AH113 - From Legacy Mainframe to Judi Cloud™: Modernizing Claims Adjudication, with Andy Kageleiry

Lightly edited for clarity.

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[00:22] Justin Venneri: Hello and thank you for listening to this episode of the Astonishing Healthcare Podcast. Today we have an exciting episode. We're going to be talking about Judi and, more specifically, as we've been expanding Judi's capabilities, we're going to be talking about Judi Cloud. I wanted to bring Andy Kageleiry, Senior Vice President of Enterprise, back to the studio to talk about Judi as a core administrative processing system: CAPS. I know, I know, another acronym. Sorry. But it's really exciting because this follows on our rebrand announcement, and obviously last week we had AJ and Kristen on the show. So Andy, thanks for joining me again.

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[00:52] Andy Kageleiry: Good to be back, Justin. Thank you.

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[00:54] Justin Venneri: Last time you were on was a fun chat. That was episode 80. It was all about smart, unified care navigation, and congrats on your promotion. Your new role is broader than just care nav, right?

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[01:03] Andy Kageleiry: Yeah. We have some pretty amazing software products here at Judi Health. I have the pleasure now of talking to prospects and clients about many of them, including the Judi Cloud business.

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[01:13] Justin Venneri: So on that note, let's take a quick step back. Tell us a bit about your background, your path to Judi Health, for anybody who doesn't know you or may have missed episode 80.

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[01:21] Andy Kageleiry: Sure. Well, Justin, I've spent the last 15 years in healthcare. I spent the first half of that period as a data science and strategy consultant to healthcare companies, and the next half working at high-growth technology startups like GoodRx and Amino, which was acquired by Judi Health last year. And now Judi. The through line of my career has been: how do we use technology and data to help make healthcare just a little bit more efficient? And so that's true of my new role that you just mentioned. I lead the Judi Cloud business, which we announced publicly last week, and I'm sure we'll spend a lot of time talking about in the episode today.

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[01:51] Justin Venneri: Absolutely. So let's get into it. Why might payers rethink their CAPS, their core administrative platform technology? What's the setup out there for health plans and TPAs these days? When we were talking about this conversation and just strategizing, I felt like a lot of what we learned and people experienced on the pharmacy side of the business is present here. It's just broader.

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[02:12] Andy Kageleiry: Well, first let's start with the baseline and talk about what we're talking about. What is the technology infrastructure that health plans and TPAs are using to run their business? You already made mention of the acronym. They're often referred to as a core administrative processing system, or claims adjudication system. You hear the acronym CAPS thrown around, and the way I like to describe this to people is it's like an ERP, a CRM, and a banking platform all built into one piece of technology, a critical piece of technology.

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So whenever you, as a patient, as a member, as a caretaker, interact with the healthcare system, maybe it's at a doctor's appointment, a surgery, you're picking up a script, you're usually generating a claim. If you're listening to this podcast, you probably are, at least with me so far. That claim is generated at the point of sale. The claim is generated by the point-of-sale system, literally at the pharmacy counter, or by the EHR at your doctor's office. But then what happens to that claim? Well, that claim makes its way to a health plan or a TPA, which has to receive it, validate it, price it, which means figure out how the dollars are going to flow around, adjudicate it, and pay it. Which sounds simple, right?

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It's actually an incredibly complicated process that involves the orchestration of data, eligibility, contracts, and membership, all up to the second of when that claim took place. This system has to answer simple questions like: is this actually one of our members? Was this member eligible at the time that the service took place? Was this member eligible for that specific service? Was the provider that submitted this, was the pharmacy that submitted this claim, in network, and is that service covered? Are they in their deductible phase, or are we covering this? Is there another insurance company that could potentially be liable to cover this? What do our network contracts with this provider dictate about how much we should pay?

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And we're just scratching the surface here, Justin. That's all assuming a simple plan design like a PPO or a preferred provider network. What about a tiered design, an alternative health plan, shared deductibles, pharmacy benefits? There's so much surface area here that the technology system ought to be able to help adjudicate and make simpler for the plan and the member. And the truth is that the technology here, the average technology that is helping a health plan or TPA run this process, just simply hasn't kept pace with the rest of the American economy.

