CAPE.

Crescent Adjudication and Pricing Engine.

CAPE resolves a healthcare claim into a final remittance through a deterministic pipeline. This page describes the architecture, the outputs, and the variance work that runs on top.

the equation

A claim is a state vector.

CAPE models a healthcare claim as an immutable state vector that accumulates structure as it passes through four operators. Each operator is a deterministic function over the controlling rule corpus. The composition is referentially transparent: the same claim, against the same corpus version, always produces the same final remittance.

The state vector is the tuple:

S  =  ⟨ C⃗, P⃗, E⃗, F⃗, R⃗ ⟩S \;=\; \langle\, \vec{C},\ \vec{P},\ \vec{E},\ \vec{F},\ \vec{R}\,\rangle
Component
Definition
C⃗\vec{C}
Clinical data vector. CPT/HCPCS codes, modifiers, units, provider NPI, place of service, diagnosis pointers, line ordering.
P⃗\vec{P}
Base price vector. Per-line reference price from the governing fee schedule. RVU-derived for procedural codes, ASP for drugs, ASC payment indicators for facility, contract tier for commercial payers.
E⃗\vec{E}
Interaction adjustment vector. Per-line adjustments from cross-line clinical editing. MPPR ranking, bilateral compounding, endoscopy families, NCCI bundling, MUE limits.
F⃗\vec{F}
Financial waterfall ledger. Per-line consumption of deductible, coinsurance, sequestration, and payer remittance.
R⃗\vec{R}
Regulatory citation chain. Per-decision authority trace. Every adjustment populates this vector with the controlling CFR section, MPFS rule, NCCI policy, or contract clause.

the pipeline

Sinit  →  A    Svalid  →  B    Sbase  →  Γ    Sallowed  →  Ω    SfinalS_{\text{init}} \;\xrightarrow{\;A\;}\; S_{\text{valid}} \;\xrightarrow{\;B\;}\; S_{\text{base}} \;\xrightarrow{\;\Gamma\;}\; S_{\text{allowed}} \;\xrightarrow{\;\Omega\;}\; S_{\text{final}}

operator transformations

A(Sinit)=Svalid  ⟹  C⃗=Parse(837 segments)B(Svalid)=Sbase  ⟹  P⃗=f(C⃗, Registry)Γ(Sbase)=Sallowed  ⟹  E⃗=g(P⃗, C⃗interactions)Ω(Sallowed)=Sfinal  ⟹  F⃗, R⃗=h(E⃗, Accumulators)\begin{array}{lcl} A(S_{\text{init}}) = S_{\text{valid}} & \;\Longrightarrow\; & \vec{C} = \text{Parse}(\text{837 segments}) \\[6pt] B(S_{\text{valid}}) = S_{\text{base}} & \;\Longrightarrow\; & \vec{P} = f(\vec{C},\, \text{Registry}) \\[6pt] \Gamma(S_{\text{base}}) = S_{\text{allowed}} & \;\Longrightarrow\; & \vec{E} = g(\vec{P},\, \vec{C}_{\text{interactions}}) \\[6pt] \Omega(S_{\text{allowed}}) = S_{\text{final}} & \;\Longrightarrow\; & \vec{F},\, \vec{R} = h(\vec{E},\, \text{Accumulators}) \end{array}

The composition is the engine:

Rc  =  Ω∘Γ∘B∘A (Sinit)R_c \;=\; \Omega \circ \Gamma \circ B \circ A \,(S_{\text{init}})

The final state SfinalS_{\text{final}} contains the per-line payer remittance, the per-line patient responsibility, and the citation chain back to the controlling authority for every adjustment applied. No decision in the engine is unattributed.

the pipeline

Operators map to phases.

The four operators are implemented as an eight-phase pipeline. Phases 0–4 resolve the claim state SvalidS_{\text{valid}}. Phase 5 produces the base price vector P⃗\vec{P}. Phase 6 applies interaction adjustments to produce E⃗\vec{E}. Phase 7 runs the financial waterfall to produce F⃗\vec{F} and the final remittance RcR_c.

CAPE eight-phase pipeline with operator groupingsABΓΩPHASE 0intakePHASE 1providerPHASE 2eligibilityPHASE 3coveragePHASE 4editsPHASE 5pricingPHASE 6interactionsPHASE 7financialRc+ trace

engine outputs

A claim is not a number. It is a decision surface.

Every adjudicated claim emits a structured output object — a replayable decision surface with full citation provenance back to the controlling authority for every adjustment.

Field
Content
final remittance
Per-line and claim-level totals across the waterfall. Payer payment, patient responsibility, deductible consumption, sequestration, coinsurance.
line decision surface
Per-line payable-or-denied determination with mechanism attribution. Each denial carries the rule that produced it.
rule-hit trace
Every rule consulted in the adjudication. Includes rules that were evaluated and did not fire, marked accordingly.
citation chain
Per-decision authority trace. Each adjustment maps to its controlling CFR section, MPFS rule, NCCI policy entry, MUE table entry, LCD article, or contract clause.
source release lineage
Which version of which authority resolved each decision. Quarterly rule updates produce versioned source releases; the lineage records which release was active at adjudication time.
replay key
Persisted identifier permitting full trace retrieval and re-execution against any subsequent corpus version.

