Could AI stop the perpetual increase in healthcare claim denials in 2025?

Background

Let's face it, healthcare providers have enough on their plates without the ever-increasing headache of claims denials. Yet, here we are; denials are skyrocketing and not slowing down any time soon.

Denials - A Numbers Game

Data speaks volumes (and not always the good kind):

• Average denial rate in 2023: 12% (MAJOR PROBLEM because it was at 9% in 2016)
• 44% of denials happen right at the front-end of the revenue cycle—where things like registration and eligibility errors sneak in.
• 24% of all denials are tied specifically to registration & eligibility issues, and yes, that number is steadily climbing.

The real kicker? 84% of denials are potentially avoidable, yet 22% of them are completely unrecoverable once they happen. In other words: Once that revenue slips through your fingers, it’s gone.

Front-End Problem (AND Opportunity)

Almost half of all denials are born at the front-end of the revenue cycle. Why? Because simple mistakes—like not verifying patient eligibility or missing key data—create chaos downstream. Think of it as forgetting to tighten the lid on a jar before shaking it; the mess is inevitable.

But here’s the silver lining: the front-end is also where the biggest opportunities lie. By addressing these errors early, providers can cut off denials at the source, reducing revenue leakage without breaking a sweat and tightening the lids of jars to come.

Denial Prevention

They say prevention is better than a cure, and this couldn’t be more true for denial management. Consider this: managing denials manually means teams are drowning in repetitive tasks like chasing down insurance details or correcting claim errors. And let’s not forget the stress it piles onto staff during peak seasons.

The smarter play? Focus on preventing these issues from happening in the first place. For example:

• Automate eligibility checks: Use AI to verify patient information directly within EHRs before appointments.
• Streamline accounts receivable follow-up: Automate manual data entry into insurance portals to speed up claim resolutions.
• Enhance claims status tracking: Implement automation to continuously monitor claim statuses and flag errors or delays before they turn into denials.

Erica Zendel - senior product manager for RCM analytics at Optum, had this to say, “Data and analytics allow for the identification of denial hot-spots, and proper root-cause analysis facilitates the identification?of preventable denials for prioritization.

Recipe for Denials Success: People, Process & Technology

This is not a revolutionary idea. However, tackling denials isn’t solely about flashy AI tools (though they help). It’s about creating a balance:

• People: Equip your staff with proper training to catch errors before they happen.
• Process: Refine workflows to minimize errors and improve efficiency.
• Technology: Use automation to handle the monotonous tasks so your team can focus on high-value work.

When these three align, denial management transforms from a costly nightmare into a manageable process—and one that saves serious money.

Not to mention, the opportunity is massive. See the below national spend on facets of the revenue cycle with eligibility & benefit verification sweeping the floor in terms of spend.

What's Next?

As denial rates continue to climb, the urgency to act grows louder. It’s no longer a question of if providers should adopt automation and AI but how quickly they can integrate these tools to stay ahead of the curve.

The bottom line? Providers that tackle denials head-on with the right mix of technology and strategy will thrive. Those that don’t risk watching their revenue vanish, one denial at a time.

Final Thought: It’s time to stop playing whack-a-mole with denials. Let’s fix the root causes and focus on smarter, scalable solutions that make denials management a thing of the past.

Getting Started with Automation/AI? Take a look at a quick example below to get you started ????

Example Automation? Here's how to automate Accounts Receivable Follow-Up for Claims:

Step 1: Fetching Denials Report

1. Bot Accesses EHR: Bot logs into EHR system.
2. Bot Downloads Reports: Bot fetches Accounts Receivable (A/R) Denials Report.
3. Bot Filters Data: Bot identifies denials that have not yet been addressed.

Step 2: Claim Verification in Payer Portal

1. Bot Processes Filtered List: Finds the patient using Member ID, DOB, First Service Date, and Last Service Date (Exception: If the member is not found, the bot flags the case for manual review.)
2. Bot Downloads Claim Data: When member is found, bot downloads the claim data and locates the associated Visit ID.

Step 3: Claim Status Update

1. Finalized Claims: Bot retrieves finalized codes (e.g., Paid, Denied, Partially Paid) and updates the Summary Report with the finalized status.
2. Denied Claims: Bot retrieves the denial code and denial description. Bot updates the Summary Report to highlight why the claim was denied and what corrections are needed.
3. Acknowledged Claims: Bot retrieves acknowledgment codes (ACK codes). Bot updates the Summary Report with payment information and notes any missing data for follow-up.

References

1. 2024 Optum Revenue Cycle Denials Index - https://business.optum.com/en/insights/denials-index.html
2. 2023 CAQH Index Report - https://www.caqh.org/hubfs/43908627/drupal/2024-01/2023_CAQH_Index_Report.pdf
3. 2023 麦肯锡 Report - Setting Up RCM for Success with Automation & AI - https://www.mckinsey.com/industries/healthcare/our-insights/setting-the-revenue-cycle-up-for-success-in-automation-and-ai

About Me: I serve as the Head of Artificial Intelligence Solutions at OpenBots , an unstructured document automation platform.