The Winning Edge Recap: Rethinking Denial Management Strategies to Counter Payer AI

As payers deploy advanced tech to scrutinize claims, health systems like Mercyhealth and WellStar are fighting back with stricter contracts and predictive AI.

Over the past several years, the uphill struggle to combat denials has gradually grown steeper. During this week’s The Winning Edge for Defeating Denials webinar, revenue cycle executives from Mercyhealth and Wellstar Health System discussed whether high denial rates will persist in the future and what health systems can do about it.

Rising denial rates are largely the result of payers using AI tools to automate claim reviews. Health systems will likely never be able to close this Pandora’s box, but they can rethink their strategy.

“We’re talking about computer-aided validation versus people that used to have to go through there and validate,” said Bradley Olson, Vice President of Managed Care for Mercyhealth. “The providers are going to have to come at this with as much aggressiveness as the payers have historically."

Contract Negotiations as a First Line of Defense

A proactive approach to denial management starts during contract negotiations, according to Olson. Health systems need to look beyond reimbursement rates and focus on administrative challenges to getting claims paid. These include outdated communication methods, inconsistent rules, and excessive requests for medical records.

Olson advises that health systems include contract provisions that force payers back to the negotiation table if they make changes that have a significant financial impact on providers. This relies on an effective joint operating committee to foster ongoing dialogue with payers.

“It is very important because at least then they have to sit in front of you on a monthly basis or quarterly basis and at least talk to you face-to-face," Olson said. "It's not hiding behind the veil of a contract or some sort of a technology."  

Effective Tech from Front-End Eligibility to Back-End Appeals

At WellStar Health System, the strategy relies on implementing automation to handle the manual, repetitive tasks associated with denial management of the revenue cycle, freeing up human staff for complex problem-solving.

While denial rates have remained steady, according to Lewis, the tools required to manage them have evolved. On the front end, WellStar uses AI-powered bots for real-time eligibility and benefit verification to prevent downstream errors.

"These tools just automatically check the insurance coverage and benefit details before services are rendered," Lewis said. "That really does reduce a lot of manual errors."

On the back end, Wellstar is using automated workflows to handle payer follow-up and cash posting.

The Necessity of Collaboration

Maintaining open lines of communication with other departments beyond the revenue cycle is crucial. At Wellstar, there is a strong focus on interdepartmental collaboration, which includes monthly meetings on denials organized by service line. These sessions include representatives from operations, medical coding, utilization, and clinical teams.

“By having this structured forum for cross-functional collaboration, we really can address the root cause of the denials more proactively and really drive for that continuous improvement,” Lewis said.

At Mercyhealth, the managed care teams serve as a bridge, translating complex payer policies for coding and authorization teams to ensure everyone is on the same page.

Asked about the road ahead, both revenue cycle leaders were hopeful but also prepared for continued payer-caused frustration. They predicted that while denial volumes might rise in the short term as payers adopt new tools, providers are learning how to fight back.