By Musheer Ahmed, PhD, Founder & CEO at Codoxo. Codoxo were finalists in the ‘Best Use of AI for Healthcare’ and ‘Most Innovative AI Technology’ awards at the 2025 AI Awards.

The Healthcare Cost Problem Hidden in Plain Sight

Every time a healthcare service is delivered, a payment follows, and behind each payment is a chain of decisions that determines whether it will be accurate, compliant, and paid correctly. Yet in today’s healthcare system, those decisions are rarely validated until after they have already been made. Most safeguards are designed to catch mistakes only once a claim is submitted, or even after it has been paid, creating a costly cycle of denials, rework, and administrative friction. The opportunity ahead is not simply to fix these problems faster, but to prevent them from occurring in the first place.

Over the past decade, healthcare organizations have made meaningful progress in moving payment oversight earlier in the process. The shift from postpayment recovery to prepayment review has helped identify errors sooner and reduced some downstream cost.

But even these advances have a structural limitation: they still occur after a claim has been created. That means after coding decisions are made, documentation is completed, and administrative effort has already been invested. At that point, errors are not prevented; they’re merely detected later, triggering additional work across the system. This is the central challenge of healthcare payment integrity today: despite years of innovation, most activity still happens downstream of where errors originate.

The Cost of Acting Too Late

The consequences of this timing are significant. U.S. healthcare spending reached approximately $5.3 trillion in 2024, driven by continued growth in hospital care, physician services, and prescription drug spending. Independent analyses estimate that nearly 25% of that spending is wasteful, tied to unnecessary services, administrative complexity, and preventable errors.

While healthcare waste has many sources, a substantial portion stems from how claims are created, submitted, and corrected. When issues are identified after submission or before payment, they trigger a cascade of resubmissions, appeals, audits, and provider outreach. Across the industry, denial rates now average approximately 12.5% and can reach as high as 49% in some cases, creating significant operational strain for both payers and providers while increasingly eroding the provider experience. Each denial sets off additional administrative work, contributing to an estimated $25.7 billion in annual claims adjudication costs for providers, a meaningful portion of which is considered avoidable.

In response, many health payers have doubled down on optimizing these downstream processes by adding more edits, expanding prepayment review, or increasing recovery efforts. These measures can deliver incremental gains, but they do not address the underlying issue— intervention still happens too late.

Defining the Critical Moment: Point Zero

Codoxo has introduced Point Zero Payment Integrity, a model that moves intervention to the earliest possible moment in the payment lifecycle, before a claim is ever created.

Point Zero focuses on educating providers before care delivery, ensuring providers accurately interpret policies, select codes, and prepare documentation rather than attempting to correct those decisions after submission. By educating providers before this stage, healthcare payers and providers can prevent errors from entering the system at all, reducing the need for downstream review, denial, and recovery.

In practice, this means helping providers align documentation, coding, and billing behaviors before inaccurate claims are ever submitted. Payers can proactively identify providers impacted by upcoming policy changes, deliver targeted education and go-live support through preferred communication channels, and give providers time to adjust workflows before new requirements take effect. Rather than relying on denials, audits, or provider abrasion months later, this approach enables earlier alignment and smoother policy adoption from the start.

It also supports ongoing coding accuracy through AI-driven identification of billing and documentation patterns that may lead to improper payments, downstream review, or compliance risk. Automated provider education, peer-to-peer benchmarking insights, shared payer-provider visibility, and self-service performance reporting help providers continuously improve accuracy over time. The result is a more proactive model of payment integrity centered on prevention, first-time accuracy, reduced administrative burden, and stronger provider relationships.

What makes this shift possible now is artificial intelligence. Historically, engaging providers at this level of specificity and scale was impractical. Manual outreach could not reach thousands of providers effectively, and static rules struggled to keep pace with evolving billing behavior. Today, advanced AI systems can analyze vast volumes of claims data, identify patterns in real time, and surface risks before they result in denied or improper claims.

Generative AI further enhances this capability by enabling faster interpretation of policy changes and more precise, contextual communication. Rather than replacing human expertise, these technologies augment it, allowing healthcare teams to focus on strategic decision-making and collaboration instead of repetitive rework.

“The future of healthcare payments will not be defined by how efficiently inaccuracies are corrected, but by how effectively they are prevented.”

                                                  – Musheer Ahmed, PhD, Founder & CEO, Codoxo

From Policing Claims to Partnering with Providers for Better Provider Experience

The impact of earlier intervention extends beyond operational efficiency to fundamentally reshape the relationship between healthcare payers and providers. Traditional payment integrity models often feel punitive, with providers learning about issues only after a denial or audit. A proactive approach like Point Zero, by contrast, emphasizes transparency and proactive education, ensuring providers understand expectations before submitting claims. Industry research, including findings from the American Medical Association, highlights how administrative complexity and lack of transparency contribute to provider burden and misalignment with payer requirements. When providers are given timely, relevant insight, they are more likely to align with policy requirements, reducing administrative burden and minimizing disputes. The system begins to function as a more collaborative ecosystem rather than an adversarial one.

This shift is already delivering measurable results. A regional health plan seeking to address costs tied to billing inconsistencies and coding errors adopted a pre-claim, education-first approach. Instead of relying on denials or audits after submission, the organization began identifying patterns in billing behavior and delivering targeted guidance to providers before claims were created. Within the first year, the plan achieved more than $20 million in ongoing savings—exceeding projections, while also reducing administrative friction and improving provider engagement.

In one instance, a provider discovered that a billing process had been automatically applying a modifier across claims, an issue that had gone unnoticed under traditional models. With early intervention, the issue was corrected quickly, preventing ongoing errors and unnecessary payments. These outcomes reinforce a broader principle: when actionable insight and education are delivered early, providers can adjust behaviors before inaccurate claims are submitted—driving measurable savings, improving first-time accuracy, and creating a better provider experience.

What Comes Next for Healthcare Cost Containment

Healthcare is reaching a turning point. Rising cost pressures, growing regulatory scrutiny, and increasing provider expectations are forcing payment integrity to evolve. Reactive models create friction and inefficiency, while proactive approaches help contain costs, improve accuracy, and strengthen provider collaboration.

Artificial intelligence is accelerating this shift by enabling earlier intervention and better alignment across the payment lifecycle. The future of payment integrity will not be defined by how efficiently errors are recovered, but by how effectively they are prevented.