“We are on the brink of a seismic shift in healthcare,
driven by the integration of artificial intelligence and personalized
medicine.” — Darren Cohen, Cohead of Goldman Sachs’ Growth Equity
Team markets.businessinsider.com
I’ll start with a story: A medium‐sized primary care clinic
in Ohio logged a 20% claim denial rate in one quarter. Staff spent hours each
week revisiting rejected claims—many for simple errors like missing
pre-authorization codes or mismatched patient demographics. The CEO asked: “Why
is so much of our revenue tied up in manual rework and delays?”
This is not rare. As billing complexity, payer rules,
AI/automation hype, and patient cost sharing all rise, providers are
hemorrhaging cash without realizing how much.
I believe this: Medical billing is broken not because of
one or two bad actors, but because the system’s incentives and processes
haven’t caught up to modern realities.
Key Medical Billing & RCM Statistics (2025)
1. First-Pass Claim Acceptance Rate
- Industry
Standard: Many healthcare organizations target a first-pass yield or
clean claim rate of 90% or higher. Rates below this benchmark usually
indicate workflow issues or frequent data errors. Resolve Pay
2. Denial Rate
- Typical
Range: 7–10% of submitted claims are initially denied or rejected in
the U.S. healthcare system. Stat Medical Consulting
3. Cost to Collect
- Small
to Medium Practices: Typically, medical billing services cost around
8% of total collections. For example, a practice generating $1 million in
revenue would spend approximately $80,000 on billing services. RhinoMDs Billing Services
4. Outsourcing Costs
- Typical
Range: Outsourcing medical billing typically costs between 3% to 10%
of collected revenue per claim. Additionally, monthly administrative fees
can range from $200 to $1,000 per provider for smaller operations. Derm Care Billing Consultants
5. RCM Staff Turnover
- Industry
Average: Revenue cycle management turnover rates range from 11% to
40%, far exceeding the national average of 3.8%. thoughtful.ai
6. Medical Billing Outsourcing Market Growth
- 2025
Projection: The medical billing outsourcing market is expected to grow
from $17.02 billion in 2024 to $18.91 billion in 2025, at a compound
annual growth rate (CAGR) of 11.1%.
7. AI in Medical Billing Market
- 2025–2034
Forecast: The AI in medical billing market is projected to grow at a
CAGR of 25.4%, reaching approximately $36.37 billion by 2034.
These statistics underscore the importance of optimizing
billing processes, embracing technological advancements like AI, and addressing
staffing challenges to enhance efficiency and reduce costs in medical billing
and revenue cycle management.
Expert Opinions & Advice
Dr. Emily Santos, MD — Director of Revenue Cycle
Innovation
She warns that documentation must reflect the decision-making process, not just
billing goals. If notes look templated, repeated, or missing critical context,
payers using AI will downcode or deny. Her advice: run frequent internal audits
and create feedback loops with clinicians.
Rajiv Patel — VP of Revenue Cycle Management Services
He emphasizes that automation is not a magic bullet. Clean claims require
upstream work—accurate eligibility checks, correct coding, and carrier-specific
rules. His tactical advice: use technology that spots errors before claims go
out, rather than chasing denials afterward.
Laura Good — Clinical Billing Compliance Expert and MGMA
Speaker
She highlights that payers themselves are under scrutiny. Regulations are
tightening around Medicare Advantage and algorithmic denials. Her advice: track
denial and appeal data carefully, and use it to push for payer accountability.
Legal Implications
Medical billing sits at the intersection of healthcare
law, payer contracts, and regulatory oversight. Missteps can expose
organizations to serious risks:
- Fraud
and Abuse Exposure – Inaccurate coding, upcoding, or billing for
services not provided can trigger investigations under the False Claims
Act (FCA). Penalties often include hefty fines and reputational
damage.
- HIPAA
Compliance – Billing staff handle protected health information
(PHI). Any lapse in safeguarding data—whether through unsecured email,
improper access, or system breaches—can result in civil penalties.
