Growing claim denials: Rising rates of claim denials take a bite out of providers’ revenue and divert RCM staff from more important work as they must chase payments and file appeals. An AHA study revealed that commercial claims denials increased by 20% between 2022 and 2023. This number is even higher for Medicare Advantage denials, which rose by nearly 56%. Providers have to bear administrative costs for delays and denials. For commercial payers these costs average around $64 per claim and $48 for Medicare Advantage. According to a trend alert by Premier, providers fighting denials incur an average cost of $43.84 per claim – meaning that providers spend nearly $20 billion a year just to adjudicate with payers.

Three strategies to address operating challenges
Health system leaders generally use three major levers to help overcome financial pressures:


Leveraging AI with human-in-the-loop. While everyone is talking about artificial intelligence (AI) and generative AI, many health system leaders admit they don’t know how or where to start. For faster time-to-value, progressive health systems are focusing on applying AI tools to the administrative side of healthcare, specifically to RCM processes. This is not only because healthcare organizations are under pressure to improve financial performance, but also due to a historic shortage of qualified RCM professionals (coders, billers, and authorization specialists).

Leading health systems are starting their AI journeys with highly focused, low-risk use cases that avoid the perils of the unknown while improving efficiency and outcomes through a combination of technology and people – with a human-in-the-loop approach. Here are a few examples of how AI is optimizing RCM:

• Identify documentation requirements for prior authorization, eliminating the chance that they will be overlooked by busy staff. This helps reduce delays in care and adverse events while also helping to reduce PA-related denials.
• Conduct root-cause investigations of denials where AI analyzes payer adjustment codes from remittance forms and creates regular denial reports for the provider to improve documentation.
• Utilize computer-assisted coding with natural language processing (NLP) to choose the appropriate medical diagnosis, procedure, and phrases from the patient chart. The technology then matches them to the appropriate codes, increasing coder productivity by 25%-45% and decreasing Discharged Not Finally Coded (DNFC) by between one and three days.

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