AI Denials Are Rising. It's Time to Rethink Your Payer Contracting Strategy.

AI denials are bad news for providers. 

A full 61% of physicians fear that unregulated use of artificial intelligence by payers is creating an increase in prior authorization denials [1]. This growing issue directly impacts medical decision making, worsen the patient experience and in turn, the patient financial experience. But it isn’t just the American Medical Association calling attention to this problem. 

Major Medicare Advantage plans – including UnitedHealthcare, Humana, and CVS – are implementing AI solutions with a focus on post-acute care including nursing homes and rehab facilities. These automated systems are fast-tracking denial decisions, and the result has been a notable spike in denial rates. Between 2020 and 2022, UnitedHealthcare doubled its post-acute denial rates using “machine-assisted” reviews [2]. As these changes accelerate, revenue cycle leaders must respond just as swiftly. One of the most common responses is providers employing their own AI solutions to appeal and follow-up on denials and underpayments. This is a good start, but it doesn’t get at the root cause of the problem. 

What we’re seeing with payer-side AI tools is a more precise application of contract terms – including provisions like clean claim technicalities, unilateral amendment clauses, silent PPO discounting, and all products clauses. This means two things:

1. Tighter payer contracting practices with smarter negotiations, proactive terms management, and regular audits of payer agreements.
2. Granular denial metrics that help revenue cycle teams pinpoint areas of highest leakage, whether from contract misalignment, missed appeals, or systemic gaps in healthcare payer contracting strategy.

For many healthcare providers, overhauling payer contracts, denial metrics, and technology workflows all at once can feel overwhelming. That’s why outsourcing medical billing and partnering with RCM specialists with strong AI technology can be a practical first step. Not only can it relieve internal teams, but it ensures that payer contract management and denial tracking are handled with expert oversight.

In today’s increasingly complex payer landscape, the smartest provider organizations will embrace a multi-pronged RCM strategy – one that includes better contracting, better data, and better technology. After all, that’s the approach payers are taking.