How insurance payment processes waste billions

$16.4 BILLION is wasted annually in healthcare. Not on failed treatments or faulty equipment — on administrative inefficiency. As a founder building AI for healthcare, I find these numbers from the latest CAQH Index Report eye-opening. I read the whole 74-page report, so you don't have to. [1] Here are the takeaways: - Administrative complexity consumes 10% ($400B) of total U.S. healthcare spending - $89B is spent on administrative transactions (22% of that $400B) - $18B+ could be saved by transitioning to fully electronic transactions - This $18B in potential savings represents 5% of the total $400B spent on administrative complexity Let's break down where the biggest opportunities lie: Three areas account for 88% of the potential savings: - Eligibility and benefit verification: $9.3B - Claim status inquiry: $3.2B - Claim submission: $2B That's $14.5B we could redirect to patient care – just by embracing digital processes. And it's not just about cost-cutting. Digitization means: - Freeing up clinicians to focus on patients, not paperwork - Accelerating care delivery - Reducing errors that cost lives A few more interesting stats: - Medical providers spend 20 minutes on manual eligibility checks vs. 4 minutes electronically - Electronic adoption for eligibility verification is at 94%, but manual processes still waste billions - Fully electronic transactions could cut the cost of administrative tasks by 20% I'm convinced: This is our low-hanging fruit. The shift to electronic transactions could trigger a domino effect of system-wide efficiency gains. Healthcare leaders — I'm curious. What's been your experience with automation in these administrative / ops areas? What roadblocks are you facing?

₹85 for a medicine that costs ₹66.45 MRP. ₹2,500 for a blood test that costs ₹1,200 outside. ₹7,000 for a room that's listed at ₹5,000 in the tariff. According to our analysis of 100,000+ claims, these price discrepancies aren't isolated incidents—they appear in 23% 𝐨𝐟 𝐚𝐥𝐥 𝐡𝐞𝐚𝐥𝐭𝐡𝐜𝐚𝐫𝐞 𝐜𝐥𝐚𝐢𝐦𝐬 𝐩𝐫𝐨𝐜𝐞𝐬𝐬𝐞𝐝 𝐢𝐧 𝐈𝐧𝐝𝐢𝐚. And here's the reality: 𝐭𝐡𝐢𝐬 𝐢𝐬𝐧'𝐭 𝐚𝐛𝐨𝐮𝐭 𝐛𝐥𝐚𝐦𝐢𝐧𝐠 𝐡𝐨𝐬𝐩𝐢𝐭𝐚𝐥𝐬. The problem isn't malicious intent—it's a fragmented ecosystem that lacks standardization and transparency. 1. 𝐓𝐡𝐞 𝐬𝐲𝐬𝐭𝐞𝐦 𝐢𝐬 𝐟𝐫𝐚𝐠𝐦𝐞𝐧𝐭𝐞𝐝 Pricing varies dramatically across healthcare: ↳ Different hospitals use different billing systems. ↳ Tariff agreements change frequently. ↳ Manual processes introduce human error. 𝐓𝐡𝐞 𝐫𝐞𝐬𝐮𝐥𝐭? > Patients pay more than necessary. > Insurers spend millions on claim verification. > Hospitals face payment delays and rejections. 2. 𝐓𝐡𝐞 𝐜𝐲𝐜𝐥𝐞 𝐢𝐬 𝐮𝐧𝐬𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐛𝐥𝐞 Overcharging happens. ↓ Insurers reject claims or delay payments. ↓ Hospitals increase prices to cover losses. ↓ Patients bear the ultimate cost. 3. 𝐓𝐡𝐞 𝐬𝐨𝐥𝐮𝐭𝐢𝐨𝐧 𝐢𝐬 𝐜𝐨𝐥𝐥𝐚𝐛𝐨𝐫𝐚𝐭𝐢𝐯𝐞 ↳ Automated tariff verification at the point of billing. ↳ Real-time feedback before claims submission. ↳ Transparent pricing is accessible to all stakeholders. Technology that serves humans, not the other way around. 𝐓𝐡𝐞 𝐬𝐡𝐢𝐟𝐭: Confrontational → Collaborative At Vitraya, we believe conscious entrepreneurship means creating solutions that benefit the entire ecosystem: ✅ Hospitals get faster payments with fewer rejections. ✅ Insurers process claims efficiently with greater accuracy. ✅ Patients receive fair, transparent pricing for care. Healthcare pricing shouldn't be a mystery. When we solve systemic issues together, everyone wins. Explore how we're building a more transparent healthcare ecosystem. #healthcareinnovation #transparentpricing #insurtech

