Claritev Corporation (CTEV) Earnings Call Transcript & Summary

All right. Good morning, everyone, and thank you for joining the MultiPlan fireside chat here at the Citi Healthcare Services Conference. My name is Daniel Grosslight, and I'm the healthcare technology analyst here at Citi. And I'm very pleased to welcome Dale White, the brand new CEO of MultiPlan; and Jim Head, the new CFO at MultiPlan. Great to have both of you with us and looking forward to an interesting conversation. But before we get into the questions, I know Shawna, IR at MultiPlan, wants to test her reading abilities here. So she's going to read some legal language for you all, and then we'll dig into the questions. Shawna, go ahead.

Thanks, Daniel. So just before we get started, I just want to remind everybody of our forward-looking statements that you should be able to see on screen right now. As a quick reminder, our remarks and responses to questions may include forward-looking statements as outlined on screen, and actual results may differ materially from those stated or implied due to the risks and uncertainties associated with our business, which are discussed in our risk factors included in the quarterly and annual reports filed with the SEC. Any such forward-looking statements are based on information available as of the date of this call. While we may elect to update such forward-looking statements at some point in the future, please note that we assume no obligation to do so. And with that, I'll turn it back over to you, Daniel. Thanks.

All right. Great. Thank you. So as I mentioned, Dale, Jim, you're new in your roles. Dale, you're not new to the company, but Jim, you are. So it would be great just to kind of level set here, guys. It's a pivotal year for you. We have The No Surprises Act coming into play. We've got the potential for some client attrition, that's been talked about for a while here. It would be great if you could -- and maybe Dale, we'll start with you. If you could lay out what your action plan is for the next 90 to 120 days. Jim as well can join in. And Jim, for you, I'd love to get your thoughts on why you joined MultiPlan. And obviously, it's a little bit of a new role for you. You spent nearly 30 years in finance. So testing your hand at the CFO role, good to get some perspective on that. But Dale, I'll turn it over to you first.

Daniel, first of all, thank you, and thank you for inviting Jim and I to participate in this year's conference. As you said, I've been in the seat for just over a few weeks, but I have been with the company for 18 years. Mark and I -- Mark Tabak, the former CEO and I have been operating partners for 18 years. And really had a firsthand view of the critical role that MultiPlan has played inside the health care ecosystem. Jim and I are really inheriting a very successful company with a 40-year track record of growth. We have been and will continue to be effective in achieving our mission to deliver affordability, efficiency and fairness to the U.S. health care system. Daniel, as you pointed out, in the short run, I think it's important that we continue to focus on operational excellence standing behind the promises and commitments that we've made to customers, particularly around surprise billing as we help them to ensure their compliance with the law. As I mentioned during our earnings call, we have over 90 implementations that are either completed or in process. All of whom are waiting to implement as soon as possible. And we have a pipeline of 60 opportunities that are -- where we're in discussions around the Surprise Bill. So Surprise Bill execution for us over the next 90 days is extremely critical. I'd say beyond that, there's not a lot that needs to change as we kind of -- we continue to execute on our Enhance and Extend strategy and the elements of our growth strategy. We're now are more deliberately focusing our efforts on what we call our Expand element. That's looking out to a longer-term horizon and beginning to determine the best way to leverage our extensive data, our services and our connectivity to bring new value to the health care system and to our customers. That's kind of the way I look at it coming into the first 90 days in this chair. Jim?

Thanks, Dale. Maybe I'll give a quick reason why I was attracted to MultiPlan and then maybe amplify some of Dale's comments. By way of background, I'm actually familiar with this company. I worked on the sale of it, the first private equity sale in 2005 to Carlyle. So I've stayed close to the company over the last 16, 17 years. And what I was really attracted to is this is a business that has a phenomenal track record. It has a right to win, and in my opinion, still has plenty of growth ahead of it. But I do believe that it's been misunderstood, and needs to have -- needs to be invested in to continue that growth trajectory. So one of the things that -- or maybe a couple of things that are on my agenda that augments what Dale had just said is focusing on investing in the business while maintaining best-in-class margins. So that balancing act, we're going to continue to express to you, the investor, investors that we think we can maintain really strong margins but also provide some room to invest in the business. So as I mentioned, we have a right to win, and we think there are new products, new areas to invest. And obviously, enhancing the platform for better performance is a big issue. Number two, allocating capital. And as we mentioned on our earnings call, delevering the balance sheet over time. That's going to be a bit of a migration, and we can expand on that in a bit. But making sure that we're allocating capital to both invest back in the business, but also migrate the balance sheet down. And then last but not least, and I'm hoping you're starting to see some of the signs of this, but Dale and I really want to improve how we communicate with investors going forward. I think we are -- as I said, we're misunderstood, and I believe that we have really strong demand for our services in the marketplace. We're trying to emphasize that, as you saw in our earnings call with savings emphasis. We're going to try and give you more clarity on the enterprise risk that exists. Hopefully, you saw that a little bit with the NSA, our customers and essentially other areas, leverage, et cetera, that are key to investors' perspective. And then last but not least, we're trying to make it just simpler. It's a complex business. I think we all acknowledge that. And trying to make the number of moving parts a little bit lower for investors is going to be a key area of focus this year.

