Driscoll Health Plan Case Study

“Having separate, third-party consultants—other than the vendor you’re contracted with—gives you ... an independent, consistent source of truth.”

-  Dr. Mary Dale Peterson
Executive Vice President and COO
Driscoll Health System


Driscoll Health Plan
Corpus Christi, TX


Migrating from a long-time, third-party administrator to in-house operations while implementing a new administrative system with limited resources


Change Healthcare Consulting Services
Change Healthcare Clearinghouse


  • Increased claims auto-adjudication rate by 15%
  • Significant decrease in provider claim appeals
  • Matched or exceeded all state-mandated service level agreements
  • Improved turnaround time on state-required data and report submissions
  • Realized annual operational cost savings of $14 million per year

The Customer:

The community-based Driscoll Health Plan has provided healthcare coverage to South Texan children and families for the past 21 years. The nonprofit insurance plan serves a 14-county area surrounding Nueces County and a 10-county area in the Rio Grande Valley. This busy regional plan is committed to its mission of improving lives through quality care.

Driscoll Health Plan is affiliated with Driscoll Children’s Hospital in Corpus Christi—a 189-bed tertiary care center founded as a charity children’s hospital in 1953—and Children’s Physician Services of South Texas, a physician group of almost 40 specialties and over 100 pediatric specialists. Driscoll Health Plan also offers healthcare services at Driscoll Children’s specialty centers and clinics.

The Challenge: Managing a Core System Implementation with Limited Expertise

In the last decade, Driscoll Health Plan has grown more than threefold. The health plan now serves 170,000 members, representing a high percentage of the region’s Medicaid population. For more than 20 years, Driscoll Health Plan outsourced most of its business operations, relying on third-party administrator (TPA) services for its claims and payment processing, eligibility services, certain financial services, and the customer call center, among other services.



As healthcare providers grapple with rapidly changing industry dynamics such as the growth in high-deductible health plans and the shift to value-based programs, they must also continue to address familiar challenges impacting the bottom line. This Perspective highlights areas of significant concern to providers and offers strategies to help increase revenue and improve cash flow.

Key Healthcare Challenges

Increasing Denials
A recent analysis found that providers submit an estimated $3 trillion in claims every year.1 Of those, $262 billion are denied. The average cost of a denied claim is approximately $118, representing on average $4.9 million per hospital—nearly 3.3 percent of net patient revenue.2 In addition, the Centers for Medicare and Medicaid Services reports that 60 percent of denied, lost, or ignored claims will never be paid in full.3

Underpayments and Unpaid Claims from Payers
Collecting timely and full payment from commercial and government payers continues to be top of mind for industry executives. Between underpaid and unpaid claims, American medical practices alone may be leaving a total of $125 billion on the table every year.4 Ensuring claims are paid at contracted rates will help providers realize optimal revenue for services rendered.

Rising Cost of Uncompensated Care
Self-pay patients continue to remain a significant source of financial risk for providers. An estimated 27.6 million Americans were still uninsured at the end of 2016,5 and for the first time since the Affordable Care Act (ACA) went into effect, the uninsured population rose by 1.3 percentage points to 12.2 percent in 2017.6 Hospitals continue to struggle under the weight of uncompensated care, incurring more than $576 billion in costs since 2000, according to the American Hospital Association.7

Increasing Patient Responsibility
The shift to high-deductible health plans means providers can no longer rely on payers to reimburse them for the majority of costs. Instead, they must focus equally on patient payments and payer reimbursement if they want to collect all they’re owed. This adds significant challenges and complexity to the revenue cycle, as 63% of Americans are unable to handle a $1,000 emergency room bill.8

Opportunities to Capture Revenue

The complexities and challenges of today’s healthcare landscape are driving healthcare providers to take advantage of the following opportunities to capture revenue:

Step one: Help your patients get insured.
Reducing the number of self-pay patients can help reduce non-payment risk. During the 2017 open enrollment period, 12.2 million enrolled, including 33 percent who were new enrollees.9 Forrest General Hospital in Hattiesburg, Miss., has been actively helping uninsured patients enroll in Medicare and Medicaid for years; in 2014, the hospital system expanded its efforts to include plans available on the federal health insurance exchange. Part of this plan included community outreach to educate patients about the ACA and how they could benefit from it.

