Harnessing AI to Combat Rising Denials and Reimbursement Delays in Healthcare

According to a  Staffingly report, rising denials and reimbursement delays are draining hospital cash reserves. Experian’s State of Claims 2024 report identified increasing denial rates of 10 to 15 percent as a major threat to provider finance. Amid these challenges, hospitals are turning to artificial intelligence (AI) to confront the most complex claim types.

Healthcare Innovation spoke with Frank Forte, CEO of EnableComp, about how AI is giving providers a fighting chance with the toughest claims. EnableComp is a provider of complex revenue cycle management (RCM) services based in Tennessee. In January, the organization announced its acquisition of Health Resources Optimization, Inc. (H/ROI), a clinical denials and revenue recovery firm serving health systems in the Northeast. The acquisition expands the revenue EnableComp captures by resolving and preventing the most challenging clinical denials — DRG (Diagnosis-related groups) downgrades and medical-necessity denials — and by recovering lost revenue through post-bill DRG validation.

“This acquisition enhances our ability to drive revenue improvement across the most complex parts of the revenue cycle — areas where missing a single opportunity can lead to substantial revenue loss for hospitals,” said Frank Forte, CEO, in a statement regarding the acquisition. “Hospitals are facing intense margin erosion and need a partner built to handle this complexity. Our Complex Revenue Intelligence™ (CRI) approach combines our unique expertise and intelligent technology to surface revenue risk and guide recovery.”

Could you tell our audience a bit about EnableComp?

EnableComp is a company that focuses on complex revenue cycle. We're focusing on the things that others miss, the most complex claims, denials, and revenue recovery issues for hospital providers. We service about 1000 hospital providers nationwide. We're leveraging our own technology platform to help us understand trends and maximize recovery for healthcare systems, and also to provide root-cause insights into potentially preventing or minimizing future denials.

How do complex claims impact providers?

Providers are very challenged to stay abreast of all the changes in reimbursements, whether it's coming from commercial payers or government payers. Veterans’ administration claims, motor vehicle claims, workers' compensation claims out-of-state, and Medicaid - those four primary services or areas are what they call complex claims. They're complex because they're harder to process, harder to get paid in a timely fashion, and also harder to maximize payment. The reason for that is that there are so many variables.

There are a lot of variables with a patient who has commercial insurance, they go to a hospital, and they have certain procedures. Sometimes things aren't coded correctly, sometimes the diagnosis shifts, etc. Sometimes it gets delayed, denied, and sometimes it gets paid. But those are fairly standard.

When you get into veterans’ administration, for instance, you have military payer fee schedules, which change throughout the course of the year. You have different insurance companies that are specific to veterans. Veterans, whether they're active duty or have served, have different processes, depending on whether they go to a VA hospital or a commercial or regular hospital. All those variables make it very difficult for the healthcare system, not only to get paid in a timely fashion, but to maximize payment.

There are different types of primary, secondary, and tertiary payers, and a healthcare system may not have the resources, knowledge, or state-by-state expertise to maximize payments on those claims. With all these different services, there's a tremendous amount of data, domain expertise, and legal advice that goes into staying abreast of all these things.

Even though it doesn't make up the biggest percentage of claims and denials for healthcare providers, in aggregate, it's about a $16 billion market, and so there's an awful lot of these complex claims and denials that providers just aren't really cut out to go after as aggressively as somebody would if that's all they do.

Can you address the increasing denials and reimbursement delays, and how they are draining hospital cash reserves?

I think you're finding denial rates are going up 10 to 15 percent. It's very difficult to get payments in a timely fashion. A lot of rules are changing so fast that the providers are struggling to get full payments, and they don't even know what's coming next. The contractual changes are also changing every year with the payers. That also compounds the amount of variables that they have to process. The effect is that denial rates are going up. Margin compression in hospitals is getting more and more intense.