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The average payer is running a 20-year-old tech chassis. A lot of them are still using on-prem physical hardware mainframe systems with dozens of other systems bolted onto it, literally or figuratively. At Judi, we call this the patchwork of systems. And it turns out that running a patchwork of systems can work, but it is arduous. It takes people to operate, it's expensive. Every one of those patchwork vendors needs to be paid for their service. This setup can cause some serious challenges with data accuracy, which further adds cost to the system.

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[04:50] Justin Venneri: Yeah, and that's the last thing anybody wants, right? You don't want to pop open a screen and see a little cursor there like it's DOS back in the day, or Atari. And we joke about the green screen sometimes, but it's true. And people are keeping track of stuff on paper or in Excel and trying to manually update it, and it's inefficient. Talk to me, though. I feel like there are some newer options out there too, right? There really weren't great alternatives on the enterprise pharmacy platform side of things, but I feel like there's some advancement, right?

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[05:16] Andy Kageleiry: Yeah. And that's sort of the genesis of why, as a company, we built Judi in the first place. And while we just announced Judi Cloud for the first time last week, the truth is this software platform has been under development for almost a decade now. We started building it when we started the company back in 2017, brought it onto the market a few years later on the pharmacy side. And to your point, Justin, we did that because the technology platforms that existed at the time, and again, we're thinking about pharmacy when we go back to 2020, just weren't up to snuff. They weren't good enough for what we wanted to be able to do as a pharmacy benefit manager.

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If I think about 2026, we're not just talking about pharmacy, we're talking about medical. There absolutely has been some technology advancement, although when I look at the market, I see a lot of what I would call point solutions for infrastructure. Point solutions and point solution fatigue have been talked about a lot from the member experience side, from the clinical delivery side. But I think we're also entering a space now where there's significant proliferation of point solutions from an infrastructure perspective as well. And those point solutions tackle a single challenge.

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So, for example, there are platforms now that offer point solutions for prior authorizations, point solutions for pricing and managing out-of-network claims, for digital member experience, for a certain category of payments. And what's great about those is that they're tackling a single problem and using technology to try to improve it. That's a great option if your system runs on a mainframe and simply cannot handle the activity that this point solution can provide. So what payers do is they bolt on those point solutions. That's how we've ended up with the patchwork I mentioned before.

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One of the challenges here is that those different solutions don't address root cause issues with the adjudication platform. They're a band-aid. So for every new vendor solution, you have to create a technology integration. You have to hire a person to become an expert in and manage that system and that integration. You have to maintain another vendor relationship, and another. And we can see incremental improvement from a patchwork system like that, but not step change. And what we've focused on when we think about Judi is building everything natively into a single platform, which is a totally different paradigm. So we're taking a perspective of: this tech should be modern, it should be fast, it should be AI native, but it should all sit on a single code base and a single pane of glass. That's the Judi Cloud business.

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[07:26] Justin Venneri: And just to dig a little bit, who really feels the pain of an aging claim system first? And sorry if that's a silly question, but I just assume it's the plan administrator, or whoever's kind of in charge of ops or claims review at the TPA, or if it's the plan sponsors or the members.

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[07:43] Andy Kageleiry: Well, this problem frankly affects everyone. So obviously, yes, the operational teams at a payer or TPA who are dealing with this technology platform every day, and that's going to slow down their work. They're going to feel that day in and day out. But this tech is so fundamental that it also affects other stakeholders. So let's talk about a common problem that we see with old systems, which is unreliable adjudication.

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I'll use a real example. I have a Judi Cloud client that migrated from a legacy platform this year. Their old technology system could not reliably process a certain type of office visit that accounts for like 25% of claims. Incredibly common. We're not talking about a 1% edge case here. And every single claim that came into their system of that type had to be pended, which is another way of saying it had to be manually reviewed by a person. It's 2026, and 100% of this type of claim is being reviewed. I picture it by candlelight with a quill dipped into ink, is how it feels. Despite something that should really be handled by technology.

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So what problems does that cause? Obviously it's time-consuming, it's expensive for that person, for the payer, but it also slows down the entire chain. Now, remember, in medical claims processing, things don't happen in an instant like they do at the pharmacy counter. A claim is generated, it's submitted to the payer, and it can often take days or weeks or even months for that claim to be fully adjudicated and for payment to go to the provider. Providers want to be paid, they want to be paid timely for the services that they've rendered. And I think that's fair.