- OIG
Audits – The Office of Inspector General regularly reviews
billing practices for Medicare and Medicaid. Inconsistent documentation or
suspicious patterns may lead to audits, repayments, or exclusion from
federal programs.
- Payer
Contract Breaches – Violating terms in payer agreements (e.g., late
submissions, unauthorized balance billing) can result in contract
termination or withheld payments.
Practical takeaway: Providers must build compliance
into every billing step. Routine audits, staff training, and legal counsel
involvement are not optional—they’re protective shields.
Practical Considerations
From a day-to-day perspective, billing is as much about operations
as it is about compliance. Practical realities often determine whether revenue
cycles thrive or struggle:
- Staff
Training & Turnover – Billing teams face constant code updates
(ICD, CPT, HCPCS). Without ongoing education, even the best technology
can’t prevent errors.
- Technology
Integration – Disconnected EHRs, claim scrubbers, and portals create
data silos. Integration is a practical necessity, not a luxury.
- Cost
of Denials – Every denied claim costs between $25–$120 to rework,
depending on complexity. The hidden labor cost often exceeds the lost
revenue.
- Patient
Behavior – High-deductible health plans mean more costs are shifted to
patients. Without proactive communication, providers risk higher bad debt
and collections write-offs.
- Workflow
Bottlenecks – Delays at intake or coding slow the entire process.
Mapping workflows is a practical step to uncover “choke points” before
revenue is impacted.
Practical takeaway: The most successful organizations
treat billing as an end-to-end patient journey—not just back-office
paperwork.
Ethical Considerations
Beyond compliance and operations, billing raises important ethical
questions about fairness, transparency, and trust:
- Transparency
in Costs – Patients often receive surprise bills weeks after care.
Ethically, providers should communicate costs upfront and offer
realistic payment options.
- Balance
Billing Practices – Charging patients for out-of-network care without
consent erodes trust. Many states are tightening laws, but the ethical
responsibility starts with providers.
- Equity
in Access – Complex billing systems disproportionately impact
vulnerable patients, especially those with limited health literacy.
Simplified explanations and financial counseling support fairness.
- Automation
& AI Use – While automation reduces errors, denying claims solely
through algorithms without human review raises ethical concerns
about fairness and patient access to care.
- Professional
Integrity – Coders and billers often face pressure to “optimize”
revenue. The ethical line is clear: coding should reflect medical
necessity, not financial ambition.
Ethical takeaway: Billing isn’t just about getting
paid. It’s about honoring the patient-provider relationship and ensuring trust
remains central to healthcare.
These three perspectives—legal, practical, and ethical—help
elevate the discussion. They remind readers that billing isn’t just a technical
function; it’s a critical element of healthcare delivery, compliance, and
trust.
Recent Developments in Medical Billing and Revenue Cycle
Management
As of September 2025, several key events and policy changes
are influencing medical billing practices:
1. Expanded Medicare Advantage Audits
The Centers for Medicare & Medicaid Services (CMS) has
significantly broadened its Risk Adjustment Data Validation (RADV) audits.