Rather than weighing in on the messy issues the DOGE initiatives are creating, I want to zero in on those that affect businesses directly, one of which is the cost of self-insured employer healthcare. The issue I will raise affects Medicare and commercial insurance, and has to be addressed because it is a major source of wasted spending. One source of waste and possible fraud with which I became familiar after retiring from Pitney Bowes was the extensive use of "upcoding." This term is completely unfamiliar to anyone outside the healthcare business, but it is a major source of additional healthcare costs that we pay as employers or taxpayers. At its most fraudulent level, "upcoding" occurs when a provider bills for a more expensive or serious procedure or diagnosis than was actually performed.  However what is done in a legal gray area is the use of coding consultants who work with providers to get them to create clinical notes that are designed to maximize either reimbursement or patient population risk profiling. They also result in physicians spending unnecessary time with some patients and inadequate time with others to meet billing code requirements. Some providers become better at tailoring both their healthcare practices and their completion of clinical notes to extract more revenue. The system gets gamed. What does not happen is the optimization of healthcare. This RAND Corporation study analyzes the additional cost of this upcoding. In this limited survey, it estimates that upcoding added 28% to what insurers, Medicare, or self-insured employers would pay. This game-playing is inherent in the fee-for-service system and it likely adds tens of billions of dollars to the cost of healthcare. Although the Affordable Care Act attempted to move away from fee-for-service with the concept of "accountable care," the industry figured out how to game that system by using upcoding to increase the risk profile of patient populations to make the case that their patient populations were inherently sicker. Although most media coverage is about blatant fraud, the much bigger problem may be over-treatment and the coaching that causes physicians to maximize revenue, as opposed to deliver optimal care. I will do a separate posting on an example of over-treatment I experienced.

The BCG-Medi Assist report "Rebuilding Trust" released at #RakshaSummit2025 reveals a sobering reality: 8-10% of total health insurance claim payouts are lost to fraud, waste, and abuse every year. This isn't a rounding error, it's a systemic leak that inflates premiums, squeezes insurer margins, and keeps healthcare unaffordable for millions of Indians. The data tells a compelling story. Retail reimbursement claims carry 20x higher fraud risk than group-cashless claims. The INR 50,000 to INR 2.5 lakh claim bracket is the fraud sweet spot, lucrative enough to manipulate, yet below the threshold for rigorous scrutiny. Infectious diseases top fraud propensity charts due to vague symptoms and test-heavy billing. And geographically, fraud isn't concentrated in hotspots, it's embedded everywhere across the ecosystem. Why does this persist? The report identifies five root causes: 1. Fragmented data preventing cross-verification, 2. Reactive audits that catch fraud only after money is gone, 3. Misaligned incentives where providers get paid for volume rather than outcomes, 4. Weak legal deterrence with no dedicated penal code for health insurance fraud, and 5. A customer mindset that has normalized small acts of misuse as harmless. The report proposes a three-pillar framework to solve for this: - Prevention through Connected Care shifts from reactive claims management to proactive health monitoring - Detection through Operational Excellence embeds AI at every touchpoint - Deterrence through Trust Infrastructure introduces Provider and Member Trust Scores, essentially a CIBIL for healthcare integrity where high scores mean faster approvals and low scores trigger scrutiny The business case is clear: a 100 basis point reduction in FWA could improve sectoral RoE by 70-80 basis points. With India's health insurance market projected to reach INR 2.6-3 lakh crore by 2030, getting this right now protects enormous future value. The roadmap targets FWA at 5% by 2030, 3% by 2040, and near-zero by 2047. The foundation already exists - ABHA with 74 crore+ IDs, NHCX connecting providers and payers, IRDAI's new fraud monitoring guidelines. The question is whether we move from infrastructure to execution. India has a genuine opportunity to build something unprecedented: an AI-native, integrity-by-design health insurance ecosystem. But only if we treat fraud, waste, and abuse as the strategic priority it actually is - not just an operational nuisance. When FWA drops, premiums stabilize. When premiums stabilize, coverage expands. When coverage expands, out-of-pocket spending falls. That's the virtuous cycle worth fighting for. (Link to the report in comments) CC: Medi Assist, Boston Consulting Group (BCG), Dr. Vikram Chhatwal, Raksha Summit

