Spring 2025 Issue

Revenue Cycle Management: Automation Transformation
By Kali Durgampudi
For The Record
Vol. 37 No. 2 P. 8

How Automation and AI Streamline Claims Processing

Health care providers spend more than $25.7 billion each year fighting claims denials. These denials extend time to payment, increase administrative burden, and reduce cash on hand by an average of 28%—setbacks that eventually impact a provider’s ability to deliver high-quality patient care. Unfortunately, the industry axiom of “No money, no mission” has never been truer than it is today.

But taking proactive steps and implementing automation and AI solutions can substantially reduce the burden on providers and allow them to focus on providing care, supporting patients in their path to recovery, reducing an inordinate amount of administrative process, and eventually freeing up time and money for the betterment of our entire health care ecosystem.

Why Denials Happen
A Kaiser Family Foundation study found that roughly one in five claims are denied. In most cases, denials are caused by minor and easily preventable errors or omissions, such as verification of insurance eligibility, missing patient or provider information, or incorrect medical coding for the services provided.

These seemingly trivial mistakes have a major impact on providers’ bottom lines and operations. Denied claims commonly exceed $14,000 each, driving up accounts receivable. And the appeal process can take as many as four rounds of administrative efforts during a four- to six-month period.

Automation to the Rescue
Automating administrative activities can address the most common issues in claims processing and accelerate and streamline the entire process. Proactively reviewing and addressing common claims denial root causes significantly reduces how often payers initially deny claims. And reducing denials eliminates rework and stops the elongations of the payment process, thus improving revenue cycle management (RCM) performance.

To understand how process automation can drive efficiency and claims management and processing, it’s important to first consider how automation systems work. These systems perform tasks based on set rules and parameters while diverting to humans the responsibility for addressing higher cognitive tasks that are beyond the reach of programmable rules and variables.

Much of the process for coding, reviewing, and submitting medical claims fits within this rubric. Medical billing and claims are based on a set of contracts between the provider and the payer that outlines levels of coverage, deductibles, and other payment details, which automation can easily process.

Additionally, automation can verify the amount of medical record documentation required by the payer and extract that information from the medical record system. This has two benefits: It prevents a denied claim from occurring and eliminates the manual effort involved in locating, organizing, and submitting it to the payer to meet their stated requirement.

Advanced process automation systems can easily manage those tasks. KLAS Research found one health care system was able to automate more than two million transactions, comprising 75 million process steps, accounting for 367,000 hours saved.

AI Takes It to a New Level
With AI, hospitals and health systems can enhance advanced automation systems to perform more than programmable advanced automation tasks. AI systems focus on ingesting, interpreting, and predicting information in accordance with much more advanced rules, parameters, and guidelines. Essentially, AI systems make “best guess” predictions and decisions based on the available information.

By analyzing past denials, advanced automation systems supported by machine learning can be used to identify patterns and root causes of denials, implement solutions to correct those issues, ensure future claims are correct, and predict which claims are most likely to be denied—providing opportunity to address issues with payers before a denial occurs.

These advanced algorithms can compound the advantages of automation, yielding significant additional reductions in claim denial rates. Additionally, the AI system will improve over time as it continues mining new claims denials and payer policy changes. To date, we have seen a 57.1% drop in denial write-offs and a 13.1% drop in initial denials among clients implementing a specialized automation and AI solution targeted at claims denials.

Easier to Implement Than It Seems
Health care technology is developing as quickly as ever, and providers often struggle to keep up. IT budgets and staff are maxed out, and the list of technology upgrades needed never stops growing.

Solutions providers often hear that health care provider budgets just won’t allow for any new systems. Automated claims denials and machine learning systems, however, are relatively easy and inexpensive to implement. Automation typically “sits atop” a provider’s existing underlying systems. In fact, most can be added to existing EHR systems through cloud-based application programming interfaces, minimizing new equipment outlays. And many RCM and claims denials automation providers charge a percentage of cost savings, resulting in no upfront cost.

Adapt With Technology
As the health care technology landscape continues to evolve, health care providers are facing unprecedented change in the payer landscape. Without automation and AI to keep pace with shifting policies and standards, denial rates, RCM processing time, and claims staffing needs are likely to increase.

Implementing automation improves the speed and efficiency of the claims management process, minimizes errors and issues with claims, and allows administrative staff to focus time on the most challenging claims. More importantly, these systems help ensure patients get the care they need and prioritize recovery instead of stressing about payment.

— Kali Durgampudi is the CEO of Apprio.