Health systems bet on AI to curb denials and protect cash

Modern Healthcare – Friday, January 30, 2026
By Alex Kacik and Tim Broderick

Health systems are increasingly turning to artificial intelligence to limit claim denials and streamline prior authorization processes as providers look to boost revenue and get paid quicker.

Providers and insurers are gearing up in an AI arms race in pursuit of controlling reimbursement. Health systems have automated claims management to free up clinicians and counteract insurers that are looking to lower reimbursement.

“We’re deploying AI to protect ourselves, to protect our revenues, because at times AI’s being deployed to reduce our revenues,” Wright Lassiter, president and CEO of Chicago-based CommonSpirit Health, said earlier this month at the J.P. Morgan Healthcare Conference. “My callout to the insurers is that what we really need to spend our time focusing on is how to ensure that we can take cost and complexity out of our organizations and not think about AI in a militarized zone of pointing it against ourselves.”

Recent survey data from health system revenue cycle leaders illustrate the revenue cycle battle between providers and insurers, according to a McKinsey & Co. report published earlier this month. At least 60% of health systems used AI and other technologies in 2025 to better manage claim denials and prior authorization, up from 23% for denials and 44% for prior authorization in 2024. More than half of revenue cycle leaders used advanced technology to improve coding, up from 39% in 2024.

Nurses often spend at least 45 minutes writing an appeal letter seeking to overturn a denied claim. Generative AI can help reduce writing time to 10 minutes, said Michael Peterson, senior partner at McKinsey and lead author of the report.

“Health systems have more denials from payers than they are able to handle,” he said. “Generative AI allows providers to appeal more denials and spend more time at the bedside.”

While providers’ use of AI across the revenue cycle process is widespread, health system approaches vary. Some organizations use so-called point solutions for each issue, potentially leading to redundant processes. Many health systems aim to deploy technologies that work together across their organizations, often via their electronic health record system.

Cleveland Clinic’s applications in patient payments, documentation, coding and billing work together via its systemwide Epic health record, Cleveland Clinic Chief Financial Officer Dennis Laraway said at the conference.

Automation and other technology have helped decrease Cleveland Clinic’s accounts receivable balance. The nonprofit health system has used AI-driven applications to help reduce its days of revenue in accounts receivable to 47 days in 2025, from 53 days in 2023, Laraway said. The percentage of its accounts receivable balance exceeding 90 days has dropped to 30.3%, from 34.5%, during that time frame.

“You have to be integrated into your host system, and the tech stack is doing that for us,” he said. “Days in accounts receivable and the aging of our accounts receivable, those numbers need to continue to come down, but we feel like what we built will be lasting for the future.”

Access this article at its original source.