Revenue Is Not Lost at Billing. It’s Lost Before the Claim Is Even Created
Hemant Apte, Chief Executive OfficerApril 23, 2026
AI technology has had an amazing impact on denial management services. As an industry, I believe we’ve only experienced the early stages of its potential and that the future is still highly uncertain.
This is because what will matter most is not the advancement of the technology itself, but the depth of understanding of the problems and root causes to which it's applied. This is especially true in billing, accounts receivable and denial management. Here’s what I mean.
On the provider side, AI is a multifaceted question. Providers can improve their denial management through application of AI to appeals and follow-up workflows and see amazing progress. But this can become a never-ending game of catch-up if the question of why these denials are happening in the first place remains unanswered.
The American Medical Association attributes much of the shift in denial management healthcare challenges to AI batch denials [1] – a process that involves minimal, if any human scrutiny. At the same time, denial trends are changing. The average amount of a hospital’s denied inpatient and outpatient claims has jumped 12% and 14% respectively, largely driven by an increase in payer audits. Notably, the average dollar amount for a denial tied to a request for information or medical necessity (highly labor-intensive denials to process) rose by a full 70% [2].
Countering these dynamics requires a deep understanding of the root causes of denials – addressing why the denials happen in the first place and how to get in front of those issues at the coding and billing level. To accomplish this, revenue cycle leaders should view AI through a holistic lens of its role in supporting revenue integrity – interrogating processes and looking for both impacts and opportunities from AI and denial management in billing, coding, audit, and accounts receivable workflows.
Until this high-level perspective becomes a norm, the industry won’t see large-scale benefits for providers, payers, or the patients who matter most. And this is what we’re proud to offer at 3Gen Consulting – a continual exploration of the nuances of healthcare denial management services while equipping our clients with the tools and perspectives that only a vendor partner with deep and specialized industry experience can offer.
[1] J. Lubell, "How AI is leading to more prior authorization denials," American Medical Association, 10 March 2025. Available: https://www.ama-assn.org/practice-management/prior-authorization/how-ai-leading-more-prior-authorization-denials.
[2] D. Muoio, "Payer audits, denial amounts rise again in 2025, vendor data show," Fierce Healthcare, 20 November 2025. Available: https://www.fiercehealthcare.com/finance/payer-audits-denial-amounts-rise-again-2025-vendor-data-show.
Hemant Apte, Chief Executive Officer
Hemant Apte is the Founder and CEO of 3Gen Consulting, a leading healthcare revenue cycle management and technology company serving providers, ACOs, and health plans across the U.S. Since founding 3Gen in 2006, Hemant has guided the company’s evolution from a boutique consulting firm into a data-driven organization at the forefront of AI-powered RCM innovation. With decades of experience in U.S. healthcare operations, Hemant continues to provide thought leadership to clients navigating financial, compliance, and technology challenges in an increasingly value-based care environment.
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Denials are rising due to increased payer audits, AI-driven batch denials, and stricter medical necessity reviews. In 2026, providers must address upstream documentation and coding gaps to reduce denial rates.
It means most denials originate from issues in documentation, coding accuracy, or eligibility verification before a claim is submitted – not during billing or AR follow-up.
AI is improving appeals and follow-ups but is also enabling automated payer denials at scale. Without root cause analysis, providers risk chasing denials instead of preventing them.
Common causes include incomplete documentation, incorrect medical coding, missing prior authorization, and lack of medical necessity support – issues that occur before claim submission.
Leaders should conduct pre-bill audits, strengthen clinical documentation, improve coding accuracy, and implement denial prevention strategies focused on upstream workflows.
3Gen combines AI-driven insights with deep domain expertise to identify root causes, improve coding and documentation, and prevent denials before they impact revenue cycle performance.