The number of patients coming in who don't have insurance is also going up, which puts a tremendous burden on bad debt and areas where healthcare systems can't compensate for it. You also have staffing shortages within the healthcare system. It’s really the perfect storm. It's putting tremendous pressure on our healthcare system.

Where do you think AI can help with these issues?

AI is probably a very overused term, particularly in healthcare. It's a tool. AI, by itself, does nothing without domain expertise, to be able to help interpret what AI is bringing back. You need a lot of data for AI to be effective and useful. Otherwise, it'll make a lot of mistakes. You also need what I call a large cohort. If you're looking across 1000s of hospitals, aggregating lots and lots of data, and you have people who understand what they're looking at and how to train the AI model, the large language models, you start to get really actionable insights. You start to really understand which payers are paying, how long the average payment is taking, when diagnosis codes go out, which ones are shifting, or which are getting down-coded or up-coded, and how to prevent that before it actually goes out to the payer. It gives you more opportunity to get it paid the first time. You can prioritize the most important, largest, or most impactful claims that go out the door.

You’re able to use that data and AI to be able to understand trends around what's going to get denied, and what is the best approach for writing an appeal or automating an appeal.

While humans can do this stuff, they can't do it quickly, and the complexity that's compounding in the industry makes it really challenging for humans to stay current. To do a claim manually from end to end could take an hour and a half. Through AI and automation, you're able to do that in minutes or seconds. For it to be able to process basic things, allows the people or the experts to go and shift their responsibilities to look at other things, as opposed to just doing this manual, repetitive work over and over. Even if they're doing the work, they can't see the trends. They can't get insights into what's coming. They can't look in the past.

Do you think the process works well with AI?

Are the kinks worked out? No, I think it's early in the evolution. I think the mistake people make is thinking that when they buy software or a tool and put it into a healthcare workflow, they are going to immediately get results. It just doesn't work that way. There are so many variables in processing a claim for a patient throughout the revenue cycle, so many areas or opportunities where things may not go perfectly, that if you don't have a lot of data and domain expertise to even train or evolve that AI tool, you're going to get bad information. I think there's still an evolution that has to happen.

When you're looking at denials, what do you foresee happening in the coming years?

Provider technology and focus on denial prevention and revenue cycle have increased significantly. It has, ironically, outpaced some of the technology and responses of the payers, and they're actually seeing more and more claims automated and sent through than ever before. They're denying a lot more. I don't think they can keep up with the influx of things being presented, but also, things are changing in real time. They have a responsibility to their shareholders to maximize their revenue, so they're certainly pushing back in areas where they feel like the claim isn't justified.

Payers will start investing more in AI and technology. They're going to get smarter and faster at pushing back than they have in the past, which will put pressure back on the providers again and probably, for some period of time, increase the percentage or rate of denials.

The first thing you're going to see is that it's not going to go down, it's going to go up. If anything, they get more technologically savvy. I think that's going to continue to happen.

There's a lot of debate in government about what will be changing on the VA side, certainly around the Affordable Care Act (ACA) and health insurance criteria. A lot of that is going to put more pressure on healthcare systems to drive more technology and to try to maintain their margin.

What would your advice be for healthcare leaders?

Healthcare leaders have an awful lot on their plates. I spend a lot of time with our clients and see what they have to go through. I would say, leverage the tools that you have. Most healthcare providers are trying to leverage, for example, their medical record EHR system, to use as much data and tools as they already have at their disposal. Try to standardize processes as much as possible. Partnering in certain revenue cycle areas makes a lot of sense.

There is a world in which technology, and, through partnerships, we will be able to start hopefully predicting and providing insights to providers where they could avoid some of these areas and avoid denials. There's certainly the capability, technologically. It's just very difficult to operationalize because of the non-standardization and the fact that the data lives in many, many areas in healthcare; it's not all consolidated.

All the providers that I speak to are very much focused on prevention, as opposed to trying to overturn denials later.