October 21, 2025 • 4 Min Read

Many organizations are still running on legacy core administrative processing systems (CAPS) that are decades old. These platforms aren’t just expensive to maintain, they’re too rigid to keep up with today’s healthcare environment. With CMS’s 2025 interoperability deadlines on the horizon, the risks are only growing.

At the same time, administrative waste continues to drain the U.S. healthcare system, nearly $500 billion every year. That staggering figure shows just how unsustainable the old model has become.

The Hidden Cost of Doing Nothing

Payers who delay modernization face 25–35% higher IT maintenance costs than their peers who have modernized.

The compliance clock is ticking. Fast Healthcare Interoperability Resources (FHIR) enabled application programming interfaces (APIs) must be live between 2025 and 2027, or payers risk penalties, heightened oversight, and reputational damage.

And the operational toll is just as real. Without AI-powered automation, tasks like fraud detection and prior authorization remain slow, manual, and costly. Claims drag on, creating errors and frustrating providers and members alike.

Meanwhile, competitors who have modernized are pulling ahead. They’re faster, more accurate, and more cost-effective—winning over members, attracting top-performing providers, and setting a new standard for the market.

Getting Used to a New Payer Operating Model

The question isn’t if payers need to change, it’s how. The old model has hit a wall. The path forward? It’s really about rethinking how people, processes, and systems work together.

A modern, cloud-first, AI-powered operating model transforms the way an organization runs:

• Processes move from manual-heavy tasks to automated, real-time workflows.
• People spend less time fixing system issues and more time on strategy and relationships.
• Technology provides the speed, flexibility, and compliance backbone that makes everything else work.

The result is an ecosystem that runs smarter and faster:

• Payers gain a competitive edge and reduce costs
• Providers get paid more quickly, with fewer errors
• Members enjoy smoother service and clearer communication

Where to Start

If you’re ready to rethink modernization, here are a few steps you can try:

• Map your legacy systems and create a phased cloud migration roadmap—think AWS or Azure—while keeping interoperability top of mind.
• Deploy AI to automate claims, detect anomalies, and accelerate prior authorizations.
• Build FHIR APIs to stay compliant with CMS rules and enable real-time data exchange.
• Strengthen data governance with lineage, cataloging, and audit trails, making compliance easier and more reliable.
• Invest in your people by upskilling staff and fostering a data-driven culture to ensure adoption.

Modernization is complex, but you don’t have to do it alone. RGP helps healthcare payers modernize efficiently, reduce claims friction, embed compliance, and improve operational accuracy so your systems, teams, and processes all work together to deliver better experiences for providers and members.

Ready to move faster, cut costs, and transform your payer operations? Contact our experts today to start the conversation.