Yes. Great. [Operator Instructions] So that was a great intro guys. There's lots of wood to chop for you, and it seems like you're excited to do it. So that's great to see. So maybe if we could just stick with the NSA for a bit because that's been, I think, at least from my perspective, what's been causing the most amount of recent controversy. You noted during your earnings call that at most this year, you expect to see about 2 points -- 2 percentage points of revenue headwind due to the NSA. We're still very early in the year, right? You're probably still processing claims from the end of last year. So what gives you confidence that, that 0% to 2% headwind is the right number at this point in time?

Daniel, it's a great question. Look, from our perspective, last year, we said that when the law was first enacted and without the benefit of the interim final regulations, we thought it would be in the 10% to 12% range of -- up to the 10% to 12% range of impact to volume. The dust has begun to settle, and we clearly have more visibility on our client commitments. We now have the benefit of both interim and final regulations, that one issued in July and one issued in late October. And further, our larger customers have really been ahead of the curve and early in their decisions about how they're going to implement and how they're going to comply with Surprise bill. And an important point, too, for us is we have visibility into all of our clients' historical claim volume. We know what their historical claim volumes are, so we -- because we've seen those through the years. And so we have a good understanding. You're right, we're in the early innings in terms of seeing claim volume today. But we know what their historical claim volumes have been. So when we really talk about the 2% and up to 2%, we look at it through what we knew as a known attrition, known win, some new wins and really some lack of visibility into the smaller customer base where they haven't made decisions yet. I mean, in many cases, the smaller clients have said no change as to what you're doing today, what we're doing with you today and around Surprise bill-related claims and others were working on to get visibility into that. We're clearly in the early innings, right, of NSA-related claim volume. You're right, you're spot on in saying that for the most part, we're still seeing claims from -- due to our claim lag. We're just starting to see Surprise bill claims come in, and we're just starting to see dates of service on or after January 1 when Surprise bill takes place. But we really have good visibility, again, based on the regulation, we have good visibility on what types of claims will be in scope and we expect those claims to make up our NSA volume. And based on our historical claim volume, particularly with the larger clients, we know exactly the kinds of Surprise bills we'll see, what are in scope. And that's why we feel confident, without the benefit of having 6 months of experience, without the benefit of having that 6 months of claims experience, we feel really good about that estimate of up to 2% impact.

Got it. Okay. When the rules making came out around the NSA, particularly that part 2 of the rules making, I think it was like in October or early November of last year, we were quite surprised. And I think the provider space was quite surprised at how prescriptive it was on the QPA, which for those who don't know, is effectively the median in-network rate, which -- the presumption is that QPA is the right payment amount. Now you can argue with that and you can go to arbitration, but it seems like CMS deliberately made that QPA a quasi or de facto benchmark. So if that QPA is the benchmark. And assuming most payers are able to calculate that QPA on their own, why as a payer would I go to MultiPlan and pay your rate to determine the price when that QPA, which is pretty much readily available, will be, for the most part, the benchmark? Why go to MultiPlan when I know what the benchmark will be?

