An AI For An AI—How CFOs Can Reverse The Tide of Denials in Revenue Cycle

With denials on the rise, more health systems are turning to AI in the revenue cycle.

Payer denial prevention emerged as a significant theme throughout almost every session at HFMA 2025.

At a time when payer denials are spiking in both volume and complexity, revenue cycle leaders from Banner Health, Houston Methodist, and Legacy Health came together to share results from pioneering AI-driven denial management programs. Their message was clear: AI isn’t just a buzzword, but rather, a critical tool in the battle for financial sustainability and operational resilience.

The Denials Dilemma: Complexity and Volume on the Rise

Lisa Schillaci, VP of Revenue Cycle Operations at Houston Methodist, noted that payers are increasingly requesting medical records without discretion, overloading revenue cycle teams and dragging out reimbursement timelines. Terrie Handy of Legacy Health pointed out a sharp rise in DRG downgrades and a lack of transparency, while Katie LeBlanc of Banner Health emphasized that traditional workflows are ill-equipped to manage the new denial landscape—one that payers are reshaping with sophisticated AI under the guise of “payment integrity.”

The CFO To Do List

Prioritize Denial Prevention
Prevention, not just recovery, must be the focal point, according to these leaders. Carefully worded managed care agreements and pre-authorization centralization are leading to tangible results for health systems. CFOs should ensure their contracting teams are armed with detailed historical denial data to negotiate more protective terms in their next payer meeting.
 

Choose the Right AI Deployment Strategy
One recurring theme during this session was the tense decision of either building internal capabilities or partnering with external vendors. Banner Health, for example, created “BannerWise,” an in-house AI system. However, LeBlanc cautioned that internal development can divert valuable operational resources and even delay implementation. Moving teams around is a tall order, she shared. Legacy Health and Houston Methodist leaned more on trusted vendor partnerships, especially for AI-generated appeal letters and DRG downgrade responses.

 For CFOs, be sure to balance investment between internal innovation and trusted vendor solutions to accelerate time and value without overstretching internal teams.
 

Centralize and Simplify Data
 Schillaci underscored the difficulty of finding actionable insights from the EHR. “What’s disguised in all of the data is what’s actionable,” she said.

Her team has focused on consolidating payer authorizations and denial workflows to better identify trends and accelerate appeal timelines. Using AI to triage and prioritize appeals, especially appeals with high overturn potential, has already produced noticeable decreases in denial volumes.

For CFOs, be sure to invest in analytics platforms that unify clinical and financial data to drive real-time, actionable decision-making.
 

Develop a Clear AI Strategy—Not a Shiny Object Wishlist
 As AI enthusiasm grows, Handy warned leaders not to get distracted. She expressed that without a clear strategy, teams will go to trade shows and get excited about the wrong things. The session emphasized the need for governance. Legacy Health recently formed an AI oversight committee, while all three organizations emphasized cross-functional collaboration across clinical, IT, and revenue cycle teams.

For CFOs, be sure to establish an AI governance committee that includes finance, clinical, and IT leaders to align investments with measurable outcomes.
 

Looking Ahead: A Learning Curve, Not a Magic Wand

While Schillaci admitted her team was skeptical at first, they were also excited. Each panelist agreed that AI is not a silver bullet, but a strategic lever—especially when paired with strong operational foundations and a prevention-first type of mindset.