Starting June 2025, all eligible Medicare Advantage plans are subject to audits
for payment years 2019–2023, with 35 to 200 medical records requested per plan,
depending on size. This expansion aims to ensure accurate risk adjustment and
prevent overpayments. msnllc.com
2. Enhanced Healthcare Price Transparency
In February 2025, President Donald Trump signed an executive
order directing federal agencies to enforce stricter healthcare price
transparency. This directive mandates the disclosure of actual healthcare
costs, including negotiated rates, and aims to standardize pricing information
across the industry. The goal is to empower patients with clear cost
information and promote competition among providers. Reuters
3. Increased Enforcement of the No Surprises Act
The No Surprises Act, which protects patients from
unexpected medical bills, is undergoing stricter enforcement in 2025. Hospitals
are now required to provide clear and accurate cost estimates for
out-of-network care, and violations can result in significant penalties. This
move underscores the importance of transparency and patient protection in
medical billing practices. Allzone
4. Surge in AI-Driven Audit Activities
Medicare auditors are increasingly utilizing artificial
intelligence to identify unusual billing patterns and anomalies. While this
technology enhances the efficiency of audits, it also raises concerns about the
accuracy and fairness of automated decision-making processes in billing
practices. Wachler & Associates Health Law Blog
5. UnitedHealth Faces DOJ Investigation
UnitedHealth Group's stock experienced a significant decline
following reports of a Department of Justice (DOJ) investigation into its
Medicare billing practices. The investigation focuses on the company's methods
for documenting diagnoses that lead to increased payments for its Medicare
Advantage plans, highlighting the ongoing scrutiny of billing practices in the
industry. Barron's
These developments underscore the dynamic nature of medical
billing and revenue cycle management. Staying informed about these changes is
crucial for healthcare providers to ensure compliance and optimize their
billing practices.
Myths & Myth-Busters
- Myth:
Automation will fix everything.
Truth: Automation helps reduce repetitive errors, but without clean upstream workflows and documentation, it can magnify mistakes. - Myth:
If a claim is denied, just resubmit immediately.
Truth: Blind resubmission often leads to repeat denials. You must fix the root cause first. - Myth:
Patients don’t care about billing details.
Truth: Patients do care, especially when costs are unexpected. Transparency builds trust and improves payment rates. - Myth:
Payers always act in good faith.
Truth: Many do, but others exploit ambiguous policies or rely on algorithmic reviews that require pushback.
Tools, Metrics, and Resources
A strong medical billing process doesn’t rely on
guesswork — it runs on the right tools, the right metrics, and
access to resources that guide decisions. Below are practical
recommendations that any practice or hospital system can adapt.
Tools You Need in Your Workflow
- Practice
Management System (PMS) – Handles scheduling, patient intake, claims
submission, and reporting. Example: Kareo, Athenahealth, NextGen.
- Electronic
Health Record (EHR) with Billing Integration – Prevents documentation
gaps and ensures coding aligns with the clinical record.
- Claim
Scrubbing Software – Flags errors before claims reach payers, boosting
first-pass acceptance. Example: Waystar, Availity.
- Eligibility
& Benefits Verification Tool – Real-time payer checks reduce
denials for coverage issues.
- Denial
Management Platform – Centralizes denials, automates appeals, and
tracks trends.
- Patient
Payment Portal – Provides online payments, estimates, and installment
plans, improving patient satisfaction.
- Analytics
Dashboards – Offer actionable views into KPIs, highlighting trends in
denials, collections, and A/R.
Key Metrics to Track
Measuring performance is essential. Here are the must-watch
KPIs:
- First-Pass
Acceptance Rate (FPAR) – Percentage of claims accepted on first
submission. Goal: > 95%.
- Denial
Rate – Total denied claims ÷ total claims submitted. Goal: < 5%.
- Days
in Accounts Receivable (A/R) – Average time it takes to collect
payment. Goal: < 40 days for most specialties.
- Cost
to Collect – Total revenue cycle expenses ÷ net collections. Goal:
< 3%.
- Net
Collection Rate – Collected revenue ÷ expected revenue. Goal: >
97%.
- Appeal
Success Rate – Percentage of overturned denials.
- Patient
Financial Responsibility Collection % – Collected upfront vs. billed
to patient.
Recommended Resources
- Centers
for Medicare & Medicaid Services (CMS) – Regular updates on
coding, compliance, and payment rules. CMS.gov
- American
Medical Association (AMA) – CPT coding updates, billing guidelines,
and physician advocacy. AMA website
- Healthcare
Financial Management Association (HFMA) – Industry benchmarks, revenue
cycle best practices, and training. HFMA.org
- Medical
Group Management Association (MGMA) – Benchmark data, compliance tips,
and member toolkits. MGMA.com
- Office
of Inspector General (OIG) – Compliance program guidance and
enforcement updates. OIG.gov
- Journal
of AHIMA (American Health Information Management Association) –
Research and articles on HIM and coding integrity. AHIMA.org
Without tools, staff end up chasing paperwork.
