Artificial Intelligence Can’t Fix a Broken Healthcare System

As healthcare costs continue to rise alongside inflation, providers and insurers alike are looking for ways to offset these increases with reduced administrative and operational costs. Advances in artificial intelligence (AI), specifically related to revenue cycle management, have streamlined transactional workflow in medical claims processing. However, this powerful technology can only improve healthcare revenue cycle to a point. Especially if the technology is based on the eroding foundation of fee-for-service (FFS) payment.

Artificial Intelligence Can Lead to Errors and Bias

For healthcare providers, insurance payer’s efficiency gains can be offset by time dealing with incorrect insurance denials and long-payment delays that can be associated with AI software. As a recent case study in Modern Healthcare noted, Anthem has experienced problems related to incorrectly downcoding medical claims and perceived delays in payments to healthcare providers. AI technology is being incorporated into claim payment systems. These are algorithms that are designed to scan claims, identify reimbursement patterns, and make judgments on how claims should be processed. This is a complex operation riddled with opportunities for error and bias. Anthem and other payers implement AI software to automate claims processing and dissuade fraud, waste and abuse, but the reality is, artificial intelligence in the software has impacted some healthcare providers negatively, forcing them to leave the network.

Cost Rise and Relationships Suffer from Delayed Payments

In a fee-for-service (FFS) system, AI in claims processing can strain the relationship between payer and provider. The growing technological sophistication of these claims processing systems contributes to an increasing number of payer-provider disputes. Incorrect decisions by the software can delay payouts to healthcare providers, sometimes for months. In the current fee-for-service system, insurers are incentivized to delay payouts as long as possible to maximize time value of money. The additional delays brought on by claims processing disputes can result in more providers leaving insurance networks. This hurts both payer and provider, as well as raises prices on the newly out-of-network patients receiving care. FFS creates an environment that pits payer and provider against one another, and any new technology introduced will only exacerbate the conflict.

Insurance companies may expect AI to be a magic switch, but these innovations are only as solid as the foundation upon which they are built. While technology is seemingly a great solution in any industry, the real challenge is fixing the process. You cannot fix a bad process with technology, and fee-for-service is a bad process. To fully harness the power of new tech requires a reimbursement process that eliminates the scenario whereby providers have to trust insurers to be transparent about how AI impacts clinicians and payments. We need to fix the real core of the problem with a system that aligns the interests of payers and providers. We need value-based care!


AI does what insurers ask. Providers say that’s the problem.