Every adjustment is reproducible from the trace. Traces persist across rule updates. Outputs are auditable by any third party with access to the same authoritative sources.

execution trace

One line, end to end.

The following trace shows the four operator transitions applied to a single line of a real claim: line 04 of a Connecticut orthopedic outpatient claim, 20610-RT-XS, joint injection with explicit-separate-structure modifier. Each transition shows the arithmetic, the controlling authority, and the resulting state change.

claim parameters

payerMedicare Part B
provider postureNON-PAR · assignment accepted
deductible$257.00 remaining (consumed earlier in claim)
line under trace04 · 20610-RT-XS · joint injection
prior line03 · 29881-RT · knee arthroscopy

phase 4 · NCCI procedure-to-procedure conflict resolution

Operator AA — clinical parsing.

29881 → 20610            active column-1 / column-2 conflict
CCMI                    = 1  (modifier bypass permitted)
column-2 line modifier  = XS
resolution              = EXPLICIT_SEPARATE_STRUCTURE_BYPASS
line status             = payable

Authority: CMS NCCI Policy Manual, Chapter I, §E. NCCI PTP file 2025Q4.

Sinit→SvalidS_{\text{init}} \rightarrow S_{\text{valid}}: clinical posture established, bundling conflict resolved, line marked payable.

phase 5 · MPFS computation with non-participating adjustment

Operator BB — reference pricing.

RVU components (CY 2026, code 20610):
  work RVU       0.79  × work GPCI       1.022   = 0.807
  PE RVU         0.44  × PE GPCI         1.091   = 0.480
  MP RVU         0.13  × MP GPCI         1.207   = 0.157
  total adjusted RVUs                            = 1.444

conversion factor (CY 2026)                     = 32.3465

base PAR price                  1.444 × 32.3465 = $46.72
NON-PAR assigned adjustment       46.72 × 0.95  = $44.38

Authority: 42 CFR §414.20 — fee schedule formula. 42 CFR §414.20(b) — 95% non-participating reduction.

Svalid→SbaseS_{\text{valid}} \rightarrow S_{\text{base}}: base price computed from RVU components, locality adjustment, and conversion factor.

phase 6 · MPPR ranking and reduction

Operator Γ\Gamma — claim interaction.

session ranking (indicator-2 codes on claim):
  line 02 · 27447-LT · total knee arthroplasty   → rank 1 (highest)
  line 04 · 20610-RT-XS · joint injection        → rank 2

MPPR factor for rank 2                          = 0.50

priced                          $44.38 × 0.50   = $22.19

Authority: CMS Pub. 100-04, Ch. 12, §40.6 — multiple surgery rules. MPFS payment-policy indicators 2026Q1.

Sbase→SallowedS_{\text{base}} \rightarrow S_{\text{allowed}}: cross-line interactions applied. Allowed amount established.

phase 7 · financial split with sequestration overlay

Operator Ω\Omega — payment waterfall.

allowed amount                                  = $22.19
deductible state                                = exhausted on lines 01–03

coinsurance split (80/20):
  patient responsibility       22.19 × 0.20    =  $4.44
  Medicare gross               22.19 × 0.80    = $17.75

sequestration (2% of Medicare portion):
  reduction                    17.75 × 0.02    =  $0.35
  payer payment                17.75 − 0.35    = $17.40

Authority: 42 CFR §410.152 — Part B amounts of payment, 20% coinsurance liability. Budget Control Act of 2011 — mandatory sequestration.

Sallowed→SfinalS_{\text{allowed}} \rightarrow S_{\text{final}}: financial waterfall resolves remittance. Citation chain complete.

final line output · 20610-RT-XS

allowed$22.19
patient responsibility$4.44
payer payment$17.40

variance engine

The trace, run across a file.

A single trace is defensible. What makes the engine commercially useful is what happens when the trace runs across the entire claims file. Variance is the structured difference between what CAPE computed as correct and what the payer actually paid — surfaced not as scattered per-claim deltas, but as named patterns with attributed mechanism, controlling authority, and recovery posture.

Every variance finding answers four questions: what is happening, how much it costs, why it is happening, and what to do about it.

Five categories of variance.

01

underpayment patterns.

Payer remittance below CAPE-computed allowed across a stable cluster of claim characteristics — CPT family, modifier combination, provider, date range. Diagnostic of fee schedule version mismatch, locality misapplication, contract terms not propagated to the payer's claim system, or systematic application of the wrong reduction factor.

02

contract compliance failures.

Systematic divergence between the payer's behavior and the contract terms across an entire procedure family or relationship period. Diagnostic of unilateral payer policy changes, contract addendum not implemented in the payer's claim system, or stale fee schedule attached to the payer-product mapping.

03

denial patterns.

Claims denied that should pay. Diagnostic of bundling logic ignoring modifier bypass, medical-necessity denials against LCD coverage, prior-authorization denials on services that do not require prior authorization, timely-filing denials that miscalculate the window.