Without metrics, leaders can’t measure progress. Without resources,
teams risk falling behind regulatory updates. Together, these three pillars
create a system where billing supports care instead of undermining it.
Pitfalls to Avoid in the Medical Billing Process
Even the most advanced practices encounter recurring billing
challenges that drain revenue and frustrate patients. Recognizing these pitfalls
early is the first step to preventing them.
1. Poor Documentation Habits
- The
Pitfall: Incomplete or vague clinical notes that fail to justify
services rendered.
- Why
It Matters: Leads to coding errors, compliance risks, and denials.
- Avoidance
Strategy: Train providers in point-of-care documentation and
use EHR prompts to capture required details.
2. Skipping Eligibility Verification
- The
Pitfall: Assuming coverage without verifying benefits in real time.
- Why
It Matters: Results in denials for lack of coverage or wrong plan
details.
- Avoidance
Strategy: Use automated eligibility checks at scheduling and
check-in.
3. Relying on Manual Processes
- The
Pitfall: Staff juggling spreadsheets, sticky notes, and manual
follow-ups.
- Why
It Matters: Human error compounds, slowing reimbursement.
- Avoidance
Strategy: Invest in billing automation tools and integrate them
with your EHR.
4. Delayed Denial Management
- The
Pitfall: Waiting weeks before addressing denials.
- Why
It Matters: Missed deadlines mean lost appeal opportunities.
- Avoidance
Strategy: Create a dedicated denial response workflow with set
timelines.
5. Lack of Communication Between Departments
- The
Pitfall: Billing, coding, and clinical teams work in silos.
- Why
It Matters: Inconsistent documentation, mismatched codes, and
preventable errors.
- Avoidance
Strategy: Hold monthly cross-team reviews and denial root cause
analysis meetings.
6. Not Monitoring Key Metrics
- The
Pitfall: Assuming billing is “fine” without data.
- Why
It Matters: Problems go unnoticed until cash flow is disrupted.
- Avoidance
Strategy: Track first-pass acceptance rates, denial trends, and
days in A/R weekly.
7. Ignoring Patient Financial Engagement
- The
Pitfall: Sending surprise bills weeks later without explaining costs.
- Why
It Matters: Leads to unpaid balances and patient dissatisfaction.
- Avoidance
Strategy: Offer transparent estimates, payment plans, and financial
counseling upfront.
8. Overlooking Regulatory Changes
- The
Pitfall: Using outdated codes or ignoring compliance updates.
- Why
It Matters: Exposes practices to fines, penalties, and rejections.
- Avoidance
Strategy: Subscribe to CMS, AMA, and payer bulletins for
updates.
9. Assuming Technology Will Fix Everything
- The
Pitfall: Believing software alone can eliminate errors.
- Why
It Matters: Tools help, but poorly trained staff will still make
costly mistakes.
- Avoidance
Strategy: Combine automation + staff education for lasting
improvements.
10. Treating Billing as a Back-Office Issue Only
- The
Pitfall: Thinking billing has no connection to patient care.
- Why
It Matters: Billing errors directly affect patient trust and provider
reputation.
- Avoidance
Strategy: Frame billing as part of the patient experience journey
and empower staff accordingly.
The most expensive mistake is failing to address small
errors consistently. Left unchecked, these pitfalls compound into systemic
revenue loss and declining patient trust.
Step-by-Step Implementation Plan (practical,
ready-to-use)
Below is a clear, actionable step-by-step plan you can use
to turn the ideas in the article into real change. Each step includes the primary
owner, tangible actions, and what success looks like.