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So when you delay this process, when you have piles of claims sitting physically on someone's desk, providers are getting paid slower, which creates abrasion with the provider, creates abrasion with the member themselves, who may get a bill because the provider hasn't been paid fast enough. And so it just creates this sort of propagation of problems all the way through the chain. One thing we talk a lot about at Judi is: what does this add up to? We think there's a trillion dollars, with a capital T, of administrative healthcare waste every year in this country. And the types of problems I'm talking about here are just one of many that are tallying up to that total amount.

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[09:40] Justin Venneri: It's interesting that you mention that example. It kind of makes me think about the pharmacy side. Keith LaFountain, our co-producer, will have to keep me honest. I think it was episode 61, but we were talking about our hours banking system for unions. Christy was describing how to track things for the hours, just manually. And it was almost like I pictured her with a napkin and a pen, sitting there trying to keep track of how the hours added up, who was eligible, et cetera. So I know it's definitely time-consuming. What other sorts of issues surface for TPAs that suggest it's really a need versus a want at this point to look at upgrading? A side note: we talked about third-party administrators with Mike Tate and Mark Pierce on the podcast earlier this year. I'll link that in the show notes for background on TPAs. What would you say there, Andy, on why the time really is now to explore this?

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[10:26] Andy Kageleiry: Well, we've spent a lot of the time so far, and frankly it's a lot of what I think about, on the challenges with existing platforms, and in particular the ways that those platforms are inefficient and add cost to the system. But there's another angle here too, and when I talk to TPAs in particular, it's something they care a lot about, which is the flexibility of their platform. So less about "hey, can you start getting the auto-adjudication rate up from 0% to something higher?" and more about "what can we offer in the market to help us grow?"

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So if you go to a conference or listen to any healthcare podcast this year, the first thing you're going to hear about is AI, but the second is that you're going to start to hear about the proliferation of more creative plan designs. Some of these ideas are not necessarily new, but they're in vogue today because they're effective ways to use benefit designs to guide members to cost-effective care. So for example, alternative health plan or dynamic co-pay products have exploded in the last few years. Tiered network designs, and in particular multi-tier network designs that aren't just a PPO with an in-network and an out-of-network tier, but adding a second or third tier to guide members to cost-effective care. Direct contracts are another element that I see sometimes in those tier designs or on their own.

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And a lot of legacy software platforms just simply cannot handle those kinds of benefit designs. When I took on this new role at the end of last year, that's something that really surprised me, because again, it's 2026, and our tech should be able to address the technology needs that TPAs and plans have. The software systems are too brittle. They require using a patchwork, like I talked about before, hiring people, or the administrator just says, "I'm going to be upside down on this plan, but I just have to offer it because my competitor does."

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So we had a lot of experience building for this, because when we first built for pharmacy on the Judi platform, we realized, as our own users of this platform, all the exceptions to what you think is going to be the standard plan design, and what's going to be the standard number of accumulators, and the tiering of accumulators, and all kinds of things. You think, "oh, no one's ever going to want four accumulators or five accumulators." And they did. So when we built the medical platform, we took a first-principles approach and built for ultimate flexibility. That was more expensive, that was more time-consuming. But it helps us when we talk to a TPA or plan who says, "can you help me design a new benefit design that I can put in the market for X?" I can't remember one of those conversations where I've said, "no, sorry, we can't handle that in our platform." It's tremendously powerful, and I like it as an example where we're not just saying, "hey, it's very expensive to run your old system, it's going to be less expensive to run mine," but also thinking about bending the cost curve, outside of just administration, to some of these really innovative designs that are helping bend trend.

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[12:56] Justin Venneri: Yeah, that's awesome. Okay, for the average TPA or health plan that's evaluating its current CAPS vendor, what questions should the leaders of those organizations be asking about speed, flexibility, integration, and just total cost of ownership?

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[13:12] Andy Kageleiry: So a lot of health plans I talk to in particular are thinking about a major, what I call a rip-and-replace migration. We've done those. We've done them efficiently. They haven't been as scary as everyone thought, but they're kind of the big boogeyman in our industry, because for decades it's been incredibly challenging for CIOs who just want to avoid the headache. For example, I talked to one CIO a couple months ago who said, "if I could snap my fingers and get over to your system, I would do it in a heartbeat. But I'm just wary of doing a big transformation."