It's a great question and it gets to the specifics of the legislation, as you pointed out. And in the final interim regulation, CMS said at the point of arbitration, the arbiter is to look to the QPA as, in my words, the primary variable. Meaning it puts the burden on the provider to provide compelling evidence as to why additional reimbursement beyond the QPA is appropriate and justified. So it clearly puts the burden, as you pointed out, Daniel, on the provider at the point of arbitration. In many ways, though, I'm not sure the final chapter for Surprise bill has been written. We're waiting for the final regulations to be issued by CMS. They're due out in late May. And clearly, I think the providers will view that as an opportunity to see if they can -- if they've had an opportunity to change the way the regulation will be implemented and how the QPA will be viewed as part of the surprise build calculation. So that's one. Two, as you know, there's been multiple sets of litigation filed by the providers against the Surprise Bill Act, at least 2 in Texas, 3 in other states. I believe 1 in New York challenging the constitutionality of balanced billing and certain provisions of the law. So I think there's still settling that needs to be done. And I'm not sure it's a given yet that the QPA will be the basis for that reimbursement. But let's say, I mean, secondly, the law is currently written. So let's say just as it is, I don't think it's not as simple as just calculating the QPA and complying with the regulation, right? The regulation is extremely complicated. It's very complicated. And the payers have turned to MultiPlan to help them manage the entire process. It's not simply the calculation. There's 5 critical steps to the act. And it includes the identification of the bill, the calculation of the QPA, the initial payment offered to the provider because, as the law allows, that amount can be different than the QPA. The post-payment negotiation process that, that is -- that a provider may take advantage of if they disagree with the rate of reimbursement that's been provided by the payer. And lastly, the arbitration process. So there's several steps in this -- to processing claims and just calculating the QPA. And many of these steps are right in our wheel path, and they're right in our wheelhouse around the analytics, around negotiation services, around repricing a claim, around arbitration management. And so that's why we feel very good about the payers utilizing MultiPlan to help them comply with the law. And we don't feel at all that it's just a stopgap -- that we're a stopgap measure until -- to use those services on the front end until the payers can stand on their own 2 feet. We believe there will be persistence in the use of our solutions and for a couple of different reasons. We're certainly an independent NSA solution. We were experts in data analytics. We do -- we're experts in negotiation. We're now -- we built arbitration capabilities based on our experience in subrogation. And simply many payers, they don't possess the skill set and the services that you need in the NSA world. And so we're confident that given the complexity of the law, the need to the agility, the need for operational excellence, all of that will play well for MultiPlan going forward in working with our payers to comply with the complexity and the management of the Surprise Bill law.

Got it. That's helpful. And I'm going to ask you now to kind of test your game theory for the long term in terms of how the NSA impacts just the provider willingness to stay out of network. And I think, going back to your response, it's not that certain that the QPA will stay as the primary metric. But if it does, and if I'm a provider that is out of network, and I know for the most part that I'm going to get jammed down to the QPA eventually, what's my motivation for staying out of network? Longer term, do you think that this bill might incentivize providers to bite the bullet and just go in-network?

I'll start by saying you're right, we're 45 days in this process, and it's far too early to say with confidence and certainty that it's a foregone conclusion that providers are simply going to get the QPA and bet they'll -- and bet their incentive will be to move in-network, right? It's too early and no one knows whether -- what will happen. I think in the short run, providers are going to -- they're certainly not going to make quick move -- from my perspective, they're not going to make quick moves to move in-network until there's clarity around the act. And ultimately, how the act is ultimately issued. But as I said, the final rules are due in late May, the issues around the litigation. I'm still not -- set it back to the side, I'm still not sure, even if there's no change to the rules, we're not anticipating a rush of providers into the network. We haven't seen a lot of movement with providers. And one of the reasons to be in-network -- I think of it this way at a practical level, one of the reasons to be in-network that providers historically have always joined provider networks, right, is the ability to increase their patient volume through the payers, through the promotion of the payers and provider directories to members and things like that. These kinds of providers, the patients, they don't have to seek patients. The patients come to them because most of these providers in the Surprise bill arena are ER, anesthesiology, radiologists, pathologists, hospital-based physicians where the payers -- the members or the patients come to them. And so there's not the typical motivation or benefits for a provider to join -- necessarily join a network because historically, yes, increased patient flow, increased volume promotion to members in the community. These group of providers will automatically get access to those patients by virtue of their physician and their -- and the work they do at the hospital. And the law is largely -- remember, the law is largely focused on those providers -- at hospitals where I did everything right, I chose my hospital and then I was surprised by an ER bill or a radiologist bill or an assistant surgeon bill, one that I didn't have a chance to choose. And so I'm not sure the same incentives exist. And I really believe that the providers will take a wait-and-see attitude on whether they'll join networks. And then you have the opposite dynamic of how do the payers look at it from their perspective and whether or not their networks stay big or whether their networks get smaller. And so there's a lot influx around that, and we'll take a wait-and-see attitude since we're just 45 days into the process.

