How Advanced Payment Integrity Strengthens Transparency and Collaboration Across the Healthcare Ecosystem

Increasing rates of claims denials cause operational bottlenecks and financial consequences across the healthcare system.

In 2024, the initial claims denial rate rose to nearly 12%. Denied claims cost hospitals about $260 billion every year, limiting cash flow and hindering their abilities to provide comprehensive care. High rates of claims denials can also impact members’ ability to access timely care.  Claims management and processing is complex, and there is no one-size-fits-all solution.

So why do claims denials continue to rise, and what are the ripple effects? In this blog, we discuss four key areas that are impacted most by claims denials and how advanced payment integrity can help.

4 Areas Impacted Most by Claims Denials

At a time when healthcare innovation improves outcomes and expands access, an increase in claim denials feels like a step backward. These denials often result from coding errors, insufficient documentation, policy discrepancies, or pre-authorization failures. While these measures may be intended to control costs, they frequently lead to unintended consequences that can create significant challenges for health plans, providers, and members.

1.    Financial and Operational Challenges

The Advisory Board highlights that nearly 90% of improper claim denials are preventable, and often caused by common administrative errors like incomplete documentation, coding mistakes, or missing prior authorizations. These errors are exacerbated by the complexity of the coding and billing system, which includes thousands of updates to diagnostic and procedural codes each year.

Furthermore, health plans must devote significant resources to reviewing and resolving denials, which leads to delays and operational inefficiencies. Taking a reactive approach to denials increases administrative costs for health plans and adds unnecessary strain, without delivering significant savings. This emphasizes the urgent need to invest in denial prevention strategies to streamline operations and minimize waste.

2.    Reputational Impacts

Claims denials don’t just hit a payer’s bottom line—they also chip away at members’ and providers’ trust.

For members, claim denials feel personal. Repeated denials, especially for time-sensitive care, can erode trust in their health plans. Recent public scrutiny only amplifies the reputational risks for health plans, exposing them to advocacy pushes, regulatory intervention, and legal challenges.

For providers, frequent or inaccurate denials increase frustration and undermine collaboration, making health plans appear as obstacles rather than partners in care. This misalignment can jeopardize network agreements and reduce the health plan’s credibility within the provider community.

3.    Poor Clinical Outcomes

High-utilization patients, like those managing chronic illnesses, usually face the steepest challenges. A 2023 study from the Kaiser Family Foundation found that 27% of people with frequent doctor visits had their insurance claims denied, compared to 14% of those with fewer visits.

4.    Reduced Provider Capacity

Healthcare providers face significant challenges from claim denials, spending an average of $43.84 per appeal. These costs add up to billions annually for hospitals and health systems, straining budgets and forcing organizations to divert resources from essential services.

Managing claim denials takes valuable time away from patient care and strategic improvements. Administrative staff responsible for complicated claims rework and appeals processes often face heavy workloads, leading to health worker burnout.

This problem hits smaller hospitals especially hard, as they typically have smaller administrative teams and fewer resources to handle the volume of denials. As a result, these facilities are forced to make tough decisions between paying to appeal claims denials or funding patient care efforts.

Enhance Claims Management with Prospective Payment Integrity

Reducing preventable claim denials requires a shift toward transparency, collaboration, and innovation in healthcare. For health plans, this means taking a proactive approach. Instead of treating claim denials as isolated mistakes to fix after submission, focusing on identifying patterns and addressing root causes can eliminate claims discrepancies at the source.

Payment integrity solutions like HealthEdge Source™ use advanced technology to improve claims management and efficiency.

With HealthEdge Source, the entire claims process—from pre-adjudication to post-pay—is managed through one streamlined, integrated platform. For health plans, this means fewer handoffs, faster resolutions, and significant time and resource savings. This all-in-one approach simplifies operations and gives health plans greater control over managing diverse lines of business.

Robust Reimbursement Content Libraries

HealthEdge Source offers a comprehensive reimbursement content library that is constantly updated to meet the latest payer and regulatory requirements. This helps health plans stay compliant and up-to-date as rules change.

A dedicated internal content team manages these updates, sourcing changes directly from the Centers for Medicare and Medicaid Services (CMS), state Medicaid programs, and other regulators. The team maintains Medicare and Medicaid edits, pricing rules, and rate schedules, delivering automatic updates every two weeks. This seamless process ensures health plans always have access to the most current information, keeping claims aligned with the latest standards and reducing denials caused by outdated information.

Advanced Claims Editing

HealthEdge Source makes claims management easier with advanced editing tools. Unlike traditional systems, the solution allows payment rules to be customized to fit unique health plan reimbursement policies, provider agreements, and regulatory requirements. Based on custom edits, it can flag discrepancies in real time, reducing denial rates and improving first-pass accuracy.

The editing process uses a dual-layer approach for added precision. First-pass edits catch errors upfront, while second-pass edits apply payer-specific rules before finalizing payments. This process helps identify issues such as duplicate claims, mismatched levels of care, or frequency limit violations, cutting down on post-payment corrections or recovery efforts.

The “Monitor Mode” feature adds another layer of control by allowing health plans to test potential edits in a sandbox environment before rolling them out. By modeling financial and operational outcomes ahead of time, plans can make informed decisions and avoid disruptions.

Real-Time Data and Reporting

HealthEdge Source offers clear insights and analytics through customizable dashboards that track key metrics like impacted claims, triggered edits, and financial outcomes. These tools make it easier to refine claims processes and meet regulatory reporting requirements. Root cause analysis adds another layer of support by identifying why denials happen—whether from coding mistakes, unclear policies, or missing documents.

The platform ensures fair and consistent decisions, reduces provider disputes, and promotes better collaboration by combining real-time feedback with history-based logic. Integrating real-time error detection allows health plans to proactively resolve claims issues before adjudication, which helps minimize costly post-payment recoveries.

AI Platform Enhancements

The partnership between HealthEdge Source and Gynisus enables dynamic analysis of claims data in real time to identify issues like coding errors and clinical documentation misalignments that frequently result in denials. This self-checking AI model adapts to the nuances of healthcare data, supports medical necessity validation, and delivers consistent outputs to meet stringent payer requirements. This combination of adaptability and automation reduces review times by more than 50% and empowers clinicians to focus on more complex cases that require specialized expertise.

In addition, leveraging HealthEdge Source in conjunction with Codoxo’s AI-driven Unified Cost Containment Platform can enhance end-to-end payment integrity processes. This partnership combines advanced prospective payment integrity capabilities with AI to address key challenges like fraud, waste, abuse (FWA), and inaccurate claims processing. By consolidating claims workflows and embedding AI directly into the adjudication lifecycle, this collaboration equips health plans with unprecedented transparency, faster time-to-value, and reductions in vendor reliance.

Together, these partnerships make HealthEdge Source an industry leader in proactive claims management, merging cutting-edge AI technology with a deep understanding of payment integrity. By reducing administrative overhead, streamlining error detection, and improving collaboration between payers and providers, these collaborations set a new benchmark for accuracy and operational excellence in healthcare.

Claims Processing Built for Today and Tomorrow

HealthEdge Source redefines payment integrity by addressing the complexity and fragmentation of today’s healthcare system with precision and agility. By combining editing, pricing, and analytics in one easy-to-use cloud platform, it streamlines payment processes and boosts efficiency.

With automation at its core, it reduces manual effort, enhances compliance, and delivers measurable cost savings, ensuring health plans operate at peak performance without the overhead of outdated systems.

Ready to transform inefficient and costly claims processes? Download our eBook, “Path to Payment Integrity: A Story of Innovation and Impact.”