Waystar launches generative AI tool to help hospitals fight insurance denials

Hospitals and health systems in the U.S. collectively spend close to $20 billion annually trying to overturn denied insurance claims, according to a March report from Premier, a group purchasing organization. The report also highlights that nearly 15% of medical claims submitted to private insurers are initially rejected. Now, a healthcare payments company, Waystar, is stepping in with a generative AI-powered tool aimed at addressing this expensive and time-consuming issue.

Waystar’s latest offering, AltitudeCreate, uses generative AI to automatically draft appeal letters for denied claims. The company believes this tool can help healthcare providers reduce costs and eliminate the frustration of manually compiling appeal letters—a process that often involves navigating through dense contracts and extensive records.

“We think if we can develop software that makes people’s lives better in an otherwise stressful moment of time when they’re getting health care, then we’re doing something good,” said Waystar CEO Matt Hawkins in an interview with CNBC.

Waystar went public in June, raising approximately $1 billion. In 2023, the company processed over $1.2 trillion in gross claims volume, impacting nearly half of the U.S. patient population.

The Growing Challenge of Insurance Claim Denials

The issue of claim denials has gained national attention recently, particularly following the tragic shooting of UnitedHealthcare CEO Brian Thompson in December. Public frustration with the insurance industry has been palpable, with many Americans sharing stories online about denied claims and their financial toll, CNBC reported.

The U.S. healthcare billing system is notoriously complex. After receiving care, providers like hospitals or clinics submit claims to insurers for reimbursement. These claims are either approved or denied based on specific criteria set by the insurance company. When a claim is denied, patients often bear the financial burden, which adds up to more than 450 million claims facing denial each year—a number that continues to rise.

Providers can appeal denied claims by submitting detailed letters to insurers, but this process is often costly and time-intensive, with no guarantee of success.

Using AI to Fight Insurance Denials

The U.S. healthcare system faces a staggering $350 billion in annual losses due to administrative inefficiencies. Hospitals and health systems alone spend $20 billion each year fighting denied insurance claims—a figure that continues to grow as denial rates rise. Beyond financial costs, these denials also limit access to care and negatively impact patient satisfaction.

Waystar is addressing these challenges with its generative AI tools, revolutionizing how providers handle claim denials. A recent Modern Healthcare report, conducted in collaboration with Waystar, highlights a strong interest among providers in AI solutions that effectively reduce administrative waste, streamline operations, and foster better interactions with both payers and patients.

“More than half of denied claims ultimately get overturned, but the appeal process is time-consuming, complex, and error-prone for providers,” said Waystar CEO Matt Hawkins. “Generative AI unlocks a new era of productivity and precision, transforming how the industry simplifies claims, appeals, and payment workflows. With Waystar’s AI-powered software platform, providers of all sizes are better equipped to appeal denied claims with unprecedented efficiency, accuracy, and ease.”

Waystar CEO Hawkins explained that while the conversation around claim denials has intensified recently, the development of AltitudeCreate began six to eight months ago. In May, Waystar partnered with Google Cloud to explore artificial intelligence solutions, identifying claim denial automation as one of 12 potential applications.

AltitudeCreate is part of AltitudeAI, Waystar’s suite of AI tools unveiled this week. Organizations already using Waystar’s denial and appeal management software received access to AltitudeCreate earlier this month at no extra charge. The company plans to expand its availability to a wider audience in the future.

Waystar’s denial and appeal management solutions have been available for several years, and AltitudeCreate builds on that foundation to address staffing shortages and administrative inefficiencies in healthcare.

“In a system bogged down by administrative waste, where providers are short-staffed and struggle to follow up on denied claims, we’re introducing software that automates the process and lightens the load,” Hawkins said.

With AltitudeCreate and its broader AI-powered solutions, Waystar is positioning itself as a key player in reducing the financial and operational strain caused by claim denials, offering a glimmer of hope for healthcare providers grappling with a challenging system.