AI in the Revenue Cycle—A Use Case for Denial Prevention

Artificial Intelligence (AI), once considered healthcare’s “next big thing,” has proven that it is here to stay. While AI’s application in clinical care and pharmaceuticals has received the most buzz, the technology’s potential impact on the $43 billion spent each year on healthcare’s revenue cycle could be equally transformative.  

According to a November 2022 report from Crowe LLP, a global consulting firm, average denial rates grew from 10.2% in 2021 to 11% in 2022. Other studies show that the average cost to rework a claim is $25 and typically takes about 71 minutes. It also costs about $118 per denied claim to appeal. However, the value of the unpaid claim and the time it takes to rework it are only part of the overall impact on a health system’s bottom line.

Many provider organizations invest too heavily in reactive solutions—point technologies, staffing surges, and complex appeal processes. These tools may help “manage” denials, but true cost savings lie in prevention. Tools with AI capabilities address many of the time-consuming, resource-intensive, and costly processes associated with claims editing and denial management. But the true value of this technology is its ability to analyze claims for errors before routing them to the payer.

Many systems offer packaged or custom edits to claims before submission, but these edits are built retrospectively, requiring costly analysis to determine the root cause of the denials, and ongoing maintenance as payers’ adjudication rules shift in response to external forces. Telehealth claims adjudication, for example, changed rapidly during the early days of the COVID-19 pandemic.

The ideal system would analyze claims from multiple providers, going to multiple payers, and spot trends that will likely lead to denials, including higher dollar, lower volume claims. Applying AI to the constantly changing stream of data removes manual writing and maintenance of edits and allows health systems to react to changes faster – before the claims are submitted and a new batch of denials must be analyzed.

The Potential of Predictive Editing

Providers want more effective ways to identify and prevent denied claims so they can reduce administrative rework and lost revenue associated with them. Leveraging AI for predictive editing within the revenue cycle management process can yield significant savings by cutting down on administrative expenses related to claim revisions and denials. This enhances the performance of the revenue cycle and enables healthcare providers to prioritize patient care over administrative duties.

At Availity^®, our revenue cycle management solution, Essentials Pro™, utilizes an AI-driven predictive editing tool. This feature empowers providers to detect denials early, thus saving valuable time and financial resources. Powered by an AI algorithm, predictive editing focuses on identifying and correcting the subset of denials most likely to be avoidable. Its predictive capabilities stem from analyzing claims data across various provider organizations and individual health plan policies. The solution will return the predicted Claim Adjustment Reason and Remark (CARC & RARC) if the likelihood of denials is very high; the model only returns edit errors when there is 98 percent confidence that the claim will be denied.

As a result, providers can:

• Reduce the administrative cost of reworking claims and improve revenue cycle performance.
• Increase edit coverage by capturing complex, payer-specific edit scenarios that are beyond the scope of traditional front-end edit engines.
• Reduce the administrative effort of maintaining manual rules.
• Allow providers to save on implementation costs because predictive editing can be used within the provider’s existing edit/error management tools.

The path toward a sustainable and healthy revenue cycle requires tools, insights, and analytics to help providers submit claims right the first time. AI and machine learning tools have the potential to move your organization from costly denial management to streamlined denial prevention.

If you’re interested in learning more about Essentials Pro’s robust RCM features, download our Buyer’s Guide or schedule a meeting with our team today!

About the Author

Anne Neal, Vice President of Product and Payment Accuracy at Availity, brings over 20 years of extensive experience in product development within the healthcare industry. With a focus on leading product portfolios and driving innovation in both payer and provider spaces, Anne has established herself as a visionary leader. Before joining Availity, Anne spearheaded revenue cycle innovation at UnitedHealth Group Optum and spent over two decades at Cognizant’s TriZetto Provider Solutions, where she led the development of its payer core administration platform.

Anne’s mission in healthcare is to create a seamless, personalized, and compassionate system where affordable quality care is accessible to everyone. She holds a bachelor’s in business administration from Staffordshire University and an MBA from Grand Canyon University, with additional executive certifications from Harvard and Columbia. Anne was honored as a Luminary by the Healthcare Businesswomen’s Association in 2020.