Cloud vs On-Premise Claims Adjudication: Which Works Best for Insurers?

For most insurers in 2025, the answer is cloud-first claims adjudication.

What cloud typically delivers:

• Faster time-to-value (weeks to go-live)
• Elastic scale during peak periods (e.g., AEP, month-end)
• Lower 3–5-year total cost of ownership (fewer hidden infra/maintenance costs)
• No compromise on compliance or security (HIPAA, HITRUST/SOC 2 alignment)

On-premise still has a place for specific needs like strict data residency or bespoke pricing engines. The goal of this blog post is to help you decide quickly and confidently, between cloud and on-premise, focusing on real operational impact - cost, speed, scale, and compliance.

Especially if you operate in Medicare Advantage (MA) with CMS timelines to meet. We’ll also show where Mirra Healthcare’s flexible deployment and Medicare Advantage–ready configurations can shorten time-to-value and keep audits clean.

What Claims Adjudication Software Must Deliver

At its core, claims adjudication software is about paying the right claim, at the right amount, at the right time -consistently and compliantly. Practically, that means:

• Intake and EDI: Ingest 837 files cleanly, validate formats, and manage acknowledgments.
• Edits and validations: Apply business and clinical edits (NCCI, LCD/NCD), check eligibility and coverage, and enforce medical necessity rules.
• Pricing and benefits: Reference fee schedules, apply benefit plan logic, and handle accumulators and deductibles.
• Coordination of benefits (COB): Determine primacy, sequence payment responsibilities, and avoid overpayments.
• Payment and remittance: Generate EOB/RA (835), trigger payments, and reconcile exceptions.
• Audit and traceability: Maintain a full audit trail and support internal and external audits (CMS, RADV).
• Reporting and analytics: Track STP (straight-through processing), first-pass yield, denial trends, and time-to-pay. Automation cuts touchpoints and cost. Industry analyses the CAQH Indexpoint to multi‑billion‑dollar savings potential.¹
• Interoperability: Integrate with UM/DM, PBM, provider portals, data warehouses, and SIU/fraud analytics.

Your deployment model matters because it determines how quickly you can update edits and fee schedules, how easily you absorb volume spikes (AEP, plan-year loads), how fast teams can push safe changes, and how confidently you pass audits.

On-Premise Claims Adjudication: Control and Its Costs 

When control is paramount, this approach provides hands-on management of infrastructure, upgrades, and local security. It still makes sense in specific cases:

• Data residency and policy constraints: Highly regulated environments requiring PHI to stay within a defined facility or sovereign boundary.
• Deep customization: Bespoke pricing engines or plan designs tightly coupled to legacy systems that require low-level access.
• Tight change windows: Organizations that schedule change windows and prefer full internal oversight of deployments and patching.

However, the trade-offs are real:

• Capital and hidden costs: Hardware refresh cycles, database licenses, HA/DR setup, monitoring tools, and regression testing on every upgrade.
• Upgrade lag: Slower cadence for new features or regulatory updates can add risk and operational debt.
• Scalability limits: AEP spikes and end-of-month file drops can challenge fixed capacity unless you overprovision year-round.
• Talent dependency: You must retain specialized infrastructure, database, and application talent to keep lights on and maintain performance.

If your business case demands an on-premise claims adjudication, plan for conservative capacity during peak events, a strict patch cadence, and a robust DR strategy with clear RPO/RTO targets. Treat upgrade testing as a first-class operational motion, not a side task.

Cloud-Based Claims Adjudication: Driving Agility and Efficiency

A cloud-based claims adjudication deployment prioritizes elasticity, speed, and maintainability without sacrificing security. Advantages teams feel quickly are as follows:

• Elastic scaling: Auto-scale for AEP surges, plan-year configuration loads, or month-end runs without overprovisioning all year.
• Faster time-to-value: Quicker setup, faster rollout of new edits and fee schedules, and reduced regression testing when vendors offer managed upgrades.
• Resilience by design: High availability and multi-zone/region redundancy, with clear SLAs for uptime and DR.
• Integration velocity: Easier to connect with EDI gateways, provider portals, UM/DM, PBM, and enterprise data platforms.
• Analytics ready: Access to modern data tooling and dashboards that help reduce manual touches and highlight denial root causes.

Security and compliance are table stakes. A credible cloud partner will align with HIPAA, be HITRUST/SOC 2 Type II–aligned, enforce least‑privilege access, encrypt data at rest and in transit, and sign BAAs. Always ask vendors to evidence their posture with current reports and clear operational controls. Mirra Health Care follows payer-grade controls and provides detailed audit trails to support CMS and internal audits. 