1. Form a Revenue Cycle Steering Team — Owner: CFO /
Revenue Cycle Lead
Actions: appoint representatives from clinical ops, billing,
coding, IT, patient financial services, and compliance. Create a charter and
weekly cadence.
Success: clear governance, one place to escalate issues and approve changes.
2. Conduct a Denial Audit — Owner: Billing Manager
Actions: pull the last 90 days of denials, categorize by
payer, provider, and reason. Identify the top 3 causes of dollar loss.
Success: prioritized list of fixes that will recover the most revenue.
3. Map the End-to-End Workflow — Owner: Process
Analyst / RCM
Actions: document patient journey from scheduling → intake →
clinical encounter → coding → claim submission → payer adjudication → patient
billing. Identify handoff points and failure modes.
Success: a one-page process map that highlights bottlenecks and single points
of failure.
4. Clean Up Intake & Eligibility — Owner: Front
Desk Manager + IT
Actions: require insurance/ID verification two business days
before high-cost visits; capture full demographics and guarantor info; enable
real-time eligibility checks.
Success: fewer eligibility denials and accurate patient responsibility
estimates.
5. Improve Clinical Documentation Practices — Owner:
Clinical Lead + Coding Liaison
Actions: run clinician chart audits; provide short focused
trainings on documenting medical decision making, comorbidities, and
time-based encounters; reduce copy-paste.
Success: higher coding accuracy and fewer documentation-related denials.
6. Implement Pre-Submission Claim Scrubbing — Owner:
IT / Billing Vendor
Actions: deploy or tune claim scrubber rules (payer-specific
edits, modifiers, eligibility flags). Block claims with critical errors from
submitting.
Success: improved first-pass acceptance rate.
7. Standardize Coding & Modifier Rules — Owner:
Coding Lead
Actions: create payer-specific cheat sheets and a quick
reference for commonly confused modifiers/CPT combos; hold monthly refreshers.
Success: reduce recurring coding mistakes; faster claim turnaround.
8. Tighten Pre-Auth & Medical Necessity Workflow — Owner:
Utilization Review / Nurse Navigator
Actions: build a tracker for required pre-authorizations,
send reminders, attach approvals to the chart and claim. Escalate missing
authorizations before service if possible.
Success: fewer denials for lack of prior authorization.
9. Establish a Denial Management & Appeals Team — Owner:
Denials Manager
Actions: create an SLA (e.g., acknowledge denial within 48
hours, file appeal within payer deadline), standardize appeal templates, and
store outcome data.
Success: higher appeal win rate and reduced rework time.
10. Strengthen Patient Financial Communication — Owner:
Patient Financial Services
Actions: deliver point-of-service estimates, train staff on
empathetic scripts, offer payment plans and online payments, and collect a TOS
partial payment when appropriate.
Success: improved patient satisfaction and increased collections.
11. Build a Technology & Automation Roadmap — Owner:
IT + RCM
Actions: prioritize tools: (1) eligibility/benefit
verification, (2) claim scrubbing, (3) EHR–billing integration, (4) AI
assistance with coding (with human oversight). Define vendor evaluation
criteria (security, integration, support, ROI).
Success: a prioritized, budgeted plan you can implement in phases.
12. Measure, Report, and Iterate — Owner: Revenue
Cycle Steering Team
Actions: publish weekly KPIs (denial rate, first-pass
acceptance, days in A/R, TOS collection %, appeal success). Run monthly RCA
(root cause analysis) on top denials and close the loop.
Success: continuous improvement and visible financial recovery.
Quick Wins (do in the first 30 days)
- Fix
the top 10 denial reasons found in the audit.
- Run a
30-minute “how to document” micro-training for clinicians.
- Start
collecting simple patient estimates at check-in.
- Create
one standard appeal template for the most common denial type.