Got it. And can you remind us what percent of revenue is derived from savings from claims subject to the NSA?

That's the number that I think is the -- as I said earlier, it's in that 10% to 12% range, right?

It's still 10% to 12% for this year. Okay. Good. Now turning to guidance for '22, which you just introduced, I think it was last week, but all the weeks are now learned together. The midpoint calls for around 5.5% growth -- revenue growth at the midpoint. So we back out the COVID impact last year, which you mentioned was around $45 million, and what you're expecting this year, which is around $27.5 million at the midpoint. That implies around 4% growth. And this is a bit slower than the growth, again, normalized for COVID and acquisitions last year of 7.5%-ish or so. And what you indicated during the destocking process where your kind of steady-state growth would be. So can you help kind of bridge us to that growth? And in particular -- I noticed in your presentation, 2% to 4% of growth is going to come from growth initiatives. So just put a little bit of a finer point on what that specifically entails on growth initiatives.

Okay. And why don't we tackle this at the longer-term level and then get very granular on '22? I think at the longer-term level, we've been pretty consistent about mid-single digits-type growth. And if you think about the composition of our 3 service lines, it helps maybe to just think about the trends on those. So the network businesses, the kind of is our steady foundation, if you will, for our capabilities. But that's a revenue stream that is not going to grow at the corporate growth rate. On one hand, we've got some nice growth activities in some of the Medicare Advantage and Medicaid builds. But we also see a little bit of substitution inside that when clients have a choice to use the network as a savings tool or Data iSight, for instance, as a savings tool. So that will be relatively steady over time. We see the analytics business growing faster than the corporate growth rate. And we see payment integrity in near term from a small base, growing higher than the corporate. When you put all that together, it kind of gets into mid-single digits. And so getting into 2022, we really put out underlying net growth in our quarter of about 6% to 9%. And that is before we get to the NSA. So the NSA took 2% off. So I think one of the components that you need to think about is the NSA, the headwind there. So all things being equal, we thought about total revenue growth of 4% to 7%. And you're right, there was about 1.5% from COVID in there. So if you take the midpoint, 5.5%, back out the COVID, you're right, it is 4%. But I would also say that if we didn't have NSA, we'd be around 6%, which is clearly inside our trend over time. It was a little bit softer than 2021, but 2021 had a pretty nice rebound in activity.

Got it. Okay. And that growth initiatives, which you dimensionalized at around 2% to 4%, is that inorganic? Or is that M&A?

No. So it is all organic. And so what we tried to do this year is to give you a better sense of kind of this -- I would call the traditional core services that, that 4% to 6%, call it the -- a little bit more of the same-store concept, which is our existing clients with those traditional products, and that feels right. The growth initiatives are some of the areas that we've added lately. And that would be the acquired businesses, Discovery and HST, which are -- it's all organic, but it is adding to our growth rate. So we're just trying to be -- we're not resegmenting. We're just trying to be a little transparent in terms of the composition. But importantly, on those growth initiatives, we're seeing that growth. It's just new contracts in data mining and the payment integrity area, et cetera. We're seeing that growth, which is adding to our overall growth rate. But the -- you'll see it in the margin discussion, we had to put some investment against that. So some of those businesses, you've got to stand up the contract with the teams and data mining, for instance, that's clinical capabilities. And subrogation and revenue integrity, you've got to stand up the teams before the revenues start flowing. So we see -- what we're trying to do is match a little bit of what we're seeing in terms of the growth opportunity with the investment.

Got it. Okay. That's very helpful. And then on that COVID impact, that was a little higher than we had anticipated, just given most folks on the provider and payer side are seeing really limited COVID impact for 2022. I know there's a lag of 1 to 2 months. So I assume that most of that COVID impact is going to be due to Omicron, which will affect largely the first quarter of '22. But can you just give us a little bit of a sense of where you're seeing the most COVID impact in terms of segment? And help us think through the cadence of that COVID impact for the rest of '22.

