The Conversation We’re Not Supposed to Have
Why payer-provider friction persists and why wasting more money on policing bad actors won’t solve it.
The conversation around payer-provider relationships has become remarkably predictable.
Providers talk about denials. Payers talk about unnecessary utilization. Both acknowledge that administrative costs continue to rise. Nearly everyone concludes by calling for “better collaboration.”
The 2025 CAQH Index puts a number on the rising-cost half of that complaint: medical administrative spending fell 9 percent in 2024, to $75.3 billion, yet the industry still leaves an estimated $21 billion in savings on the table in manual, non-automated workflows. Zoom out further, and separate analyses from McKinsey and Health Affairs put total administrative waste across U.S. healthcare anywhere from $265 billion to $570 billion a year, depending on what is counted.
Yet year after year, the underlying dynamics remain largely unchanged.
At this year’s HFMA Annual Conference, Trend convened an intentionally different discussion. Rather than debating who was right, we asked a more fundamental question: What if the friction isn’t a bad actor problem at all? What if it’s a systems problem?
Bringing together Todd Tilghman, Director of Revenue Cycle at Williamson Health, David Weathington, Chief Administrative Officer of Blue Agilis and senior advisor to Weissach Specialty Performance, and other healthcare leaders from both sides of the table produced an observation that surfaced repeatedly throughout the conversation:
Most of the behaviors we dislike are remarkably rational once viewed through the pressures that produce them.
A health plan is expected to manage medical expense, reduce administrative risk, and operate consistently across millions of claims. Fail at any of it, and premiums climb. Let the wrong claims through, and fraud follows. A health system is expected to document every medical decision, code and bill correctly and care for under and uninsured. Each organization is behaving largely as it has been designed to behave.
But here is the part of this conversation that rarely gets said out loud in a room full of revenue cycle professionals: payer scrutiny did not develop in a vacuum. Billing errors, upcoding, unbundling, and in some cases outright fraud on the provider side are real and well-documented phenomena. The OIG, CMS, and DOJ publish enforcement actions and settlement recoveries every year that confirm it. Payers did not invent clinical review programs or post-payment audits as arbitrary obstacles. They built them because the alternative, paying claims largely on faith, produced losses that the system could not absorb. A complete and honest accounting of this relationship has to include that. Providers who want payers to extend more trust have a corresponding obligation to make that trust easier to extend.
The problem is that these rational decisions often create collectively irrational outcomes.
Prior authorization, which was created to manage unnecessary utilization, is a clear illustration. It exists to manage utilization. Yet in the AMA’s 2025 physician survey, 88 percent of respondents said prior authorization increases overall use of healthcare resources rather than reducing it. The tool built to produce savings is, by physicians’ own account, generating waste instead.
Administrative costs rise on both sides; appeals increase and trust declines. And every new safeguard introduced by one side becomes additional work for the other.
An HFMA survey captured the trust piece directly: three out of four providers say increased payer transparency is essential to repairing the relationship. The fact that so many still feel it’s missing speaks for itself.
Perhaps the most interesting realization was how often disagreements begin long before anyone discusses an individual claim.
Throughout the discussion, participants repeatedly returned to the importance of definitions.
- What constitutes a delay?
- What is a technical denial versus a medical necessity denial?
- When does an observation stay legitimately become an inpatient admission?
These questions appear straightforward until experienced payer and provider leaders attempt to answer them together. Many of the industry’s most contentious issues turn out not to be disagreements about facts, but disagreements about definitions, policy interpretation, or acceptable levels of variation.
Without first establishing shared definitions, organizations frequently find themselves arguing past one another rather than solving the underlying issue.
That observation led naturally to another.
Healthcare has become increasingly comfortable treating subjective decisions as though they are objective ones.
Admission status, emergency department leveling, documentation sufficiency, and countless other adjudication decisions are often discussed as if there is one indisputably correct answer. In reality, many involve judgment, context, and interpretation.
Prior authorization shows how wide that judgment gap can get in practice. Payers have repeatedly pledged that medical necessity denials will be reviewed by a licensed, qualified clinician. Yet in the AMA’s 2025 survey, only 24 percent of physicians said that consistently happens, and just 16 percent of those who go through peer-to-peer review said the health plan’s representative was reliably qualified to evaluate the clinical question.
Recognizing that nuance does not eliminate disagreement. It does, however, create space for different kinds of conversations—ones focused less on proving someone wrong and more on improving how decisions are made.
The discussion also challenged assumptions on the provider side.
Todd acknowledged a familiar pattern: preparing for payer meetings by bringing every account over 90 days old and presenting them collectively as “problem claims.” It is understandable. It is also unlikely to produce productive dialogue.
Beginning instead with accurate statistics, proportional data, and an honest assessment of actual problem areas changes the tenor of the conversation. Large payers naturally generate more denials because they process more claims. Looking instead at denial rates, patterns, and specific operational issues creates a far more credible starting point.
The 2026 Kodiak Solutions benchmarking report shows why that framing matters. Across more than 2,300 hospitals, the median final denial rate climbed from 2.5 percent to 2.7 percent in a single year, and net revenue leakage tied to denials and bad debt reached an estimated $48.4 billion, a 25 percent increase from the year before. Clinical denials, tied to medical necessity and prior authorization, accounted for nearly all of that increase.
The same principle applies to the payer perspective.
Rather than routing every discussion through relationship managers, participants suggested creating more opportunities for operational leaders—the people who actually own claims processes and payment policies—to hear directly from their provider counterparts. Often, those closest to the work have never had an opportunity to understand the downstream consequences of the policies they administer.
Perhaps the most encouraging aspect of the discussion was that many of the ideas generated were surprisingly practical.
- Empower frontline employees to resolve common-sense issues without unnecessary escalation.
- Negotiate contract language that distinguishes technical administrative failures from medical necessity.
- Measure relationships based on long-term performance rather than isolated claims.
- Pursue incremental improvements rather than waiting for comprehensive reform.
None of these ideas will transform healthcare overnight. Collectively, however, they suggest a different way of thinking about progress.
Instead of asking, “How do we fix the payer-provider relationship?” perhaps a better question is, “How do we remove just enough friction to make the next conversation more productive than the last?”
Late in the session, Sarah Armstrong, Trend’s CEO and the conversation’s moderator, offered a perspective that may have best captured the spirit of the discussion.
If every operational problem in the payment process were solved tomorrow, providers would not necessarily receive dramatically more money, nor would health plans necessarily spend dramatically more. The greater benefit would likely be something far less visible but ultimately more valuable: dramatically less administrative waste, less rework, fewer unnecessary appeals, and more time spent creating value rather than defending positions.
That estimate is not abstract. Hospitals alone are estimated to spend roughly $19.7 billion a year simply trying to overturn denied claims—resources spent contesting decisions rather than delivering or financing care.
That distinction matters.
Because the future of payer-provider collaboration may depend less on convincing either side to behave differently—and more on redesigning the systems that currently make conflict the path of least resistance.
That redesign starts with something deceptively simple: a shared, accurate view of the data both sides are already arguing about. Most disputes do not begin because someone is lying. They begin because each side is negotiating from a different set of facts. Closing that gap may do more for trust than any amount of relationship-building ever could.