04

coding leakage.

Provider undercoding relative to documented work. Diagnostic of E/M codes systematically below documentation support, missed add-on codes for services routinely provided, modifiers not appended that would unlock separate payment.

05

overpayment exposure.

Payer paid more than contract or statute requires, or documentation does not support billing. Diagnostic of modifier overuse, medical-necessity gaps, duplicate billing patterns, services billed at higher levels than supported. Generates clawback liability bounded by the statutory recoupment window.

Representative findings — ortho/spine engagement.

finding 01 · underpayment pattern

MPPR factor misapplied to indicator-1 codes.

Payer's claim system applies the 50% MPPR reduction to all multi-procedure scenarios. The MPFS multi-procedure payment indicator schedule restricts the 50% factor to indicator-2 and indicator-3 codes; indicator-1 codes receive no reduction. The payer is reducing payment on indicator-1 codes that should pay at full allowed amount.

Authority: 42 CFR §414.22(b)(5). CMS Pub. 100-04, Ch. 12, §40.7. MPFS payment-policy indicators 2025Q4.

magnitude$487,000
claims affected2,340
window18 months
recovery postureResubmit with citation
confidenceHigh

finding 02 · denial pattern

Payer bundling 29881 with 20610-XS regardless of modifier.

Payer's automated bundling logic denies the column-2 line on the 29881 → 20610 NCCI conflict even when modifier XS is present on the column-2 line. The XS modifier is the explicit-separate-structure bypass; the conflict should resolve to the bypass path, not denial. The payer's edit engine is not recognizing XS as a valid bypass for this CCMI=1 pair.

Authority: CMS NCCI Policy Manual, Ch. I, §E. NCCI PTP file 2025Q4. Payer reimbursement policy CR-2024-038.

magnitude$214,000
claims affected1,180
window24 months
recovery postureAppeal with citation
confidenceModerate

finding 03 · overpayment exposure

Modifier 25 overuse on E/M services with minor procedures.

Practice is appending modifier 25 to office-visit codes on the same day as minor procedures at a rate substantially above the specialty-regional benchmark. A documentation sample of these claims shows E/M documentation that does not support the separate-and-significant standard required by modifier 25. The pattern is an active OIG audit target as of the 2024 Work Plan.

Authority: CMS Pub. 100-04, Ch. 12, §30.6.6. NCCI modifier guidance. OIG Work Plan 2024 — modifier 25 audit target.

magnitude−$340,000
claims affected892
windowRAC 36 months
recovery postureEscrow / holdback
confidenceClawback risk

Three findings shown. A representative ortho/spine engagement surfaces 40 to 80 distinct named patterns across the five categories, each individually traced and cited. The diligence report consolidates these into the headline variance number.

representative aggregate

$4.21M

net recoverable

n = 219,847 claims·ortho/spine platform·24-month window

rule corpus

The unified source registry.

CAPE resolves claims against the unified rule corpus assembled from federal, regional, commercial, and engagement-specific sources. Each source is versioned and maintained against its authoritative publication. The corpus is the engine’s substrate; the engine is the computation over the corpus.

Federal regulatory.

Source
Content
CFR Title 42
87 substantive sections governing Medicare claim adjudication. Subparts of particular relevance: §§ 405, 410, 411, 414, 415, 424.
MPFS final rule
11,247 priced CPT/HCPCS codes for CY 2026. Quarterly RVU updates, conversion factor, locality adjustments, GPCI tables across 89 payment localities.
NCCI v32.0
~2.7M procedure-to-procedure edits with modifier-bypass indicators. CCMI matrix, mutually exclusive pairs, column-1/column-2 relationships.
MUE tables
Medically Unlikely Edits by CPT/HCPCS code, with adjudication-indicator overrides for date-of-service, claim line, and code units.

Regional.

Source
Content
LCDs by MAC
Local Coverage Determinations across the 12 MAC jurisdictions, current as of 2026Q2. ~2,400 active LCDs across the corpus.
MAC articles
Companion billing and coding articles published by each MAC. Operational guidance not present in the LCD itself.

Commercial.

Source
Content
Payer policies
~3,800 commercial reimbursement policies tracked across UHC, Anthem, Cigna, Aetna, Humana, BCBS plans, and specialty payers. Versioned by quarterly publication.
Payer fee schedules
Public and obtained payer fee schedules where available. Used as price-discovery substrate when contract terms unavailable.

Engagement-specific.

Source
Content
Practice contracts
Per-engagement contract registry. Payer-specific fee schedules, modifier overrides, carve-outs, percent-of-Medicare adjustments. Loaded at engagement intake.
Audit windows
RAC statutory recoupment windows by claim type (3 or 5 years), MAC retro-review windows, commercial payer audit clauses extracted from practice contracts.

Sources are loaded, normalized, and versioned. The engine consults the source registry at adjudication time and persists the source release lineage in the citation chain. A claim adjudicated against the Q2 2026 corpus carries the Q2 2026 release lineage; the same claim adjudicated against a later corpus would produce a different result and a different lineage.

related material