According to Pat Riley, Director of Insurance Operations at Forrest General, the decision to promote enrollment through the exchange was an easy one, saying, “We felt like any uninsured patient who we could enroll in an insurance plan through the exchange would be a potential savings for our hospital. So we did various things to help people understand they could come to us for help and information, and we could also help them enroll in a plan if they chose to do so.”

With the expansion of Medicaid in many states, helping to enroll eligible patients can drive improved revenue.

Step two: Facilitate both financial clearance and patient payments.
As patient responsibility grows, providers must go beyond eligibility verification; they need an efficient workflow for full financial triage. This includes verification of identity; checking eligibility and benefits; gaining prior authorization or checking for medical necessity; accurately estimating and communicating patient financial responsibility and determining propensity to pay; and facilitating patient payments at every step in the patient journey: prior to and during the pointof- service, and after the delivery of care. Creating a culture of patient education and payment request is critical for increasing patient payments. The added transparency of providing patient estimates upfront helps build consumer trust, simplify the patient billing cycle, and improve the overall patient experience.

Step three: Optimize payment for each episode of care.
Make sure payers are meeting their negotiated, contracted payment rates. Concurrent, retrospective, and ongoing reviews of contractual denials and underpayments, as well as recovery of zero-balanced third-party accounts, will help ensure you are getting paid the right amount the first time. In 2015, Medicare and Medicaid underpaid U.S. hospitals by $57.8 billion.10 Double-check all DRGs, specifically Transfer DRGs, to ensure proper payment from Medicare. Twelve to 15 percent of Transfer DRG claims are underpaid, which amounts to an average payment reduction of approximately $3,500 per instance.11 In aggregate, hospitals may lose an estimated $4 billion dollars to miscoded Transfer DRGs annually.

Step four: Prevent and proactively address denials and rejections.
Determining benefit eligibility and getting medical necessity documentation prior to and during care delivery helps ensure claims are submitted correctly on the first pass, which itself reduces subsequent administrative expense. Employing technology is an easy way to validate eligibility and benefits are accurately verified and to catch administrative errors, both of which help to increase the first-pass clean claims rate. Submitting clean claims eliminates the time-and-expense of reworking/correcting rejections and denials, and prevents delays in reimbursement. Develop a task force to examine denials and solve upstream issues. Analytical tools can proactively identify opportunities to increase cash flow and stem revenue leakage; this in turn helps providers reduce the risk of audit and/or non-payment.

Step five: Efficiently collect patient payments.
Many consumers expect a retail-like experience in healthcare as they do in other industries. Reduce the risk of delayed or non-payment by communicating with patients in the way they prefer to make payments. For example, some consumers still prefer to receive paper statements to make payment via checks, while others prefer electronic messaging and making digital payments via smartphones and tablets. Recent studies show that offering consumers multiple payment channels helps to drive patient satisfaction.12

Step six: Streamline payment posting and remittance management.
Providers work with multiple types of payers, and payers use various remittance processes and forms of payment. This creates many challenges, including matching payments to remittances. Leverage technology that integrates key processing into a single solution by automating payment posting from payers. Eliminating manual posting helps improve accuracy, save time, and stimulate cash flow.


Providers face numerous challenges in getting paid for the services they provide, but there are also numerous solutions available to help address these challenges, such as implementing patientcentric and technological solutions that integrate with operational workflows. Taking advantage of opportunities such as these will help improve efficiency and customer satisfaction.

The plan’s leadership had long been interested in changing TPA vendors or insourcing many of the departmental functions, but other projects had taken priority. “We were expanding so rapidly in service areas and product lines that we didn’t have the bandwidth to take on a high-risk project like this,” says Dr. Mary Dale Peterson, former CEO of Driscoll Health Plan and current Executive Vice President and COO of Driscoll Health System. “It was a timing issue for us.”

