AI in revenue cycle management: The case for a clinical-first approach
January 22, 2026 | Hari Bala
AI revenue cycle management (RCM) refers to using artificial intelligence to automate financial processes in healthcare, such as coding, billing and denial management. However, for AI to be effective, it must go beyond statistical pattern matching and understand the clinical reality of the patient journey. Without this "clinical-first" foundation, health systems risk increased denials, hidden rework and compliance vulnerabilities.
Why is traditional AI failing in the revenue cycle?
Traditional AI in the revenue cycle often relies on historical claims data. This "black box" approach identifies statistical correlations but misses the clinical context — the medical "why" — behind a diagnosis or procedure. Consequently, it replicates past errors and lacks the nuance to interpret complex medical records accurately, leading to high denial rates and administrative waste.
The hidden costs of claims-only AI
For CIOs and CFOs, relying on claims-only AI creates significant operational risks that undermine digital transformation goals.
- Hidden rework factories: When AI flags minor data variations as errors because it lacks clinical understanding, your team spends valuable time validating suggestions. This isn't automation; it's a shifted manual burden that frustrates staff.
- Compliance risks: Algorithms unaware of changing payer rules or medical necessity criteria can generate statistically "correct" but compliant-invalid claims, exposing your organization to audits.
- Inaccurate predictions: Predictive models without clinical logic struggle to explain why a denial will happen, forcing RCM teams to react to problems rather than prevent them.
Demand more from your AI
As you evaluate AI partners, it's time to ask different questions. Instead of focusing on the latest algorithm, ask how the AI is trained, who trains it, and whether it truly understands the clinical story. The future of the revenue cycle belongs to the smartest clinical engine.
Read the full article on Becker's Hospital Review to discover why clinical intelligence is the key to RCM success.
Hari Bala is chief technology officer, health information systems, at Solventum.