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So there are really two things that I counsel CIOs about. So first is: what's on the other side has to truly be worth it, right? It has to lower your cost to operate, make you faster, make a measurable impact on the administrative burden. It has to provide you with the growth opportunities by way of launching new products that we just talked about, launching clients faster. Depending on how innovative you want to be, you need to be able to see a fast, positive P&L impact very quickly during the journey. It's not just enough to switch. You have to choose the right partner to switch to.

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The second piece is that while rip-and-replace is the right long-term goal, because you don't want to run two systems or three systems in perpetuity, you don't have to start there. I've worked with groups, and we're implementing groups now, where we're taking a phased approach, putting new products and new lives on the Judi platform, then over time migrating out of old systems. That significantly reduces strain, gets clients to value on day one, makes for a more seamless migration, and frankly lets us prove it. And we're always excited to do that.

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[14:32] Justin Venneri: Okay. And beyond operational efficiency and the flexibility, how or why can a modern CAPS or enterprise health platform bring transparency to medical claim processing, or help organizations grow, as you alluded to? I understand that's a big part of the equation, right? If you can't offer a more flexible or some type of innovative product to add to your member base, then that's got to be kind of frustrating if you're a CIO, CTO, or just the business leader of that organization.

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[14:59] Andy Kageleiry: Well, it's a good question, Justin, because over the history of our company, first as Capital Rx, obviously, and now as Judi Health, we've had a major focus on bringing transparency to healthcare. As your listeners probably know, we did that in pharmacy by leading the market to a fully transparent, full pass-through model on pharmacy and pharmacy rebates. And now we're bringing the same principle to medical.

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I think one of the most obvious examples that I've seen when I demo the product is how we enable reporting. So we have a module in our platform called DORA. It's an acronym for Data Output and Reporting. That is the simplest thing in the world, and also one of the most mind-blowing. When we demo the Judi Cloud platform, I say it's simple because I mentioned at the top I started my career as a data scientist, and so having hands-on access to every field that could possibly come through a claims adjudication system, when I think about it from first principles, that's exactly what I would expect, right? Turns out that is not remotely the industry norm.

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So what we've built our DORA module to do is, simply put, if the data exists on a claim, if it exists somewhere in Judi, you can access it, you can analyze it in a self-serve way, and if you can't do that, our teams will help you set up a report or an automated report to get it. There's not a single data set that, if you have the right levels of access in Judi, there's not a single piece of data that you can't extract and use to help your clients achieve their benefit objectives.

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It doesn't sound revolutionary, but it lets us pull up every claim up to the second. And importantly, from a transparency perspective, it lets us deep dive into the sub-components of what you're paying everybody, what you're paying your network vendor, including shared savings and other service fees that are often obscured by bad actors in the system. We're a completely open book. We do this for our own clients. And when you license the Judi software, you have the power to do the same thing.

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[16:42] Justin Venneri: And plan members never really know what claims platform their plan runs on, and they shouldn't have to. What's the experience you want a member to have that tells you the technology behind the scenes is doing its job well?

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[16:55] Andy Kageleiry: We joke that when we flip on Judi from an old platform, sometimes on like a January 1st, sometimes on July 1st, the message is: members shouldn't notice a single thing. And that's basically true, because 99% of the general healthcare-seeking population has never thought about the infrastructure that we're talking about today. They shouldn't have to. This stuff should just work. So the truth is that members will often feel the difference in small ways, or in my platonic ideal, in stuff that doesn't happen. So let me give you some examples.

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If you're on a great infrastructure platform, the member's digital experience should be helpful, should be totally in sync with your current benefits. For example, you should be able to check on the status of a prior authorization directly in the app, and you shouldn't have to call your health plan. We've looked at industry data, and that's one of the most common reasons why people call their PBM, because they need the status of a prior auth. If you have a great infrastructure, if you have a great technology platform that extends to the digital experience, that member should be able to answer that in a self-serve way.

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If you do call your TPA or your payer and they're running on a modern system, your call should be addressed the first time, because your customer service team has 100% perfectly accurate information. Maybe it's medical, maybe it's pharmacy, maybe it's both, directly in front of them up to the second. That should be easy, seamless, table stakes.

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Your benefit design for the member should reward smart choices. We've talked earlier in the podcast about some of the trends that are in vogue now, and those are great for members and they're great for plan sponsors as well. More and more we're seeing that members have a zero cost share to make a smart choice, whereas they used to have a 10% coinsurance. If you have a modern technology platform that enables that, your TPA can offer that kind of benefit, and that is savings that is not only coming out of the system but is being passed on to members.