Through its affiliations, Driscoll Health Plan coordinates care with both the Driscoll Children’s Hospital and Children’s Physician Services of South Texas. When the hospital and physician group adopted Epic as their electronic medical record (EMR) system, the health plan saw an opportunity to act as a coordinated health system.

Driscoll decided to move to the Epic® Tapestry core administrative system, which would allow the plan to easily exchange information with its affiliated healthcare partners.

Implementing any core system is a tricky process— especially when customers will be impacted downstream. As both providers and members depend upon the health plan’s ability to process claims and authorizations quickly, the team needed to ensure a smooth transition.

Once the project began, Driscoll realized its internal project management team wasn’t big enough to support a project of this magnitude. The health plan was not experienced in a core system implementation, and needed more structured project leadership, risk management, and experienced business consulting.

The Solution: Mitigate Risks and Fill Resource Gaps with an Experienced Consulting Team

In 2007, Driscoll had engaged Change Healthcare Consulting Services—known at the time as Healthcare Technology Management Services— to help with the selection and implementation of an insourced care management system, and was pleased with the result. Over the years, Change Healthcare Consulting supported Driscoll in various management initiatives, including improving its TPA relationship.

To ensure its Tapestry project was successful, the leadership team decided to augment Epic’s implementation resources and its own internal team with Change Healthcare Consulting Services.

“Having separate, third-party consultants—other than the vendor you’re contracted with—gives you a different viewpoint on how your project is going,” explains Dr. Peterson. “We were insourcing other areas that weren’t directly related to the platform, such as expanding the finance team. We knew we wanted an independent, consistent source of truth as well as experience in system implementations.”

Change Healthcare Consulting Services was initially asked to provide risk management services. After performing an assessment, Change Healthcare’s consultants recommended subdividing the project into 15 concurrent projects. The restructured workstreams would be managed by a Change Healthcare program manager.

The fact that Change Healthcare could supply the specific expertise we needed was essential. They have a vast resource pool, and there were quite a few consultants who were godsends to our staff.”

-  Dr. Mary Dale Peterson
Executive Vice President and COO
Driscoll Health Systemp

As the projects progressed, Driscoll engaged the assistance of experienced Change Healthcare resources with a deep knowledge of Epic, health plan operations, and core system implementations. When significant gaps were identified, the consulting team took on additional responsibilities, including system configuration, workflow improvements, reporting, and financial services.

After mitigating many of the project’s technical risks, including the development of electronic interfaces with Driscoll’s partners as well as other systems, the team identified new risks as the project moved closer to insourcing and hiring.

One key external risk involved state-based service level agreements, or SLAs. Texas operates a complex Medicaid program, which includes a vast body of requirements. To continue operating, health plans must meet mandated SLAs about matters such as maintaining a specific response time to member calls or paying claim providers within a specific time frame.

“Before we went live, we had to know that we were going to meet the service levels,” says Dr. Peterson. To meet the state’s requirements and improve upon the TPA’s performance, the team developed key performance indicators for operations. Driscoll’s management began measuring these indicators during the testing phases, receiving support from Change Healthcare consultants as the plan quantified its progress.

At the CEO’s request, Change Healthcare’s consultants also facilitated risk management sessions in which each department director presented operational risks from their department’s viewpoint. In this way, departments were able to share valuable feedback concerning Driscoll’s operational readiness in relation to the system’s functionality, training, and inter-department workflow.

As the implementation progressed, Change Healthcare recommended that Driscoll engage a wide variety of additional resources, including a workflow/process design leader, three technical developers for interfaces, a configuration analyst, a data warehouse developer, a finance business analyst, and a finance report writer. The Change Healthcare team was able to fill each role.

