How We Discovered Our Risk Adjustment Vendor Was Just Three People and a Prayer

The call came at 2 AM. Our risk adjustment vendors had suffered a “catastrophic system failure.” Thirty thousand charts needed re-processing. The deadline was tomorrow. That’s when we learned our “enterprise vendor with robust infrastructure” was actually three contractors working from a WeWork space.

This isn’t rare. It’s the dirty secret of the vendor ecosystem. Behind impressive websites and polished sales teams, many vendors are barely holding it together.

The Capability Charade

Vendors claim capabilities they’re actively building while selling them as established. “Oh yes, we absolutely handle cardiology coding.” Translation: they’ll figure it out after you sign the contract.

We asked our vendor about their quality assurance process. They sent a beautiful 47-page document describing multi-tier reviews, statistical sampling, and accuracy validation. Impressive, until we visited their office. Their “QA team” was one person spot-checking random charts when she had time.

The “proprietary AI technology” they marketed? Licensed from another company that licensed it from a university project that was abandoned in 2019. The AI wasn’t learning or improving. It was frozen in time, getting dumber as medical practice evolved.

Their “99.9% uptime guarantee” lasted until their single server crashed. No redundancy. No backup system. Just three people frantically calling AWS support while thousands of our charts sat unprocessed.

The Reference Shell Game

Every vendor provides glowing references. Here’s what they don’t tell you: those references are often investors, partners, or clients getting massive discounts for positive reviews.

We called five references for a prospective vendor. Four gave identical praise, almost word-for-word. Suspicious, we dug deeper. All four were partially owned by the vendor’s parent company.

The fifth reference was legitimate and honest: “They’re okay for basic coding, terrible for anything complex. We keep them for simple stuff and use another vendor for everything important.” That’s not what their sales team promised.

One vendor provided a case study showing 50% productivity improvement at “a leading health plan.” We were that health plan. The 50% improvement was fiction. When confronted, they said it was a “forward-looking projection” that somehow became past tense in marketing materials.

The Talent Mirage

“Our team of certified coders” sounds impressive until you learn they’re all contractors hired last week from the Philippines. Not that offshore talent is bad, but they’re not the “US-based experts” advertised.

We tested our vendor’s expertise by inserting deliberately complex cases into routine batches. Their “senior coding team” missed 78% of the intentionally difficult HCCs. When questioned, they admitted those charts were routed to junior coders because senior staff was “temporarily unavailable.” Temporarily since launch, apparently.

The revolving door is constant. The account manager who promised everything during sales? Gone in three months. Your dedicated team lead? Replaced twice this quarter. The only constant is chaos masquerading as stability.

During our vendor’s staff turnover crisis, we discovered they’d hired coders from a competitor’s reject pile. People fired for quality issues elsewhere became our “expert team” overnight.

The Escape Velocity Problem

Once vendors embed themselves, extraction becomes nearly impossible. They know this. It’s the business model.

Our vendor held our data hostage in proprietary formats. Exporting required their “professional services team” at $500 per hour. Converting to usable formats took another $50,000. The free market isn’t free when switching costs approach seven figures.

They also played the compliance card: “Changing vendors mid-audit could raise red flags with CMS.” Complete fiction, but scary enough to make boards hesitate. We stayed an extra year out of fear that turned out to be manufactured.

The contracts are designed for lock-in. Automatic renewals with 180-day notice periods. Penalty clauses for early termination. Price increases tied to volume decreases. Leave, and they’ll make you pay for the privilege.

The Vendor Evaluation Checklist

Visit their actual office. Not the sales office, the operation center. If they resist, run. We visited one vendor’s “center of excellence” and found four people in a strip mall. The photos on their website? Stock images.

Demand to speak with current operational staff, not references. Talk to the people who’ll actually do your work. If they can’t arrange this, those people don’t exist.

Test their capabilities before signing. Send 100 complex charts as a paid pilot. Judge them on actual performance, not promised potential. One vendor scored 94% on our pilot, then 61% in production. The pilot team was their A-team. Production got whoever was available.

Check their financials if possible. Many vendors are one lost client away from bankruptcy. That innovative partner might not survive the year. We’ve had two vendors collapse mid-contract, leaving us scrambling.

Never believe the marketing. Assume every capability is overstated by 50%. If they claim 98% accuracy, expect 49%. If they promise two-day turnaround, plan for four. If they guarantee US-based coding, verify it’s not US-based management overseeing offshore coding.

The best risk adjustment vendor isn’t the one with the best pitch or biggest promises. It’s the one that can actually deliver 70% of what they claim, consistently. In this industry, that makes them a unicorn worth keeping.