New Mountain Merges Rawlings, Varis, Apixio Assets To Form Payment Accuracy Firm

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Dive Brief:

• New Mountain Capital is combining three of its portfolio companies to create a new payment accuracy firm for health plans, the private equity firm said Thursday.
• The deal will merge The Rawlings Group, an analytics firm that finds third parties responsible for paying medical claims, the payment integrity platform of health tech provider Apixio and overpayment identification firm Varis. 
• David Pierre, previously the chief operating officer of home healthcare company Signify Health, will head up the newly combined company.

Dive Insight:

New Mountain’s new firm will use data and artificial intelligence to coordinate benefits, check pharmacy claims and pursue reimbursement from third parties responsible for medical claims, which could cut costs for payers, according to a Thursday press release.

The company, which doesn’t yet have a formal name, will include over 1,900 employees and serve more than 60 health plan clients, New Mountain said.

The PE firm purchased Apixio from insurer Centene last year, and bought a majority stake in Rawlings this spring.

However, the merger doesn’t include all of Apixio. Its connected care platform and value-based care products were acquired by Datavant, another New Mountain portfolio company that focuses on data exchange, as part of the transaction.

Payment integrity is playing a larger role in the healthcare sector as medical spending continues to rise and billing becomes more complex. It’s currently a $9 billion industry, according to consultancy McKinsey.

Meanwhile, PE firms are preferring to invest in healthcare IT firms or pharmaceutical services over providers, a report by market data research firm PitchBook noted earlier this summer. 

In May, PE firm KKR invested in Cotiviti, a data analytics company that provides payment accuracy, risk adjustment and quality improvement services for health plans.

New Mountain also attempted to buy out revenue cycle management firm R1 RCM early this year. However, the deal didn’t go through. Instead, private equity firms TowerBrook Capital Partners and Clayton, Dubilier and Rice entered into a definitive agreement this summer to acquire R1 for about $8.9 billion and take the company private.