Okay. Daniel, we're a little bit different than maybe the -- in the provider world or in the facilities world because we have a national footprint. And our products are skewed a little bit towards -- we've got business travel workers comp, things of that nature. So we are different, I'll just say that. But let's talk about how we developed the COVID impact. And our starting point is the Q4 of 2021, where it was roughly $5 million to $7 million of COVID impact. And by the way, that was a good environment. We -- if you think about the lag, that was really going into late summer into fall in the U.S. And obviously, COVID was receding pretty rapidly, and it was kind of getting back to normal. So that was a pretty good environment, yet we still had $5 million to $7 million. And where we had that impact was in things like a travel network, which is the complementary network. And Daniel goes to Los Angeles and gets a cold or something like that, visits an out-of-network provider. Workers' comp has been suppressed as well as just, I would call it, the underutilization of the typical stuff that's elective surgeries, but also just screening things there. So our volumes, we're still -- in the fourth quarter, we're still below -- when you strip out all the COVID claims, we're still below where they were in 2019. So we do have COVID impact on our business. It's not a giant number, though, relative to our overall revenues. So as we go into '22, we think there's going to be a couple of quarters that are going to look -- we kind of think it's going to look like fourth quarter of '21. That's our estimate. That's our crystal ball right now. Now in the first half, it might be a little bit heavier than that, just because we know Omicron is going to kind of move through given the claims lag in the end of first quarter and the beginning of second quarter. So I really think about this as a tale of 2 halves of the year. We've given you an estimate of the entire year, but we feel much more confident about the first half. The second half is going to be -- is anybody's guess, but is COVID going to be persistent? Are we going to have new waves or is it going to lift a little bit? And at which point, I think we'll have a much better sense of whether or not that's going to be something that's going to persist all the way through the end of the year. But for the first 2 quarters, we definitely think there's going to be some effect in our business.

Got it. Okay. And then just turning quickly to the margin guidance. You mentioned most of the degradation and there's around 200 basis points of degradation for '22. Most of that degradation is going to be due to kind of setting up ahead of some of these growth initiatives, which will come to fruition throughout the year. So can you just help us think through the degradation this year? What is structural and recurring? What is onetime? And in 2023 and beyond, I know you don't give long-term guidance, but how should we think about margins going forward?

Sure. Well, I would say that even in 2021, we -- Dave Redman was talking about margins coming down slightly from mix as well as just the ramp of the business as we -- as COVID started to recede, at least, in terms of relative to 2020. And essentially, we came in pretty hot in the second half of the year with respect to our margins because the business ramped and we were playing a little bit of catch-up. So as we come into the year, there is an aspect of a little bit of catch-up with last year. But to break down the components here, there is structural inflation, if you will, largely compensation related. And it's because we don't have a big cost structure and it's mostly people. So we see probably 2/3 of that 75 basis points coming on the cost side. And that's important to us. We want to invest in our people and make sure that we've got the team on the playing field. The -- we did make -- deliberately made some investments in the platform, which also are going to impact the margins. And where I would say very, very specifically, standing up the NSA, which was the largest software upgrade we've ever done, required a lot of people and required a lot of work with our clients in their environments. But also continuing to stay best-in-class in cybersecurity and making sure that our platform is purpose-built for the next couple of years. So that will be a little bit of extra spend, but I don't think that will persist. So we don't see that sticking around forever. And then last but not least, we mentioned this. To see some of the growth in our payment integrity and our value-based health area, we're investing in people. And that's the other 75 basis points. And so that is -- we see real ROI on that, but there is a little bit of a front-loading of those expenses. Okay. So just to kind of summarize, we do see our margins coming down. My observations coming in from the outside in is I asked the question how many companies have these type of margins? And the answer is, you can do the screens, it's very little. So we are still very much best-in-class. We just don't happen to be world record best-in-class. We're a little bit lighter than what we have done in the past. As it pertains to going forward, we will maintain best-in-class margins. We don't see this drifting down materially. And you're not seeing a new tone from the new CFO with respect to cost consciousness or commitment to generating free cash flow, et cetera. So as we look forward, what will bring our margins down in basis points, not in percentage points, is just the mix of the business versus any real structural long-term headwinds.

Got it. And that's a mix more towards payment integrity, which is nearly lower margin. Okay.

Yes. Great margins, but not the same as 75% margins.

Yes. I mean, frankly, you could take your margins down 20 points and still be best-in-class in my coverage.

