Gloriann Sordo, General Manager of Denials Management at Aspirion, discusses the unique challenges children’s hospitals face with AI-powered claim denials and shares strategies for success.
Healthcare technology is evolving rapidly, especially in claims processing. Can you explain what’s happening with artificial intelligence (AI) and denials?
We’re witnessing a significant shift in how payers process claims. Payers are increasingly utilizing artificial intelligence to review and reject claims, with some major insurers now processing claims in as little as two seconds.
The impact has been profound. Nearly three out of four healthcare providers report an increase in denied claims between 2022 and 2024, with almost 40% stating that their claims are denied at least 10% of the time. For children’s hospitals already operating on slim margins, these AI-driven changes require thoughtful, strategic responses.
What makes children’s hospitals particularly vulnerable to payer use of AI?
Children’s hospitals are particularly vulnerable to payer use of AI because pediatric medical data is often more complex than adult data, with various inputs from providers, parents, caregivers, subspecialists, and teachers, and some pediatric conditions have few data samples to train AI models. This complexity means AI tools often misinterpret pediatric cases, leading to inappropriate coverage decisions.
The vulnerability is amplified by children’s hospitals’ payer mix: over half of admissions are covered by government payers like Medicaid, which according to JAMA underpay nearly 3 out of every 5 admissions compared to fewer than 1 in 5 for private payers—a rate nearly 3x higher. Children’s hospitals also treat a high volume of complex, high-cost cases—exactly the type that AI algorithms are often programmed to automatically deny.
Moreover, payer AI tools have been accused of substantially increasing denial rates, according to a 2024 Senate committee. One California children’s hospital revenue cycle leader told us: “There’s one big healthcare company automatically denying fifty percent of claims using AI. We need to respond with our own technology solutions.”
When payers deploy AI tools that produce significantly higher denial rates than what is typical by employing systematic batch denials with limited human review, children’s hospitals—already operating with thin margins due to underpayment—face severe financial and operational strain.
How can children’s hospitals respond effectively?
Children’s hospitals need to embrace AI and automation while preserving the human element. Key AI and automation technologies include automated eligibility verification, which is crucial given the high-stress situations families face when bringing in sick children for care. Predictive analytics can identify at-risk claims before submission, allowing hospitals to proactively address potential issues.
Natural language processing helps analyze clinical documentation to ensure it meets payer requirements—particularly important for complex pediatric conditions. Automated appeal letter generation can draft initial appeals based on denial reasons and clinical data, which experts can then review and refine.
But what’s important to remember is that while AI can assist, human judgment remains essential in managing complex medical claims. Children’s hospitals need clinical expertise within revenue cycle teams—staff who understand pediatric care and medical necessity criteria for effective appeals and denial prevention.
Are there regulatory developments that might help?
Yes. California passed landmark legislation (SB 1120) prohibiting health insurance companies from using AI to deny coverage without human physician review. The American Medical Association developed advocacy principles emphasizing that medical decisions must be made by physicians and patients without interference from unregulated companies. Other states are following California’s lead.
What’s your advice to overwhelmed children’s hospital revenue cycle leaders?
First, know that you’re not alone. The denials landscape is uniquely challenging for children’s hospitals due to high Medicaid utilization, complex authorization requirements, extensive documentation needs, and razor-thin profit margins with low patient volumes.
Here are three takeaways on how AI is changing the approach:
- Contract intelligence prevents underpayments before they happen. Advanced AI can parse entire payer-provider contracts, extracting key terms and converting unstructured language into structured databases. This enables systems to calculate expected reimbursement across all payers and continuously monitor actual payments against contract terms—identifying discrepancies in real-time before accounts close. This shifts the model from reactive problem-solving to proactive revenue protection.
- AI-enabled appeals combine computational scale with clinical expertise. Modern platforms use large language models to ingest and analyze denial letters and medical records, compare documentation against clinical care guidelines and payer policies, and then extract relevant clinical evidence to draft appeals for human review. This process leverages AI to handle the right information at the right time while maintaining human oversight for clinical judgment and accuracy.
- AI technology addresses the fundamental capacity problem. Manually reviewing every contract term against every claim, or crafting individualized appeals at scale, simply isn’t feasible with traditional workflows. AI makes this comprehensive review possible, transforming how organizations approach both contract management and appeals. Early adopters are seeing measurable improvements in recovery rates and processing speed—demonstrating that combining AI efficiency with human expertise can meaningfully impact the revenue cycle challenges facing children’s hospitals.
What gives you optimism?
I’m encouraged by how quickly AI is making a real difference for hospitals. In our work with clients using AI-powered solutions alongside clinical expertise, we’re seeing tangible improvements—AI-enabled appeals are achieving 1.5x higher success rates and 1.2x faster from placement to first payment, which translates to meaningfully improved financial outcomes.
The regulatory attention is also hopeful. When California requires human oversight of AI denials, it sends a clear message that algorithmic decision-making without medical judgment isn’t acceptable. This regulatory framework validates our approach: using AI-powered technology to analyze complex pediatric denials and generate evidence-based appeals, with our team of clinicians and attorneys providing essential oversight.
Children’s hospitals face real challenges, but they have unique strengths, deep clinical expertise, strong community support, and mission-focused professionals. By leveraging the right technology and partnerships, children’s hospitals can successfully navigate these challenges and continue their vital work serving the most vulnerable patients.
Ready to optimize your denials management? Aspirion’s team specializes in helping children’s hospitals navigate AI-driven denials and recover more revenue. With proprietary AI technology backed by deep pediatric expertise, we work on a contingency basis—meaning we only succeed when you do. Let’s talk.
About Gloriann Sordo
Gloriann Sordo is General Manager of Denials Management at Aspirion, where she leads a team of technical, legal, and clinical professionals specializing in helping healthcare organizations
