Are AI-Powered Health Care Claims Tools Really Improving the Revenue Cycle?

More AI companies are producing tools to help automate the revenue cycle, one of the most expensive and complicated departments of a hospital. These tools have demonstrated promise in collections, but many health care leaders remain skeptical that these tools can mend their troubled relationships with insurance companies.

According to a recent survey of 102 hospital CFOs from the Healthcare Financial Management Association (HFMA), only 7 percent of respondents said they expected AI to improve the relationships between their organizations and payers over the next three years. Nearly 3 in 10 said they believed AI would make matters worse, while the remaining 64 percent believed it was too early to assess the technology's impact.

Still, as insurance companies have invested in their own AI—allegedly to save money by denying reimbursement for certain types of care or issuing denials more quickly—hospitals have been fighting back with tools of their own. One of those solutions is Iodine Software, which started using AI to improve the revenue cycle about a decade ago and is now used at approximately 1,000 hospitals nationwide.

William Chan, co-founder and CEO of Iodine Software, told Newsweek that his company aims for the middle part of the revenue cycle, which requires a lot of "clinical intelligence." Nurses or physicians must interpret data, analyze it, summarize it and decide what to do with it—plus, they had to manually collect all of that data.

"We built out a solution that will try to emulate that data-gathering and decision-making process and make that process a lot more efficient," Chan said.

AI is an ideal vector for this sort of work because new data is constantly being added to the process, according to Chan. Self-learning technology like Iodine's can connect to the health system's electronic health record (EHR) and review new patient data on a rolling basis.

This produces a more accurate clinical picture for the insurance company, which "ultimately results in accurate reimbursement back to the hospital," he said. The average 500-bed hospital in Iodine's network earns an additional $5 and $6 million per year after using the technology to improve its documentation process. Across all of Iodine's 1,000 hospital clients, that rightsizing yields a cumulative $2.4 billion per year, according to data the company shared with Newsweek.

AI can also improve labor efficiency in the revenue cycle, per Adi Tantravahi, co-founder and CEO of Cofactor AI. He launched the company last year after shadowing his aunt, who is a physician and medical director, and seeing the burden of insurance claims firsthand. He recalls sitting in her office at the end of the day, waiting to go home, when an appeal specialist showed up with a thick stack of denied claims.

The pair spent three hours going through the denials and developing an appeal strategy, according to Tantravahi. "I couldn't really believe what I was hearing," he said, "And I was convinced there had to be a better way to do it."

Cofactor AI integrates into the EHR and searches for discrepancies between the payer's rationale for denial and the data that supports approval, including provider documentation, payer policies, facility-level contracts, coding and standard of care guidelines, medical calculators and peer-reviewed studies.

"Anything and everything you can imagine being relevant here to making your case to the insurance company," Tantravahi said, "we're going to look for a wedge to make an argument for the provider."

Historically, health systems have not had the manpower to dispute every denied claim. When KFF researchers examined the Affordable Care Act marketplace, they found that only 1 percent of denied claims were appealed.

But AI can significantly reduce the time and effort that it takes to submit a denial. According to Tantravahi, Cofactor AI has taken an hour-long process and whittled it down to 15 minutes: five for the AI to gather the information it needs, and 10 for a human reviewer to OK it.

Both Tantravahi and Chan emphasized the importance of keeping a human in the loop but hope AI can make their work more efficient—allowing the hospital to review more claims and, ultimately, collect more of the money it is owed.

As AI reduces the amount of labor required in the revenue cycle department, more health systems are redeploying these workers as financial counselors, Richard Gundling, senior vice president of professional practice, told Newsweek. These professionals can have a more direct impact on patients by meeting with them to discuss their insurance benefits, copays and options for financial assistance if necessary.

Despite AI's clear promise, Gundling cautioned against viewing it as a revenue cycle cure-all. True improvement will require more transparency for patients and better communication between payers and care providers.

"AI is great to make sure everything [in the claims process] is completed quickly," he said. "But maybe it's also a chance to step back and say, 'Hey, instead of just speeding up a complex transaction, maybe it doesn't have to be this complex in the first place.'"

Iodine Software will be one of many brands submitting to Newsweek's AI Impact Awards, which recognize unique and innovative AI solutions that solve critical issues or advance capabilities across various industries. The awards highlight measurable impacts AI delivers in various business operations, including marketing, customer experience, product development and supply chain optimization.

Entries are open until April 25, and finalists and winners will be announced in late May ahead of the AI Impact Summit in June. The panel of expert judges is led by Newsweek Contributing Editor Marcus Weldon, an AI scientist and former president of Bell Labs.

For more information on the event and entry guidelines, please visit the AI Impact Awards homepage.