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And sort of the worst-case scenario that you should avoid, if you have a great technology platform, is you should get EOBs and bills that are accurate and that match each other. Something that I don't like to think about, but I know happens, is when you have these significant delays in payment or inaccuracies in the processing, you can get an EOB from your payer that says one amount due, you can get a bill from your provider that says another amount, and you might log into the system and see a third amount. That is extraordinarily confusing and sometimes scary for members, and that should never happen. So if you have a good adjudication system, you're just never going to experience some of these negative scenarios that we've talked about.

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[19:10] Justin Venneri: That would be awesome. I would think, of all the things you've said so far that someone could relate to, those EOB letters are definitely top of the list, because they show up and it's like, this may not match what you actually owe, and why? Like, why wouldn't it? But just the way things were. And what's funny is it occurred to me while we've been talking here about evolving to medical claims processing off of pharmacy, but what about unified claims processing? How does that fit in this platform and cloud discussion?

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[19:36] Andy Kageleiry: Yeah, well, certainly not forgotten, and we've spent a lot of the time today talking about medical claims adjudication because we really just announced this with the Judi Cloud announcement last week. But of course we've been in the pharmacy infrastructure business for years, and we are proud to say that we have tens of millions of health plan covered lives on the Judi platform. So medical was obviously a natural extension for us.

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When we talk about unified claims processing, we're talking primarily about medical, pharmacy, vision, and dental all running on the same system, truly natively, which unlocks some pretty amazing efficiencies. I already mentioned a contact center employee who can see both claims feeds for a member on a single screen. It lets us serve medical-pharmacy use cases. It has both benefits loaded and can easily help guide medical-pharmacy switches that drive down cost for everybody, including the member. It can enable navigators to see signals in pharmacy data that can drive clinical recommendations on the medical side. And I'm just really scratching the surface with some of these examples. But the demand has been through the roof once we start ideating with clients about the opportunity space to put everything on a single pane of glass, as we like to say. It's been pretty awesome to see.

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[20:41] Justin Venneri: Yeah. AJ talks all the time about how, when you do something twice, there's the potential for mistakes, but it's also twice as expensive. But thinking about what you just said, pharmacy, medical, then vision, dental, and others, some of these things, you're doing the same thing four, five, six times, depending. Why are there four eligibility feeds for each benefit, like one for each benefit? That doesn't make a ton of sense. All right, last question. Andy, thanks so much for taking the time to chat today. Very curious to hear what the most astonishing thing that you've seen or heard is since taking on this new role. Obviously, keep your compliance hat on for us. Tell us a surprising or interesting story. It doesn't have to be bad. Tell us a good story to send us off, related to the discussion, of course.

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[21:19] Andy Kageleiry: So there are two stats, or two sort of factoids, that I've already shared in the pod that I'll refer back to. One is a trillion dollars of administrative waste in healthcare, and the other is that healthcare has lagged behind the rest of the economy in using technology to our advantage. Now, I've talked to dozens, maybe over a hundred, TPAs and health plans so far this year since taking on this new role. I've been frankly really surprised, in a positive way, about how interested they are in changing that last fact, in changing the fact that technology has been so far behind.

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Maybe it's that self-insured groups are tired of 10 to 20% rate increases every year. Maybe it's the fact that people are tired of having their members call three times to their contact center to resolve an issue. I feel a real sea change around the excitement, the optimism, the energy for using technology to solve some of these problems. I'm seeing that in the trends we've talked about with respect to plan designs, and frankly, folks and CIOs who want to demand more from their platforms.

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So if I take off my Judi Cloud hat for a second and just put on sort of my technologist hat, my optimist hat, I feel like we may be at the precipice of real systemic change that starts to bend the cost curve down, both administratively and clinically. And then, of course, putting my Judi Cloud hat back on, I'm pretty excited to be a part of it too.

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[22:39] Justin Venneri: Yeah, same here, Andy. Always enjoy the discussions with you. Feel like I learn something new every time, and I look forward to staying in touch and seeing how things evolve over the rest of this year and into 2027. It's going to be exciting.

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[22:48] Andy Kageleiry: Thanks, Justin. Same here.

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