“When we got into the project, the fact that Change Healthcare could supply the specific expertise we needed was essential,” says Dr. Peterson. “They have a vast resource pool, and there were quite a few consultants who were godsends to our staff.”

Given their current certifications and years of expertise in application portfolios, Change Healthcare’s consultants were also qualified to assist with the integration of Epic systems. The team helped develop interfaces with Driscoll’s other applications and third-party service providers, such as PBMs and clearinghouses.

Throughout the two-year project, the number of Change Healthcare consultants fluctuated, with a maximum of 11 full-time consultants working at one time. “We had weekly updates on how the project was progressing,” says Dr. Peterson. “We were always made aware of which elements were in the red zone, and why. This helped us level-set expectations and make sure we had the resources we needed for the right period.”

Progressive Testing Scenarios Reveal Need for Extension

As part of its standard methodology for a core system implementation, Change Healthcare Consulting Services designed and managed several “The fact that Change Healthcare could supply the specific expertise we needed was essential. They have a vast resource pool, and there were quite a few consultants who were godsends to our staff.” Dr. Mary Dale Peterson Executive Vice President and COO Driscoll Health System Driscoll Health Plan 5 months of rigorous testing to ensure that Driscoll’s business processes and data were translated into terms the vendor could implement.

For added quality assurance, Change Healthcare recommended that Driscoll adopt a departmentbased testing strategy—called user acceptance testing—in addition to Epic’s standard recommended testing. Change Healthcare’s consultants worked with each business level department to develop a multitude of real-life testing scenarios based upon their daily tasks, such as denying or approving authorizations. Change Healthcare organized the testing teams and led successive test cycles, testing increasingly difficult scenarios to isolate and resolve operational errors.

Four months before the projected go-live date, the implementation team knew the results of its testing scenarios were not within the ideal range (success rates of 95% and above). Key performance indicators showed critical gaps that should be addressed before the system launched. The initial go-live date began to seem unrealistic, and all three parties— Driscoll, Change Healthcare Consulting, and Epic— decided to move the start date out.

“In our 90-day, pre-go-live session, almost every system was red. We just weren’t ready,” says Dr. Peterson. “It was hard to postpone, but it was absolutely the right decision. If you go live prematurely, you face all kinds of external risks which require months of cleanup.”

Luckily, Driscoll Health had already made contingency plans, and its TPA vendor agreed to an extension of the old system. Driscoll Health prepared for a new go-live date two months out, and authorized the extra resources necessary to make it happen.

“We made a lot of progress in those last two months,” says Dr. Peterson. “You have to do whatever it takes to be successful.”

The Results: Thorough Testing, New System Automation Increases Auto- Adjudication Rate, Reduces Appeals

On February 1, 2019, Driscoll Health Plan went live with Tapestry, debuting several new in-house departments—including Claims, Enrollment, and Customer Call Center—on the same day. Despite the extra expense incurred by the go-live delay, the project came in very close to budget.

We’re happy to be ahead of the bell curve now. We’re able to communicate to our patients what their out-of-pocket responsibility will be. Our transparency is a powerful draw.”

-  Dr. Mary Dale Peterson
Executive Vice President and COO
Driscoll Health Systemp

The health plan also realized an exciting—and surprising—increase in its claim auto-adjudication rate. For years, Driscoll’s TPA had been operating with an auto-adjudication rate around 65%. With the new system, the team anticipated similar results, and set their targets accordingly.

Driscoll’s leadership is pleased to say that the new in-house system is currently running at above an 80% rate for claims auto-adjudication, an increase they attribute in part to a much more thorough implementation process.

“Of course, it doesn’t matter if your autoadjudication rate is high if the claims all show up in appeals,” says Dr. Peterson. “Fortunately, our appeals are now half of what they were before we went live. We’re auto-adjudicating at a fairly high level for Medicaid.”

The system’s new automation resulted in improved coordination of benefits (COBs) management. Third-party liability files received from the state are uploaded weekly, and the appropriate Texas Medicaid edits are now implemented correctly within Driscoll’s claims editing software.