But no, and listen, we -- the balancing act here and important for investors to understand is we -- if we see interesting opportunities, we're going to invest in them. But the goal is to grow EBITDA over time. So you can't have lots of revenue growth and no EBITDA growth. You can't have all EBITDA growth and no revenue growth. And so we're playing that balancing act. And we think we can succeed with best-in-class margins, but still, over time, grow the EBITDA of the business.

Got it. All right. Great. That was very helpful. And maybe just a bigger picture question here. At times, folks will compare you, to me, to kind of like a PBM. Meaning you're making money on a spread between kind of a gross price and in a net price. And that has the potential to lead to inflationary pressure on the gross price, right? So is there a sense from your clients that they want to shift away from paying you on a spread or a savings and move more towards a PEPM type of model? Or are your clients happy with the percent of savings type of model?

I can take that. The -- have any clients changed their preferred payment model for the bulk of our business? The answer is no. And when you think about it and you look at across our multiple market segments, clearly, as you go downstream and market, you'll see more used to your point, Daniel, of PEPM. As an example, with our reference-based pricing program and our reference-based pricing business, we -- through our value-driven programs like HST, we use mostly PEPM pricing as the basis for our reimbursement because that's what the market is looking for and that's what the market historically has asked for around that. Same with our primary provider network. In many cases, outside our travel network, it's more -- it's been historically based on PEPM pricing. With NSA, the solutions -- we continue to price based on percentage of savings in most cases. But we have clients who have asked us to look at just the only negotiation services or only arbitration services. And so when you look at our end-to-end solution, if we have a customer that's zeroing in on working with us for post-pain negotiation when a provider is unhappy with the reimbursement they have received from the payer or they want to take it to negotiate -- to arbitration if we're unsuccessful in reaching an agreement. There we changed and we made per pricing available based on a per claim basis. Not on the PEPM, but on a per claim basis. So we adjusted as well as we'll continue to adjust as the market asks us to. But from that perspective, in that case, it didn't make sense to do a percentage of savings model. That model did not make sense for those 2 services. So we switched to a per claim basis pricing model. And that's been well received by the market for those clients that are zeroing in on those 2 services.

Got it. Okay. Very helpful. Turning to the networks business a little more. Jim, you mentioned that you're seeing strength in the government markets, Medicare Advantage, Medicaid. And that's offsetting somewhat the switch of some clients from networks to analytics. Can you just comment a little bit on where specifically the strength is coming from in the Networks business and how we should think about that growth, if it's going to grow -- the network's growth at all?

Daniel, I'll take that question. And Jim, you can add additional comments. We're clearly -- to your point, Daniel, we're clearly seeing an increase -- and an increased interest in Medicare Advantage, right? So to no one's surprise, there's 10,000 baby boomers turning 65 every day. It's one of the highest, if not the highest priority for the larger health plan is to expand their footprint in Medicare Advantage and increase their enrollment. So from our perspective, we've stepped in and we're able to leverage our 1.2 million provider network with a footprint in all 50 states and with a network development team of over 100 network development professionals and use them to help the payers expand their coverage area and the time lines they need and want. Medicare Advantage, Medicare has a very long time line in terms of being able to get certified for additional coverage, and it comes back and it comes quick. And the payers oftentimes have looked to us because we have a provider network and contracts in place in 50 states. And because we have a team of professionals that have maintained relationships with these providers. They've turned to us and have asked us to help them build out their Medicare Advantage networks and expand their network coverage footprint. And put them in a position to become certified and take on additional enrollment. We started that just a few years ago. We had great success in 2021, and that has led to more work for us in 2022 on the heels of those successful build-outs in 2021. We now have as many as 100 counties that we're building out in 9 states for our customers. So we expect it to continue to grow, and we'll step in and provide that gap for payers as they continue to assemble their plans and focus their resources for a solution for them to help accelerate their network footprint.

Right. And Daniel, maybe to take Dale's points, which is that's where we're seeing some sales growth opportunity. Just to go back to the first point, which is, within our client environments, they see a claim and there's kind of multiple services that could apply to it within MultiPlan. And so it almost goes through a tiering system, which is it starts with the network first and identify savings. And then it says, well, wait a second, can we do better? And that might route it to financial negotiation, clinical negotiation, data eyesight, et cetera. So the claim goes on a bit of a journey through multiple tiers of MultiPlan services. And so what you're seeing in...

