An "AI Arms Race" or Mutual Benefit? Why Payers and Providers Both Want Faster Decisions

In the world of healthcare billing, the relationship between insurance payers and healthcare providers is often described as an "adversarial" one. For years, the prevailing sentiment among providers has been that prior authorization is simply a tool used by insurance companies to delay care or deny payments. On the surface, it looks like a high-stakes "AI arms race"—providers using technology to force approvals while payers use it to automate denials.

However, according to Dr. Jeremy Friese, founder of Humata Health, the reality is shifting toward a surprising "mutual appetite" for better technology on both sides of the fax machine.

The Payer’s Hidden Burden

It’s easy to assume payers love the friction of prior authorization, but the administrative cost of the "status quo" is staggering for them as well. Payers are currently forced to employ "armies of doctors and nurses" just to handle the intake and manual review of clinical notes.

When a provider's nurse faxes over 100 pages of clinical documentation, a highly-paid physician on the payer side must manually review it—a process that can take anywhere from one to four weeks. This manual labor is expensive, inefficient, and creates a significant PR and member engagement problem for the insurance companies.

The "Business of Yes"

The true goal of modern AI in this space isn't to create a bigger wall, but to build a more efficient bridge. Dr. Friese describes his work as being in the "business of yes". By using AI to submit the right clinical information correctly the first time, providers can get faster approvals, which is a win for everyone.

Consider these two major areas where AI creates mutual benefits:

• Eliminating Unnecessary Requests: Currently, between 20% and 40% of prior authorizations submitted by providers are for services that don't actually require one. This creates a massive amount of "no-value" work for payers who must review the request only to tell the provider it wasn't needed.

• Real-Time Decisioning: When a payer uses AI to approve care quickly and efficiently, it reduces their own administrative overhead while allowing the provider to schedule the patient sooner.

A Solvable Problem

The "arms race" mentality suggests that one side must lose for the other to win. But in the administrative middle-ground of healthcare, the enemy isn't the counterparty—it's the friction.

As Dr. Friese notes, "Coke needs Pepsi" to get better. In the same way, as both payers and providers adopt advanced technology, the entire industry moves toward a future where 90% of authorizations could be handled by computers in five years or less. This isn't just about ROI for the CFOs; it's about clearing the administrative path so patients can get the care they need without the wait.

Listen to this and other episodes at www.practicesol.com/podcast