Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

Why AI is the perfect neutral arbiter for health care claims

Tim Wetherill, MD
Tech
February 7, 2025
Share
Tweet
Share

When Berkshire Hathaway executive Charlie Munger said, “Show me the incentives, and I’ll show you the outcome,” during a speech in 1995, he wasn’t talking about health care, but he might as well have been. Companies in any industry are influenced by how the norms and structures around them contribute to their success, and in health care, the incentives often aren’t set for the good of the end user—the patient.

Consider these incentives from the perspective of the health plan–provider relationship. While there are plenty of people in health care doing genuine work to serve patients, like in any industry, there are also bad actors. Because of the subjectivity that is baked into health care’s billing and coding policies, those bad actors are incentivized, and given latitude, to game the system. That ambiguity allows a doctor with less-than-pure intentions to, for instance, upcode a procedure they shouldn’t without pushback from the institution (or individual) paying out the claim.

The vendor stack

At the same time, the complexity that underlies these policies has created an environment where vendors can sell software and services that help health plans sort through claims and make sure they’re being paid out correctly. Theoretically, that’s a perfectly valid value proposition, except that the vendors that health plans hire to find errors aren’t incentivized to work in an efficient way.

Vendors typically are paid based on how many errors they find, so rather than addressing root causes that lead to bad billing practices, they’re motivated to maintain the status quo. That means they are often unwilling to do things like share the errors they find, since that would lead to fewer errors in the future, and thus lower payouts.

It’s the same inertia that has led to the claims administration process to rely on old systems for processing data because there aren’t strong enough levers motivating the organizations responsible for finding errors to maximize their chance of arriving at the right decision the first time. The loser in all of this is the health plan, which ends up paying for a vendor stack of six or seven companies using old technology to solve a problem poorly.

The need for change

These market inefficiencies are well-established, yet the norms have remained for a couple of reasons. For one, it’s nearly impossible for humans to legislate out all subjectivity and complexity from the system that allows for bad actors to benefit. Plus, it’s difficult to change incentives that have been in place for so long when they’re benefiting established players.

A new solution is needed—something or someone who can serve as a neutral third-party arbiter, one that’s not influenced by any incentive other than arriving at the truth efficiently. Humans, and the organizations they work for, will always be unable to achieve true neutrality. So, we need a better partner: AI.

AI as a neutral arbiter of truth

AI can be trained on rules. When those rules are clear, well-defined, and avoid introducing bias, it ensures that AI does not deviate from its mission to find the truth. This means that AI can ingest and interpret the complex policies that govern health care claims adjudication accurately, consistently, and quickly.

By creating standardization and removing subjectivity, bad actors aren’t able to skirt a rule for their own benefit, and there is less opportunity for perverse incentives to skew outcomes. Providers, for instance, will all code the same procedures in the same way, because there will be no ambiguity that allows for deviation. In this alternative reality, there’s also less of a need for a bevy of vendors to sort through claims and find errors, since the uniformity of process will lead to fewer errors in the first place.

It has been well demonstrated that the current system, built on manual processes, doesn’t lead to good outcomes for people or institutions who pay for care, and thus, is bad for the health care system as a whole. What’s needed is a neutral third party to help plans, providers, and vendors all simplify claim adjudication. AI can be that neutral arbiter, and everyone who touches the health care system will benefit.

Tim Wetherill is a physician executive.

Prev

Marijuana's hidden threat to fertility and family planning [PODCAST]

February 6, 2025 Kevin 0
…
Next

Rethinking residency: How to reshape graduate medical education

February 7, 2025 Kevin 0
…

ADVERTISEMENT

Tagged as: Health IT

Post navigation

< Previous Post
Marijuana's hidden threat to fertility and family planning [PODCAST]
Next Post >
Rethinking residency: How to reshape graduate medical education

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

Related Posts

  • Why the health care industry must prioritize health equity

    George T. Mathew, MD, MBA
  • In the crosshairs: The False Claims Act’s new targets in health care

    Scott Ellner, DO, MPH
  • Proactive care is the linchpin for saving America’s health care system

    Ronald A. Paulus, MD, MBA
  • Health care workers should not be targets

    Lori E. Johnson
  • To “fix” health care delivery, turn to a value-based health care system

    David Bernstein, MD, MBA
  • Health care’s hidden problem: hospital primary care losses

    Christopher Habig, MBA

More in Tech

  • 9 domains that will define the future of medical education

    Harvey Castro, MD, MBA
  • Key strategies for smooth EHR transitions in health care

