Insurers are denying more claims as their use of AI outpaces healthcare providers

If you feel like it’s taking longer to get paid, you’re not alone.

The number of healthcare billing and finance professionals who say they’re seeing an increase in claim denials has skyrocketed since 2022, according to a survey from Experian Health . As many as 73% of respondents said they’re facing a larger number of denied payments, compared with 42% two years ago.

Two-thirds of survey respondents also agreed that reimbursement times are increasing, and 77% said payer policies are changing more quickly than in the past.

There’s a caveat to the data. The survey was conducted this past summer, when the Change Healthcare data breach was still very much top of mind. The February cyberattack interrupted as many as $2 billion in payments in the immediate aftermath, affecting scores of providers, and took months to resolve.?

Yet the findings are nevertheless in line with a report from the American Hospital Association , also released last month, that found that, between 2022 and 2023, claim denials increased 20.2% for commercial plans and 55.7% for Medicare Advantage plans. Health systems and hospitals are spending $40 billion on billing and collections, the AHA report said, citing 麦肯锡 data.?

Beyond the Change Healthcare breach, there have been other trends that have been causing the increase, said Clarissa Riggins , Experian Health’s chief product officer. Payers have been ramping up their use of technology — including what she called “denial bots” that use artificial intelligence to assess a claim in just seconds — while healthcare providers seem to be pulling back on their technology investments.?

Half of respondents to Experian’s survey said they’re reviewing claims manually. And only 31% of respondents said they were using automation or artificial intelligence, a sharp fall-off from 62% in the prior survey. The reason may come down to skepticism: only 28% said they felt comfortable with AI as a means of reviewing claims, down from 68% in 2022.?

The Change Healthcare breach likely contributed to the mistrust, Riggins noted. The insurance industry has also faced a wave of negative press around its use of AI to make payment decisions, showing the limitations of using algorithms.?

Yet more financial professionals are evaluating these technologies: 41% compared with 33% in 2022. Hospitals and health systems have been struggling with staffing shortages and burnout that make it difficult to keep up with the volume of claims, Riggins said. Technology has the potential to help.

I had a chance to chat with Riggins about why more claims are being denied, the technology imbalance with payers and the challenges facing healthcare providers in this environment. You can read our full conversation below.

And tell me: How have claim denials been affecting your practice? And what do you see as the role of technology?

The transcript below has been lightly edited for length and clarity.

LinkedIn News: Why are claim denials going up?

Riggins: There continues to be an increased workload and staffing shortages that I don't think are going away, and ever since COVID it continues to be yan issue that is brought up consistently across our hospital and health system clients. And it's not only the increasing backlog, but it's also the continued burnout of skilled staff. Then you couple that with strict timely filing rules, and it's just a recipe for lots of pressure.?

The other thing that I would highlight is the requirements and layers of documentation that continue to be placed in a burdensome way. On top of which, there's been an imbalance between payers’ adoption of technology and providers’ adoption of technology, and in many ways the payer adoption has outpaced what the providers and the health systems are seeing. They're leveraging machine learning to identify errors and documentation, and if you're not seeing the same thing on the provider side, it's a recipe for dissonance. Think about all of the articles about denial bots, these mass denials of claims, just as an example.

LinkedIn News:? How do you think the Change Healthcare breach this year might have affected this year’s survey results?

Riggins: The survey was fielded from June to July 2024, so we were in the thick of things. That could have contributed to the response on the general sentiment of claim denials going up. But even independent of the breach, these other factors were also contributing to the sentiment. [Claim denials] continue to be a huge financial strain: delayed or lost revenue, increased administrative costs as they resubmit claims, continued burden on their administrative staff. It's time and resources that ideally could be redirected towards patient care.?

There's reputational risk as well. Imagine how patients must feel. Their out-of-pocket costs are increasing. They may face unexpected bills and surprises. That causes a lot of stress and strain for patients, especially those with limited funds and resources. It might impact their decisions on when and how to seek healthcare, causing lots of frustration, lots of confusion.

LinkedIn News: Let’s talk about the role of technology. There are so many vendors focused on automating this process, and yet your survey found that healthcare providers are using less automation.

Riggins: On one hand, because of the Change breach, there's now this lack of trust in being able to put all your eggs in one basket with regard to technology. But then in the same breath we're hearing [that healthcare providers want] to consolidate vendors. Some of the larger, multi-state health systems have distributed staff members, some of whom are remote. Imagine having to train them on all those different systems.

Providers need to educate themselves on the newest technology to help level the playing field [with payers]. The first step is educating themselves on what's possible.?

LinkedIn News: In your survey, 46% of respondents said missing or inaccurate data was the cause of the denial. Who’s responsible for the bad data that’s preventing these claims from being processed the first time around?

Riggins: If you think about a clean claim, it starts at the very beginning. It starts at that first call or patient-initiated scheduling event. It's getting as much of that information correct up front, on demographics, on insurance information, on all the basics.

LinkedIn News: It seems like technology could help there by standardizing some of that.

Riggins: Experian can do that. We have lots of data on a consumer, if you think about our broader assets. There are a lot of corrections that can happen up front. [For example], registration errors are often the cause of some of the denials that happen on the backend, post-service. If we can do a lot of the validation up front, that's going to make it so much easier for the backend of the process.

That's really what providers should be thinking about: how do you start to take the heavy lift away from the humans, who are sometimes new or sometimes overburdened with their work, and start to redirect their time and attention to more critical thinking, value-added tasks in the revenue cycle? And that's ultimately the Holy Grail.