Revenue cycle AI may not be the reimbursement answer many providers hope for, suggests a recent survey from healthcare consulting firm Guidehouse and the Healthcare Financial Management Association.
A survey of nearly 200 provider executives found that 88% of respondents cite payer challenges as one of their top revenue cycle stressors. Provider executives are largely concerned with payer relations as claim denial rates continue to rise, but other factors, such as prior authorization delays, unclear or vague denial reasons and excessive information requests, are also affecting how well payers and providers get along.
Forty-one percent of respondents also reported reduced reimbursement rates from their payer partners.
Still, the number of executives reporting denials over 5% almost doubled compared to last year's survey. Now, about 20% of respondents face a final denial rate of over 5%. Medical group and hospital executives were also the most likely to report higher final denial rates.
Prior authorizations were the next-most-cited revenue cycle stressor, selected by 42% of respondents. Executives said attaining front-end prior authorizations is a major concern, indicating another breakdown in payer-provider relations.
Other top stressors included the impact of regulatory and legislative changes (34%), workforce challenges (33%) and technology adoption and integration (29%).
AI to the rescue?
Across types of organizations, provider executives are focusing on implementing automation and AI to capture revenue and get ahead of denials and delays.
Three out of four provider executives indicated that their organizations are currently adopting or have already implemented AI in various functions. However, the revenue cycle isn't necessarily benefiting from increased automation.
About 59% of respondents reported not implementing any AI or automation in their revenue cycle operations, including 42% who said they've been exploring use cases and 16% who haven't.
The report added that 39% of respondents said they are implementing point solutions, while just 2% said they've fully or mostly integrated these technologies across their revenue cycle management operations.
Fully automated revenue cycles may be in the minority, but 69% of executives said revenue cycle technology is among their top investment priorities for the next year. Specifically, they indicated greater technology adoption to improve performance in managed care programs and strengthen payer relations.
Nearly half of respondents also reported investments in clinical documentation improvement functions, revenue integrity and charge capture. Another 35% said they plan to invest in EHR integration and/or optimization.
But provider organizations may need to iron out some wrinkles in their revenue cycle AI plan, especially when it comes to payer relations.
The revenue cycle may involve highly repetitive tasks, but varying payer rules and reimbursement requirements make straightforward AI adoption a challenge. Therefore, a single technology for automating the revenue cycle may be impossible to find.
AI highlights gaps in payer-provider alignment
Automation and AI will fundamentally change revenue cycle operations as provider executives accelerate technology adoption. Growing interest in agentic AI applications, in particular, could reimagine workflows, giving more autonomy to the revenue cycle.
However, the report exposed large gaps between payers and providers that technology may not fully address.
"It's worth noting that if providers and payers can't reset relations and align on governance, even the most sophisticated tools will fall short of their immense potential," the report stated. "These tools thrive on modernized data practices, standardized frameworks, and greater transparency."
Failing to align could result in applying technology to already flawed processes, exacerbating challenges with prior authorizations and claim denials. Another report released earlier this week from the Peterson Health Technology Institute (PHTI) highlighted this current revenue cycle challenge.
"When applied on top of flawed administrative workflows, data complexity, and incentive structures, AI exacerbates the underlying issues," the PHTI report stated. "Realizing the potential for AI to reduce administrative waste will require redesigning the processes on which the technology is being deployed."
Healthcare leaders from provider organizations, payers, technology companies and investment firms even suggested reimbursement policy reform is needed to drive administrative efficiencies.
Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.