In 2023, healthcare providers faced a staggering $25.7 billion in claims adjudication costs—a 23% increase from the previous year. Alarmingly, over 50% of these denials were ultimately overturned and paid, indicating that nearly $18 billion was potentially wasted on disputes over claims that should have been approved initially.   This inefficiency not only strains providers’ financial viability but also diverts critical resources away from patient care. The lack of a unified claims submission system, coupled with each payer’s unique rules, creates a labyrinthine process prone to errors and delays. Moreover, the largely manual nature of claims submissions exacerbates the problem, especially amid widespread staffing shortages.     It’s imperative that we bridge the gap between payers and providers by optimizing resource utilization, streamlining administrative processes, ensuring accurate reimbursement and ultimately improving patient outcomes. By addressing these systemic issues, we can redirect valuable resources back to where they belong — enhancing patient care and advancing the health of our communities. We break down the findings — and how we can fix this — in my latest Premier Inc. blog with Soumi Saha and Mason Ingram. Read it here: https://lnkd.in/dcfswqz8  

$900 billion has been wasted on healthcare administration since 2000. And it's the biggest opportunity for healthtech in 2026. Here’s why. ▶ The problem is staggering Healthcare spending tripled since 2000, but labor productivity declined. Doctors spend less time with patients, more time on paperwork - documentation, billing, insurance claims… $900 billion went to admin costs. Money that could have gone to actual patient care. ▶ The market has validated the solution 75% of health leaders say administrative efficiency is their top AI investment priority. 74% say clinical productivity is critical. Ambient AI - tools that listen to doctor-patient conversations and auto-generate clinical notes - is seeing massive venture rounds in 2025. The concept is proven. AI can handle the paperwork. But documentation is just one piece. ▶ The real opportunity is everything else → Billing automation - Claims processing, coding, insurance verification still largely manual. → Prior authorization - Doctors waste hours fighting insurers. Waiting for AI. → Specialty-specific solutions - Cardiology, oncology, mental health each have unique workflows. → Small practices - 60% of doctors work in small practices. Current tools target big health systems. → International markets - Most development is US-focused. Every country has the same problem. ▶ Now is the perfect time. The technology works. The funding is flowing. Doctors are desperate. The hard part was proving AI could work in clinical settings. That's done. Now it's a race to solve everything else - with billions in waste to eliminate. Are you building in this space? What piece of the admin burden are you solving? #entrepreneurship #healthtech #innovation

RCM - An acronym for U.S. Healthcare Waste Revenue Cycle Management (RCM) refers to all the systems and processes that healthcare organizations implement in order to be paid for services rendered. Getting paid as a healthcare service provider in the U.S is very complex because of the dominate "third party" system we have. Healthcare orgs must regularly interface with multiple parties to be fully paid. Obviously, there's the patient (who likely owes a portion of the bill). In addition, there's a 'plan sponsor', a claims administrator, and the insurance carrier. Each of these parties have a hand in pre-approving, reviewing, approving, and, ultimately, making payment. RCM is a $150 Billion/year industry in 2023. About $75 Billion/year is specifically related to "claims management". This also excludes all of the internal employees retained by healthcare orgs. By 2030 (six short years), the RCM industry is projected to grow to over $300 Billion/year. And what do we get for these hundreds of Billions spent? Patients get zero upfront price transparency, incoherent bills and EOBs, and their accounts are sent to collections with a potential for bankruptcy if they don't pay. Healthcare orgs get significant uncollected patient debts, slow payment from insurers, and large overhead burdens for billing and collections efforts. So much of the brokenness of healthcare has nothing to do with healthcare. In the case of RCM, it has to do with unnecessary payment complexity. Who wins in this model? All the RCM vendors and insurance carriers who benefit from the complexity. Who loses? Patients and Healthcare Professionals. Want to fix it? Let's make prices transparent and move to direct billing (i.e. eliminate the insurance carrier). A lot of complexity is eliminated when the insurance carrier is removed from the payment process.