Case Study Summary: A Medicare Advantage plan partnered with Penstock to implement a CMS-compliant pre-pay inpatient review program designed to prevent improper payments before release. Within 4.5 months, the program generated approximately $2.66 million in savings with a 45.9% savings rate and scaled to over a $1M monthly run rate. The initiative strengthened financial control while maintaining full regulatory compliance.

Background

A Medicare Advantage plan sought to strengthen oversight of inpatient claims across both in-network and out-of-network admissions.  

The Challenge

Inpatient claims are often high-dollar and complex. When payment is released before review, correcting discrepancies later can require additional outreach, create provider abrasion, and make recovery more difficult. The plan wanted greater confidence that these claims were paid accurately the first time, reducing the need for post-payment recovery efforts and limiting unnecessary friction with providers — particularly for out-of-network admissions where financial exposure is high.

The Solution

Penstock implemented a CMS-compliant pre-pay inpatient review program. The workflow was structured to introduce oversight before payment release without disrupting operational flow. The program was fully implemented in under 90 days and designed to meet all CMS requirements, including established turnaround times and appeal rights.

The Results

Within the first 4.5 months of implementation:

• 11,300 claims received  

• 2,020 audits created

• 1,080 charts reviewed

• 45.9% savings rate

• ~$2.66M in total savings identified

The program approached a $1M monthly run rate within months of launch and has continued to grow.

‍