While denial rates continue to climb, few health systems are using AI in claims management despite its potential to address gaps created by staffing shortages and data quality issues.
Claim denial rates continue to climb, according to the 2025 State of Claims report from Experian Health. In a survey of 250 healthcare financial leaders and billing professionals, 41% said 10% or more of claims are denied, up from 38% in 2024 and just 30% in 2022.
Burdensome manual processes and staffing shortages put a drag on claims management teams, according to the report. However, while the hype around AI continues to grow, many health systems seem hesitant to implement the new technology – at least for now.
Data Quality and Staffing Issues Fueling Denials
One-half of respondents pointed to missing or inaccurate data as the primary cause for denials. This was followed by authorizations (35%) and incomplete or incorrect patient registration data (32%).
Additionally, 68% of respondents said that submitting a "clean" claim is more challenging than it was a year ago, and 54% reported that claim errors are increasing.
The problem is compounded by significant staffing challenges. According to the survey, 43% of respondents said their claims teams are understaffed and 36% say these shortages slow down claim submission and rework.
A significant minority of respondents said they have completely automated processes for correcting and resubmitting denied claims, with 90% saying that at least some manual review of denials occurs before resubmission.
Frustration with Tech Solutions Grows with Denials
Despite recent investments in claims management technologies, many are unsatisfied with their current solutions. According to the survey, 41% of respondents upgraded or replaced their claims management technology in the last year, but only 56% believe their current platform is sufficient to meet demands, down from 77% in 2022.
Growing dissatisfaction is leading many to consider significant changes. The survey found that 59% of respondents plan to invest in claims processing or denial reduction technology in the next six months, and 55% would be willing to completely replace their existing platform if presented with a compelling return on investment.
Hesitation and Hope Around AI
Despite the attention around AI, provider adoption remains low. Only 14% of respondents said their organization is currently using AI to help reduce denials. Around two-thirds said they believe AI can improve the claims process, but this optimism is tempered by concerns about unproven accuracy, HIPAA compliance, and the need to retrain teams on new technology.
Among early adopters, AI seems to be delivering on its promise. Of these, 69% report that the technology has reduced denials or increased the success of resubmissions.
This suggests that as trust in the technology grows, AI could become the critical tool that providers need to finally break the cycle of rising denials.
Luke Gale is the revenue cycle editor for HealthLeaders.
KEY TAKEAWAYS
According to a new survey, 41% of providers now see denial rates of 10% or more, a figure that has steadily climbed since the annual survey began in 2022.
Missing or inaccurate data remains the top cause of denials, cited by half of survey respondents, followed by authorizations and incorrect registration data.
Provider adoption of AI for claims remains low at just 14%, but 69% of these early adopters report that the technology has already reduced their denials.