For broader perspective on cloud value creation, see McKinsey’s cloud research and Deloitte’s healthcare IT insights, then validate impact in your environment with your KPIs.² 

For better efficiency and cost saving, read our blog pots on Streamline Claims Processing with Modern Claims Adjudication Software

Cloud vs On-Premise: Key Operational Differences

Here’s a scannable table with indicative comparisons to guide your decision.

These figures are indicative industry benchmarks. Please validate specific timelines and performance metrics with your vendor for your environment and product mix.

Validate with KPIs

Track STP, first-pass yield, time-to-pay, claim touch rate, and denial overturn rate. Also watch upgrade cadence for regulatory updates. For context, see the CAQH Index, and for MA policy cadence, refer toCMS and KFF Medicare.³

For AEP claims success read our blog post on Accuracy, Denial Prevention, and Trust

How to Decide: A Focused 10‑Point Checklist

Use this shortlist to pressure-test your decision:

1. Compliance pace: How frequently do CMS/plan changes hit you and can your model keep up safely?

2. Volume volatility: Do AEP and month-end runs strain operations today?

3. Product complexity: MA, MAPD, SNPs, group retiree - do plan designs change often?

4. Integration landscape: Can you connect UM/DM, PBM, portals, data warehouse, and SIU quickly?

5. Data strategy: Do you need near real-time operations dashboards, denial analytics, and cost-of-care insights?

6. Team model: Do you have in-house infrastructure/database/application operations, or will managed services help?

7. Budget model: Capex vs Opex what aligns with your CFO now?

8. Security/DR expectations: What RPO/RTO do you need, and who owns it?

9. Change velocity: How often do you update fee schedules, edits, and benefits?

10. Vendor posture: Upgrade frequency, audit evidence (SOC 2/HITRUST), and customer references.

If most answers point to speed, frequent change, and variable volumes, the decision leans strongly toward cloud.

If-This-Then-That: Quick Scenarios

• Launching or expanding Medicare Advantage this year → Choose cloud. Faster CMS readiness and AEP scale.
• Mid-size with a data center → Start hybrid. Move rules/reporting first; then core adjudication.
• Large with bespoke pricing/residency → Private cloud or staged migration. Pilot one product; measure STP, first-pass yield, time-to-pay.

Decide with metrics, not assumptions.

Mirra: Accelerating Claims Adjudication for Insurers

Mirra Health Care offers flexible deployment - cloud-native, on-premise, or hybrid backed by payer-grade security, rapid configuration, and seamless EDI integrations. The goal is simple: higher automation, fewer touches, and cleaner audits across your claims adjudication operations.

What this looks like in your environment:

• Speed to value: Prebuilt Medicare Advantage rules and configurations to accelerate plan-year readiness and CMS-aligned updates.
• Operational agility: Faster deployment of edits, fee schedules, and benefits changes without protracted change windows.
• Performance and scale: Elastic capacity for AEP spikes; high availability and disaster recovery with clear RPO/RTO definitions.
• Compliance and security: HIPAA alignment, HITRUST/SOC 2 Type II alignment, encryption in transit and at rest, robust audit trails, and BAAs.
• Interoperability: Smooth connections for EDI (837/835/270/271), provider portals, UM/DM, PBM, and data platforms.
• Managed support options: Rules-as-a-service, configuration assistance, and migration accelerators to reduce internal lift.

Because Mirra is purpose-built for payer workflows and Medicare Advantage timelines, you can focus on business outcomes while keeping audits straightforward.

Explore Mirra’s Medicare Advantage in a Box to see how claims adjudication, configuration, and compliance come together for faster plan-year readiness.

Conclusion

Claims adjudication demands speed, accuracy, and compliance. A cloud-first model gives most insurers a practical edge - quicker setup, elastic scaling, and easier updates. While on-premise still fits specific regulatory or legacy needs - anchor your decision in measurable outcomes. To see how Mirra’s claims adjudication software performs with your products and volumes, pilot one product line and track KPIs over 60–90 days. Mirra supports cloud, on-premise, and hybrid deployments to align with your IT strategy.

To validate impact in your environment, pilot Mirra’s claims adjudication software on one product line for 60–90 days and measure STP, first-pass yield, time-to-pay, and claim touch rate. Connect now or talk to our experts to scope the pilot.

For more perspectives and case-led learnings on payer operations and claims adjudication, visit Mirra’s knowledge hub.

Reference

• CAQH Index Report
• McKinsey Cloud Insights, Deloitte Healthcare IT Insights
• CMS gov, KFF Medicare & Research Data