Comprehensive Payment Management Boosts Efficiency, Revenue, and Cost Savings

“We can breathe a sigh of relief now that we are on the Change Healthcare platform.”

-  Theresa Walden.
Specialty Program Director
Covenant Administrators, LLC


Covenant Administrators, LLC

Duluth, GA


Secure a vendor to handle all aspects of provider payments


Settlement Advocate


  • Nearly doubled percentage of electronic payments to 78%+
  • Virtual Credit Card annual rebate of $260,000+
  • Saves an estimated $75,000 annually on printing and postage
  • Eliminated 1099 production and related provider inquiry costs

The Customer:

Founded in 1992, Covenant Administrators is a healthcare risk management practice specializing in third-party administration (TPA) services, risk management, and funding and plan management. The company is licensed in 49 states, employs 34 team members, and processes claims for 45 employer groups and 33,000+ covered lives.

Like many TPAs, Covenant Administrators is a “lean” operation, says Theresa Walden, the company’s specialty program director. The organization’s team is located in offices in three states and works fast and efficiently, including adjudicating claims with 98%+ procedural and financial accuracy¹.

The Challenge: Find a Vendor Offering Comprehensive Management of Provider Payments

In 2013, Covenant Administrators decided it could increase its efficiency in the provider payments arena by outsourcing payment processing, distribution, and management. Based on a vendor’s impressive presentation, Walden says the TPA was eager to begin transitioning providers from paper checks to electronic payments, since automation not only streamlines processing and speeds reimbursement, but also reduces costs related to manual payments (paper, printing, and postage).

Covenant was also excited to offer providers two options for electronic payments: automated clearing house (ACH) and virtual credit cards (VCCs).

Based on the vendor’s estimate that 50% of providers would transition to electronic payments, including 30% expected to opt for VCCs, Covenant was expecting to realize both significant cost savings as well as revenue sharing.

Electronic Payment Options

  • Automated Clearing House (ACH) - Payment is processed via a network that handles multiple transactions simultaneously, crediting/debiting bank accounts.
  • Virtual Credit Cards (VCC) - Payment is sent via fax or mail to the provider and processed like all credit-card transactions on the office terminal; this option is often popular among providers concerned with privacy of financial information/ accounts. The provider pays a processing fee per transaction, which is split between the vendor and customer (revenue sharing).

Failure to Deliver

Unfortunately, Walden says the vendor fell short on multiple promises it made during the presentation.

“For example, they had told us they would handle 1099s because they were handling the payments, but that was inaccurate—we had to handle everything on our side,” says Walden. “And they told us they didn’t allow partial payments on the VCCs, but in fact, they did. They also allowed negative payments—payments for more than what we issued. And we had to do all the customer service follow-up with providers and employers to resolve those issues. Bank reconciliation was disastrous.”

Walden says that after two years, the number of providers who had transitioned to electronic payments (ACH + VCC) was about 40%—which was less than what Covenant had anticipated. Those disappointing results, coupled with all the extra administrative work the TPA was having to handle (including customer inquiries about payment methods and issuing 835s), led Covenant to seek a new vendor.

The Solution: Comprehensive Management of Provider Payments from a Trusted Vendor

Walden says Covenant was much more prepared to evaluate solutions after its first experience.

“When we went with our first vendor, we had no history behind us to know what some of the pitfalls were with having a credit-card type of program,” she says. “But now we were prepared.”

She says her list of questions for vendors included:

  • Who handles the opt-out calls if providers want to receive ACH or print payments?
  • Does your system allow for partial VCC swipes? If ‘yes’, what is your solution for handling these so they don’t affect our staffing and reporting?
  • Who handles group/provider inquiries about the payment solutions?
  • Do you process 1099s for all payments sent to you for processing?
  • Can the groups/providers have access to their information online? Including EOPs, 835s, and 1099s?
  • Can we run reports off your platform?
  • Can we print checks internally from your platform? If so, how is it handled?
  • Do you handle the proper withholding for the IRS liens?

Because Covenant had worked with Change Healthcare for more than 16 years (using Pre-Payment Insight & Review), Walden says the team was receptive to learning about its Settlement Advocate solution. Based on the organizations’ strong relationship, she said the Covenant team also felt it could trust Change Healthcare’s explanations of features and capabilities, and ultimately, was eager to move its payment settlement services.

The transition was staged by type of business and took six months to complete.

“And the reason it took an extended time was we had a couple different books of business and we moved one book at a time,” Walden explains. “We took our biggest client and we moved them over first. It was basically one payer and everything was pretty standardized. Everything worked. Then we took our second book of business which was dental only, and implemented that within the next month because it was the same format in regard to the import that you get. The third book of business had a different claims format extract, so that had to be created before we could go live with that one.”

The Results: A Significant Boost in Electronic Payments and Provider Satisfaction

Since transitioning to Settlement Advocate in 2016, the percentage of providers transitioning from paper-to-electronic payments has nearly doubled to more than 78%. Additionally, an estimated 60% of these payments are via VCC, generating more than $260,000 in rebates annually.

Of equal importance, Covenant is no longer responsible for the multitude of administrative tasks staff previously had to manage.

“If we had kept going down the path with our first vendor, we would have needed to hire one or two additional people just to handle the overflow of things we had to do,” Walden says.

But now: “Change Healthcare sends an import report with the breakdown by group total payments. They handle all questions regarding method of payment, and opt-outs. They allow us to print checks locally instead of having checks routed to us. We can refer providers to the portal to see their information online, including EOPs and 835s.

“They handle partial swipes completely on their side, which is a major issue with other vendors. So, for example, if a provider doesn’t swipe the whole amount on the card, after a certain amount of time, whatever is remaining on the card is dropped into a paper check and sent to the provider. This is huge for us because when we import a file now, we can consider every payment cleared because the ACH is pulled at night. So our accounting function has been simplified. Best of all, they process the 1099s for all payments submitted to them. Compared to the first vendor, the Change Healthcare solution is like a breath of fresh air, and we can breathe a sigh of relief now that we’re on the Change Healthcare platform.”

Walden says Covenant is still approached with vendors pitching their settlement services solutions, but none are as comprehensive.

“It’s interesting because they’ll bring multiple vendors in to try to do what Change Healthcare alone does for us. They’ll have one vendor that does ACH’s over here, another that does virtual credit cards, and then another that does an opt-in method for the virtual credit card,” she explains. “And then they help you with the name matches for 1099’s but you still have to do those. So you have three different companies that you’ve got to deal with just to get to all of the services Change Healthcare provides. And any time you bring in another vendor, there’s always a chance of some type of failure … information failure, data failure. So it just makes you leery when they say, ‘Well, we have this vendor for this, this one for this, this one for that’.”

Walden adds that vendors have also tried to entice Covenant with projected VCC estimates “as high as 40%.”

“But we’re getting over 60% now,” she says, “so why would we change?”

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