Payers are now reviewing claims at a volume and velocity that most health systems cannot answer in kind. That asymmetry is shaping up to be the defining financial pressure in healthcare revenue cycle and the leaders responsible for managing it say the gap is widening.
Across responses from revenue cycle executives at 17 health systems Becker’s works with regularly, payers have deployed AI to automate prior authorization reviews, claim adjudication and denial generation at industrial scale, while many providers are still operating with manual workflows that were not designed to absorb that volume of activity.
“Payers are leveraging automation to review 100% of claims while most health systems still manually review only a small fraction of payer activity,” said Tami McMasters Gomez, executive director of mid-revenue cycle at UC Davis in Sacramento, Calif. “That creates an imbalance that providers can only overcome through their own use of AI, predictive analytics, stronger documentation practices, and tighter integration between CDI, coding, revenue integrity, UM, and denials management.”
Jody Hinton, vice president of medical operations at PDS Health in Irving, Texas, put it more bluntly.
“The most dangerous trend in the healthcare revenue cycle is the growing arms race between payers and providers, and right now, the payers are winning,” Ms. Hinton said. “Payers are increasingly using AI, advanced analytics, and automation to identify reasons not to pay claims, often at a scale and speed providers can’t match.”
The consequences are not limited to denial volume. Aaron Klein, senior vice president of financial operations and supply chain at Carle Health in Urbana, Ill., described a more insidious pattern: payers quietly downgrading reimbursement without issuing formal denials, leaving revenue leakage that doesn’t surface in standard denial reports.
“The newer, and potentially more concerning development is payer downcoding and reimbursement reduction without formal denial activity leading to decreased yield and net revenue erosion,” Mr. Klein said. “These payment reductions often do not appear in traditional denial reports making revenue leakage difficult to identify.”
Medicare Advantage plan’s adoption of “low severity” payment downgrades for inpatient cases — including stays well beyond two midnights — as a recent example of the trend. Shelly Thompson, senior director of clinical revenue cycle and revenue integrity at Sentara Health in Norfolk, Va., said the risk extends beyond the claims that get denied outright. As payers deploy AI to conduct large-scale post-payment audits, the integrity of documentation becomes a target long after a claim has been processed and paid.
“Payers can now review massive volumes of claims and identify opportunities to challenge reimbursement much faster and on a much larger scale than ever before,” Ms. Thompson said. “As payer AI becomes more advanced, any gaps, inconsistencies, or weaknesses in the medical record can become targets for audit activity.”
Tanya Sanderson, senior director of denials management at Stanford Health Care in Palo Alto, Calif., described the problem as one of compounding administrative weight as technology on the payer side generates complexity that falls on provider teams to absorb, without equivalent technology resources to manage it.
“While technology and automation are creating important efficiencies across healthcare, they are also contributing to increased complexity in areas such as authorizations, denials, reimbursement and payment integrity,” Ms. Sanderson said. “As administrative burden continues to grow, it threatens not only financial sustainability, but also workforce resilience and access to care in the communities that depend on it.”
Stacie Zins, IT director of clinical and revenue cycle applications at North Memorial in Robbinsdale, Minn., framed the dynamic as an arms race that has become structurally difficult to exit.
“This creates a widening technology gap, where providers must continually invest in new tools and workflows simply to keep pace,” Ms. Zins said. “In an environment already challenged by thin operating margins and workforce constraints, this arms race between payer and provider technologies is becoming increasingly unsustainable.”
The solution most health systems are arriving at bucks the traditional answers of expanding the team and tackling denials head on. Ms. Hinton said the organizations that survive the next five years will be those that stop treating revenue cycle as a reactive collections function.
“The answer isn’t building bigger denial teams,” she said. “It’s leveraging the same technologies, including AI, automation, and predictive analytics, to identify risks before claims are submitted and eliminate preventable denials before they ever happen.”
Ms. McMasters Gomez agreed that the strategic threat is not AI replacing staff — it is payer automation outrunning provider capacity to respond.
“In short: the greatest threat is not autonomous coding replacing staff,” she said. “It is payer automation denying or delaying reimbursement faster than providers can identify and respond to it.”
Shannon Cameron, COO of revenue cycle and AFS at Harvard Medical Faculty Physicians in Boston, said the shift that matters most is moving from discovery after the fact to detection in advance.
“Too many organizations still discover revenue problems after the money has already been lost,” Ms. Cameron said. “We have shifted the focus on using our data to recognize changes in payer behavior, documentation and coding gaps, denial patterns, and other revenue leakage early enough to actually do something about it.”