And in particular...

Yes, go ahead, Dale.

No, in particular -- Daniel, in particular with Medicare Advantage, to Jim's point, you see that hierarchical order of services where a claim goes on a journey. But payment integrity can play a crucial role on government programs, right? So you can -- our Payment Integrity suite has applicability to Medicare Advantage, Medicaid and other government programs. So we're ideally positioned to work with those payers as we do other things for them, like network builds, to bring a suite of payment integrity and revenue integrity initiatives. Our latest acquisition of Discovery Health Care -- Discovery Health Partners brought a revenue integrity program where we work with health plans to recover premium from CMS on premium that was incorrectly paid to the health plan. And so in addition to network builds and analytics, we have payment integrity and we have revenue integrity services that we can bring to the Medicare Advantage market.

Yes. And that's a good segue to the Payment Integrity business, which you called out as probably going to grow faster than enterprise growth in the near term. The fourth quarter results in Payment Integrity were a little bit light. It seems like there was some push out in claims negotiation in Discovery. If I look at what you were expecting at the beginning of the year versus kind of the full year, it seems like it's a little light. But can you just kind of go over some of the dynamics within immune integrity specifically? And what's going to get that business growing a little a little faster in 2022 and beyond?

Yes. I think we're -- in 2021, I think it was 2 factors, and maybe we hit Discovery first. We did -- I think it is fair to say that we expected more conversion of the pipeline in the year. And I think that was slower than we anticipated given the integration. Now we're seeing more of that into 2022. So there was a little bit of a lag in terms of what we expected Discovery to deliver in terms of contracted revenue. But I don't think that's a long-term issue because we're seeing the pipeline build pretty nicely. And then in our more traditional clinical negotiation business, that's a little bit more of an ebb and flow business in the sense that there's kind of a programmatic push on certain areas to negotiate with providers. And then that ebbs and flows given essentially provider behavior. So 2021 is a little bit of a slow year. But when we express our thinking that we've got long-term growth prospects, it's not just our pipeline is building. We've actually got contracted revenue that is coming down the pipe. A little bit of a lag here because you have to sign it, implement it, and then it starts -- and again, this is back to our point about the 2 pieces of the puzzle, the contracted revenue growing and then the build that happens ahead of it. So we do feel comfortable with the long-term growth prospects. And as Dale mentioned, this is getting into new parts -- new markets for us, either the par elements of our clients' environments, but also Medicare Advantage and Medicaid. So there's lots of opportunity in there, and we're starting from a small base.

Got it. And I know we're just about out of time here, but I'd be remiss if I didn't ask about your capital deployment strategy. You laid out a new slide during the earnings where M&A is now your second on a list of deployment priorities. How are you thinking about balancing M&A with your current leverage? And you previously noted in your Extend strategy that you're looking at new markets. What do you have your sights on in those new markets? And where are you most excited about near term?

Okay. So maybe to just remind the audience that we really do -- are committed to investing in our business. And the good news is we've got the cash flow, the margins to accomplish that, as I said first. So as we start generating cash flow, we're going to balance this over time, which is M&A. And I would characterize it largely as the tuck-in type, all the way up to the Discovery or HST type of size, which might not use all our cash flow each year. And we know that we have to bring leverage down as a public company in this environment. We've always historically felt comfortable operating at a higher level, but that doesn't make it attractive to investors. So we're -- we understand that we're going to need to migrate the leverage down. But again, it's a balancing act between -- if we see opportunity, the next HST comes along, we're going to be pretty excited about pursuing that. So markets -- I'll just give you a couple of quick things on markets, lots of areas where we could invest. But let's take -- I remind everybody that staying close to home could be pretty fertile. And that is our existing clients bringing us into their par environment, payment integrity and other areas, and we feel good about it, but we still think we can add some capabilities there in terms of our product set as well as the government space. Medicare Advantage, huge market, and our clients play in that world. So we've got a lot of clover with our existing clients, but we need product capabilities in new areas to augment that. If we get outside of that really new markets or really new capabilities, that's probably going to be more costly and it's going to be more episodic. And so I would say the bar is just going to be a lot higher on that versus the next HST or Discovery.

All right. Really appreciate your time today, guys. I know you have to run to a meeting. So I'll let you go. Thank you, everyone, for joining us. And have a great rest of your day. Take care.

Thank you, Daniel.