on $5 billion to $10 billion each year, because of fragmented processes, poor data integration, and a lack of automation.4 For self-funded employers, as many as 40-60% of eligible cases are never even identified.5

In an era of relentless cost pressure, “good enough” subrogation simply isn’t good enough. The plans that win will be the ones willing to rethink traditional payment coordination from the ground up.

Proactive intervention

Traditional subrogation is a game of catch-up: pay the claim, then spend months—sometimes years—chasing dollars after the fact. By the time recoveries begin to pay, administrative costs have piled up, providers and members are frustrated, and the savings impact is lost.

Best-in-class payment coordination takes a different approach: it shifts left. That means moving intervention earlier in the claims lifecycle, before money ever goes out the door. The impact is immediate—faster recoveries, reduced overhead, and greater speed to dollars, delivering up to 30% more subrogation recoveries overall.6

Despite the benefits, adoption has lagged. Some leaders assume shifting left will disrupt operations or cannibalize traditional recovery opportunities. In reality, it does the opposite, adding incremental savings and maximizing value. By identifying cases sooner, payers can act decisively, accelerate timelines, and optimize the experience across the board.

Health plans can’t afford to wait. Shifting left delivers bigger, faster gains in today’s environment.

In fact, a large ASO employer adopted a shift left approach to payment coordination and realized an additional 132% in total savings in one year, without sacrificing traditional subrogation recoveries.7

Meaningful AI integration

AI has become the industry’s favorite buzzword. Everywhere you look, vendors claim their platforms are “AI-powered.” But pull back the curtain, and too often it’s nothing more than a rules engine flagging ICD codes or layering basic machine learning and natural language processing on top of existing systems.

For health plans under real financial pressure, this kind of AI-washing wastes time, creates false confidence, and leaves money on the table. True intelligence in payment coordination looks very different. It uses deep learning to recognize complex patterns, explainable AI to ensure transparency, and even agentic AI models that learn and adapt continuously. Importantly, it integrates external data sources, such as police reports and litigation filings, to build richer context around each claim for human-in-the-loop experts to incorporate into decision making.

Many executives assume implementing AI means short-sighted savings by cutting staff; in reality, it means freeing up experts to focus on the most complex, highest-value cases. That’s because smarter payment coordination uses AI to amplify human expertise, not replace it.

Provider-centric design

For too long, “subrogation” has been synonymous with “abrasion.” Providers see it as an administrative headache, payers see it as a necessary evil, and both sides worry about losing time and money in the process. 

But when incentives are aligned, everything changes. Providers are reimbursed fairly and quickly, interventions are collaborative rather than confrontational, and money flows back into the system without unnecessary roadblocks. Plans that adopt a provider-centric approach find more value earlier and spend less effort doing so.

The future of best-in-class payment coordination

In an era of relentless cost pressure, it’s time for payment coordination to evolve into a frontline cost containment strategy. That means embracing earlier intervention, weaving AI into processes in ways that drive real outcomes, and improving the experience for providers and members so value doesn’t come at the expense of relationships.

And that’s just the starting point. The possibilities go even further: seamless integration with clearinghouses and claims systems, broader adoption of shift left approaches, and human-driven AI embedded in processes across the industry. The plans that get there first will protect resources others continue to lose.

Leaders need to ask themselves a simple question: “Is our payment coordination strategy proactive, or are we still paying and chasing?” 

How they respond should be just as simple. Because the future of payment coordination is already here.

1. Keehan, S. P., Madison, A. J., Poisal, J. A., Cuckler, G. A., Smith, S. D., Sisko, A. M., Fiore, J. A., & Rennie, K. E. (2025, July). National Health Expenditure Projections, 2024–33. Health Affairs. https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2025.00545.

2. PwC. (2024). Medical cost trend: Behind the numbers 2025. https://virtuealliance.com/wp-content/uploads/2024/11/PWC_Behind_the_Numbers_2025.pdf

3. Moore, James J., (2012, December). NCCI Report on Auto Accidents has Interesting Subrogation Numbers. https://ww3.workcompcentral.com/columns/show/id/724b2a6d5bcb3f1120aeceea5913ba97j/save_this/ 

4. Clark, Lauren (2025, April). Missed Subrogation by the Numbers. https://www.subroiq.com/2025/04/missed-subrogation-by-the-numbers/ 

5. Jaeger, Luke (2025, February). Charting a Course to Claims Efficiency: How Independent Subrogation Programs Transform Self-Funded ERISA Health Plans. https://vengroffwilliams.com/charting-a-course-to-claims-efficiency-how-independent-subrogation-programs-transform-self-funded-erisa-health-plans/ 

6. Katch internal data, (2012). 

7. Katch internal data, (2012).