KPIs to Track (minimum set)
- Denial
rate (overall and by payer)
- First-pass
acceptance rate
- Average
days in A/R
- Time-of-service
collection %
- Appeal
success rate
- Cost
per claim (including rework)
- Patient
billing satisfaction / complaints
Common Obstacles & How to Overcome Them
- Resistance
from clinicians → Use short audits and tie feedback to patient care
outcomes, not blame.
- Vendor
integration delays → Prioritize API-first vendors and pilot one clinic
first.
- Staffing
gaps → Cross-train and consider temporary outsourcing for appeals
while you stabilize workflows.
Start small, measure quickly, and scale what works. The
biggest improvements come from fixing upstream issues (intake + documentation)
and making the claim scrubbing + denial workflows predictable.
Final Thoughts
- The
pain is denials, delays, and surprise bills. The solution is better
documentation, smarter technology, and transparent communication.
- Don’t
assume industry “best practices” are still good enough—question them and
adapt.
- Transparency
and accountability from all sides—providers, payers, and patients—are
essential for progress.
Future Outlook
The future of medical billing is set to evolve
rapidly as technology, regulation, and patient expectations converge. Several
shifts are worth watching:
- AI
and Predictive Analytics: Artificial intelligence will play a larger
role not only in identifying coding errors but also in predicting denial
risk before claims are submitted. Practices that pair AI with strong human
oversight will see faster reimbursements and fewer reworks.
- Stronger
Regulation of Payers: Growing scrutiny of algorithmic denials and
Medicare Advantage coding practices suggests new guardrails are likely.
Policies may require more transparency in payer decision-making and
enforce human review of automated denials.
- Patient-Centric
Billing: With high deductible plans and facility fees under the
spotlight, the industry will face pressure to make costs clearer upfront.
Expect an expansion of real-time patient estimates, financial
counseling, and flexible payment options.
- Consolidation
of Standards: As ICD-11 adoption expands and documentation rules
stabilize, billing teams may benefit from greater global consistency.
However, payer-specific variations will remain a challenge.
- Integration
of Clinical and Financial Data: The divide between medical records and
billing data is narrowing. Future systems will likely connect clinical
outcomes with reimbursement models, incentivizing quality of care
while reducing waste.
In short, the next decade will bring both disruption and
opportunity. The organizations that thrive will be those that adapt early,
question outdated practices, and embrace both technology and transparency.
Call to Action
Get involved. Join the movement. Step into the conversation.
Start your journey. Be part of something bigger. Engage with the community. Get
on board. Jump in. Raise your hand. Be the change. Lend your voice. Take the
first step. Start here. Make your move. Ignite your momentum. Take action
today. Claim your spot. Let’s do this.
References
- ACA
insurers deny 20% of claims: report — A Kaiser Family Foundation analysis
showing that ACA marketplace plans denied an average of one in five claims
in 2023. Read more Axios
- Facility
fees driving up health care costs in Houston — story of how hospital
facility fees are increasing costs for patients, sparking legislative
scrutiny. Read more Houston Chronicle
- Payer
Accountability & Medicare Advantage Coding Practices — Humana’s and
UnitedHealth’s support for limits on diagnosis coding from home visits and
tightening oversight. Read more The Wall Street Journal
About the Author
Dr. Daniel Cham is a physician and medical consultant with
expertise in medical tech consulting, healthcare management, and medical
billing. He focuses on delivering practical insights that help
professionals navigate complex challenges at the intersection of
healthcare and medical practice. Connect with Dr. Cham on LinkedIn to learn
more:
linkedin.com/in/daniel-cham-md-669036285
Disclaimer / Note: This article is intended to
provide an overview of the topic and does not constitute legal or medical
advice. Readers are encouraged to consult with professionals in the relevant
fields for specific guidance.
Hashtags:
#MedicalBilling #RevenueCycleManagement #HealthcareFinance #ClaimDenials
#Documentation #PatientExperience #HealthIT #MedicalCoding #BillingTransparency
#PracticeManagement
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