AI promised less friction and lower administrative costs, but a new report from the Peterson Health Technology Institute suggests that it might actually be delivering the exact opposite.
The report stems from a stakeholder workshop that PHTI held to uncover AI’s impact on two of healthcare’s most hotly debated administrative processes: prior authorization and medical coding.
The main finding highlights an obvious predicament. Speeding up flawed processes doesn’t make them any less expensive. PHTI didn’t pin the blame on either side of the AI arms race.
- It found that payors are (mostly) using AI responsibly. They’re accelerating PA reviews and auto-approving more clean cases, while simultaneously improving code validation and risk adjustment – although the DOJ would probably disagree.
- Providers are also using their AI superpowers for good. They’re automating the PA workflows driving burnout and streamlining the coding processes that take clinician time away from patients.
That almost sounds like it should create some efficiency. The problem is the system itself, and AI doesn’t fix the underlying issues.
- AI might reduce the cost for individual orgs to execute or appeal prior auths, but it won’t help costs at the system level if the savings don’t get passed on to patients.
- The workshop also found that provider AI is causing an uptick in billing intensity, which payors have naturally responded to with across-the-board downcoding and other reimbursement reductions.
- PHTI believes this makes reimbursement policy the strongest lever that can realistically be pulled to slash system-level spending and administrative inefficiencies.
Follow the incentives. Or in this case, the lack thereof.
- On paper, payors and providers should be competing for a finite pool of patients in an arena that rewards better products with smaller price tags. If AI cuts costs, providers would be able to bill less and payors could lower premiums.
- In reality, most patients go wherever the ambulance takes them, and there’s little incentive to sacrifice profits in order to get more people in the door.
Efficiency doesn’t translate to deflation. Payors or providers are rational market actors, and if AI can streamline a process that lets them hold onto more of their revenue, then that’s exactly what they’ll do.
The Takeaway
Bots arguing with bots might be faster than humans arguing with humans, but PHTI doesn’t see that eliminating friction from the overall system if nobody has any incentivize to make it happen.
