If you ask many revenue cycle leaders what is driving denials, most will point to the usual suspects: coding errors, eligibility mix-ups, missing documentation. And they are not wrong—those issues are real, persistent, and costly. But they are not the whole story. A deeper, more disruptive shift is happening on the payer side, one that is fundamentally changing the denials landscape and catching many providers off guard.
A recent HealthLeaders webinar, “The Winning Edge for Defeating Denials,” brought together three executives to unpack exactly what is going on. The panel included Keshia Lewis, Executive Director Revenue Cycle at WellStar Health System; Brad Olson, Vice President of Managed Care at Mercyhealth; and Jim Bohnsack, Chief Strategy and Client Officer at Aspirion. What emerged from their conversation was a picture of an industry in transition—one where the traditional playbook for managing denials is no longer enough.
Payers Are Quietly Shifting the Playing Field
For years, the denial process followed a relatively predictable pattern. A claim came in, a payer flagged an issue—usually administrative—and the provider’s team corrected and resubmitted. It was frustrating, but it was manageable.
Here is where the story gets interesting—and troubling. Many payers have been announcing reductions in prior authorization requirements, which sounds like progress.
But Bohnsack flagged a pattern that tells a different story. Payers are reducing authorizations on one end while significantly increasing post-payment medical record review requests on the other. The net effect is not less friction; it is friction that moves to a place where it is harder to see coming and harder to answer.
“The most troubling trend,” Bohnsack said, “is the payers stating, ‘We’re going to reduce the number of authorizations required,’ but in turn, all they’re doing is increasing the amount of medical record denial requests that are being created.” These requests are being fed into large language models (LLMs) by payers, parsed for evidence of whether a claim met medical necessity or level-of-care criteria, and used to justify downgrades.
The result is a new category of denial that does not fit neatly into the workflows most providers have built. These post-payment audit findings do not arrive through standard ERA codes that a billing team would immediately recognize. They arrive as separate notifications—a quiet signal that a claim is being downgraded and the provider needs to decide whether to chase the difference or move on to the next full denial.
“Death by a Thousand Cuts”
That decision—chase the delta or let it go—is where the real revenue leakage happens. Bohnsack described it as “death by a thousand cuts.” Payers are not always issuing full zero-pay denials. They are downgrading DRGs and paying less, betting that providers do not have the resources to appeal every partial reduction. In one example he cited, a claim was downgraded from one DRG to another—a swing of roughly $7,000—through a post-payment review, with no traditional denial code attached.
Responding effectively requires clinical knowledge. It requires coders and clinicians who can review documentation, identify the relevant evidence, and draft a compelling appeal. Those are expensive, scarce resources. And as Bohnsack noted, “The payers are somewhat betting on the fact that you just don’t have (the resources) and you’re not going to respond.”
Why Denial Rates Stay Elevated
So why are denial rates not coming down, even as health systems invest more in revenue cycle operations? Lewis offered a grounding perspective from inside WellStar. After reviewing her organization’s data, she found that the top denial drivers—non-covered services, coding errors, eligibility issues, and missing information—had actually remained consistent over the past two years. “This consistency just really suggests that while our processes may have stabilized, there still remains key areas of focus that require ongoing attention,” she said.
In other words, the familiar categories of denials are holding steady. But underneath them, the way those denials are being generated and enforced is changing faster than most teams realize. Payer technology is outpacing provider technology, and the gap is widening.
Olson, who spent several years working on the payer side before going over to the provider world, put it plainly: “There really isn’t any one single area” driving denials today. Medical necessity, authorization, eligibility, and documentation requests all play a role. But what has changed most significantly, he said, is the speed and sophistication with which payers are finding and enforcing those issues. “One of the things that I’ve really seen transition over the last four to six years is this ability to incorporate AI on the payer side.”
What This Means for Providers
The denials challenge facing health systems right now is not primarily a process problem. It is a technology and information asymmetry problem. Payers have built sophisticated systems to identify, justify, and enforce denials at scale. Providers are still largely relying on the same human-intensive workflows they have used for years.
Olson summed up the outlook on managing denials: “I don’t think it’s going to get easier. I think it’s going to get a lot harder.” The hospitals that will fare best are the ones that recognize the shift now—before denial rates force the issue.
Bohnsack offered a concrete example of what matching that technology investment looks like. To help healthcare providers navigate the denials crisis, Aspirion built an AI solution using large language models that automates the appeals process—parsing medical records, identifying clinical evidence, and drafting letters that align patient care with payer policies and clinical standards.
The results, he said, have been meaningful: a significant increase in overturn rates and 40 fewer days from placement to payment.
“Use all the technology you can,” he urged providers. “I don’t care what it is, use something—because they are, and if you’re going to try to keep pace, you’re not going to be able to do it by throwing more bodies at it.”
View the panel session recording here.