    Sandra Johnson
  • Why flashy AI tools won’t fix health care without real infrastructure

    David Carmouche, MD
  • Why innovation in health care starts with bold thinking

    Miguel Villagra, MD
  • How self-improving AI systems are redefining intelligence and what it means for health care

    Harvey Castro, MD, MBA
  • How blockchain could rescue nursing home patients from deadly miscommunication

    Adwait Chafale
  • Most Popular

  • Past Week

    • What the world must learn from the life and death of Hind Rajab

      Saba Qaiser, RN | Conditions
    • How medical culture hides burnout in plain sight

      Marco Benítez | Conditions
    • How the 10th Apple Effect is stealing your joy in medicine

      Neil Baum, MD | Physician
    • Why flashy AI tools won’t fix health care without real infrastructure

      David Carmouche, MD | Tech
    • Why Medicaid cuts should alarm every doctor

      Ilan Shapiro, MD | Policy
    • Key strategies for smooth EHR transitions in health care

      Sandra Johnson | Tech
  • Past 6 Months

    • Why tracking cognitive load could save doctors and patients

      Hiba Fatima Hamid | Education
    • How dismantling DEI endangers the future of medical care

      Shashank Madhu and Christian Tallo | Education
    • What the world must learn from the life and death of Hind Rajab

      Saba Qaiser, RN | Conditions
    • How scales of justice saved a doctor-patient relationship

      Neil Baum, MD | Physician
    • The broken health care system doesn’t have to break you

      Jessie Mahoney, MD | Physician
    • The silent toll of ICE raids on U.S. patient care

      Carlin Lockwood | Policy
  • Recent Posts

    • Inside human trafficking: a guide to recognizing and preventing it [PODCAST]

      The Podcast by KevinMD | Podcast
    • Earwax could hold secrets to cancer, Alzheimer’s, and heart disease

      Sandra Vamos, EdD and Domenic Alaim | Conditions
    • Why male fertility needs to be part of every health conversation

      Hoag Memorial Hospital Presbyterian | Conditions
    • Why health care must adapt to meet the needs of older adults with disabilities

      Lynn A. Schaefer, PhD | Conditions
    • How doctors took back control from hospital executives

      Gene Uzawa Dorio, MD | Physician
    • Improving patient encounters: time-saving strategies for physicians [PODCAST]

      The Podcast by KevinMD | Podcast

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

Leave a Comment

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

  • Most Popular

  • Past Week

    • What the world must learn from the life and death of Hind Rajab

      Saba Qaiser, RN | Conditions
    • How medical culture hides burnout in plain sight

      Marco Benítez | Conditions
    • How the 10th Apple Effect is stealing your joy in medicine

      Neil Baum, MD | Physician
    • Why flashy AI tools won’t fix health care without real infrastructure

      David Carmouche, MD | Tech
    • Why Medicaid cuts should alarm every doctor

      Ilan Shapiro, MD | Policy
    • Key strategies for smooth EHR transitions in health care

      Sandra Johnson | Tech
  • Past 6 Months

    • Why tracking cognitive load could save doctors and patients

      Hiba Fatima Hamid | Education
    • How dismantling DEI endangers the future of medical care

      Shashank Madhu and Christian Tallo | Education
    • What the world must learn from the life and death of Hind Rajab

      Saba Qaiser, RN | Conditions
    • How scales of justice saved a doctor-patient relationship

      Neil Baum, MD | Physician
    • The broken health care system doesn’t have to break you

      Jessie Mahoney, MD | Physician
    • The silent toll of ICE raids on U.S. patient care

      Carlin Lockwood | Policy
  • Recent Posts

    • Inside human trafficking: a guide to recognizing and preventing it [PODCAST]

      The Podcast by KevinMD | Podcast
    • Earwax could hold secrets to cancer, Alzheimer’s, and heart disease

      Sandra Vamos, EdD and Domenic Alaim | Conditions
    • Why male fertility needs to be part of every health conversation

      Hoag Memorial Hospital Presbyterian | Conditions
    • Why health care must adapt to meet the needs of older adults with disabilities

      Lynn A. Schaefer, PhD | Conditions
    • How doctors took back control from hospital executives

      Gene Uzawa Dorio, MD | Physician
    • Improving patient encounters: time-saving strategies for physicians [PODCAST]

      The Podcast by KevinMD | Podcast

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Leave a Comment

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...