Administrative AI: Current Use and Potential Impact

Manatt Health is supporting the Peterson Health Technology Institute (PHTI) on a series of convenings focused on adoption of artificial intelligence (AI) in the U.S. health care system.

A recent convening brought together senior leaders from health systems, health plans, technology developers, investment firms, and federal agencies on the use of AI in healthcare administrative processes.

The discussion focused on two use cases where adoption is accelerating: prior authorization and medical billing coding. These areas represent significant sources of administrative burden and cost.

Early observations point to a complex pattern: while AI can reduce administrative burden for individual organizations, it is increasing the volume of transactions, intensifying back-and-forth across the system, and may be driving costs higher. Select key themes emerged during those discussions:

• AI may reduce the costs for individual organizations to execute prior authorizations, but it has not reduced overall system-level costs. Instead, it is exposing and, in some cases, exacerbating underlying inefficiencies in the prior authorization process.
• Real-time prior authorization at the point of care is an emerging model, but current proofs of concept are narrow and not yet scalable.
• Standardizing and digitizing prior authorization data can reduce information asymmetry, but AI’s impact is limited by the variation across health plan medical policies.
• Provider deployment of AI is increasing billing intensity and inflating medical spending. Health plans are beginning to respond with across-the-board downcoding and other reimbursement reductions, though the impact of these cuts is not yet known.
• Reimbursement policy is the strongest lever to drive administrative efficiencies and system-level cost savings.

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