Driscoll has also experienced success with its new in-house system to address internal and external complaints. Before the implementation, Driscoll’s primary care providers were dissatisfied that their Driscoll patient panels changed every month, as they didn’t feel like the changes were reflective of reality. “We created a better algorithm for matching our members to the appropriate primary care physician,” explains Dr. Peterson. “We’re able to load enrollment files, search for custom elements, and assign members to the doctor who will serve them best.”

With Change Healthcare Consulting’s help, Driscoll was able to take full advantage of the new system’s workflow management system. This system allows collaborative workflows between departments to improve communication and speed turnaround. “Having control over your own processes and resources is one of the big advantages of managing your own business and customer service satisfaction,” says Dr. Peterson.

With the new freedom to manage their own resources, Driscoll is already finding other ways to improve performance using the new system. Recently, they built a customer satisfaction SWAT team within the new Claims Department to serve as an immediate escalation point for the Call Service Center. This intra-team collaboration and faster workflow means many members can get their issues resolved in one phone call.



Improved Integration Drives Greater Transparency and Care Team Collaboration

The health plan also improved its integration from its utilization management and claims system. Previously, data only moved in one direction. With the new integrated system, the authorization and adjudication process is a two-way street.

The new system allows for easier collaboration with the Driscoll Children’s Hospital and affiliated clinics. Orders are placed within Epic, so the clinics can generate notifications to the hospital and trigger any required authorization requests to the health plan.

All clinicians have access to the same system, which has greatly improved care coordination and communication. “When a care manager is creating a care plan, we can see it!” says Dr. Peterson. “Pharmacy can see that a drug was prescribed. The utilization management team uses the member snapshot daily.” Embedding evidenced-based care plans within Driscoll’s new care management system, Healthy Planet, will also help the health plan comply with upcoming regulations.

Driscoll’s new member and provider portal has also dramatically improved both transparency and efficiency. Providers can now see when their patients have visited the ER, and can immediately access a full report of their patient’s health status. Previously, one full-time employee was devoted solely to managing authorization letter changes. Now, the letters are automatically managed through the portal, saving hours upon hours of administrative time.

Driscoll’s executive team is also pleased with the sudden influx of real-time data. “We no longer have to go through a third party or anyone else,” says Dr. Peterson. “There’s no more disconnect, as we can see our data directly.”

Now that staff members are seasoned on the new system, daily operations are running smoothly, and the health plan is already tackling new challenges. Currently, Driscoll is working on integrating care delivery and driving down its no-show rate. “Our care coordinators can look ahead in the system and see if they can provide those members with more attention, so they’re protecting valuable physician time,” says Dr. Peterson.

With all operational functions now in-house, Driscoll Health Plan is poised for growth. The health plan is also set to realize significant—and ongoing—cost savings. Overall, Dr. Peterson expects to save $14 million next year with improved operations, a streamlined system, and quicker access to data.

“We have more control, a better product, and cost savings—it’s the trifecta!” says Dr. Peterson. “We’re saving enough to fund our strategic plan, to hire and recruit physician pediatric specialists. Doing this all ourselves is so much less expensive.”

Having an integrated system will allow Driscoll Health Plan to keep improving its performance while driving new efficiencies—which will ultimately lead to better care for its members.

Advice for Other Health Plans

For health plans contemplating a similar transition, Dr. Peterson advises focusing on cross-functional communication and supporting your team. “A project like this means long evening and weekend hours, which can lead to burnout. Your entire leadership team should recognize the project as a shared priority.”

Monitoring staffing levels is also key. “When you add resources, make sure to keep some of your work in-house,” says Dr. Peterson. “Once you go live, you’ll need your own expertise.” With an inexperienced team, Driscoll needed to outsource much of the implementation, which meant they were tasked with building the new system while training their own resources.

“We couldn’t have done it alone, and honestly I don’t think anyone could take this on without the appropriate consulting resources,” says Dr. Peterson. “We needed Change Healthcare’s expertise.”

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