How AI is Transforming O&P Claim Processing: Insights from Flywheel’s Head of Analytics & AI

How are Insurance Payers Using AI in Processing O&P Claims–and What Triggers Denials?

Insurance payers are increasingly relying on AI-driven claim review to process submissions quickly and flag potential issues before human review. Health insurers increasingly rely on AI models to make fast prior-authorization decisions with minimal human oversight. This has raised concerns among providers who worry it leads to batch denials and barriers to patient care. In Orthotics & Prosthetics billing, these algorithms scan for patterns that may indicate a higher risk of denial. Common triggers include:

• Documentation gaps that don’t align with the payer’s clinical policy.
• Unusual L-code combinations the AI has learned to associate with denials.
• Geographic or provider-specific patterns tied to higher-than-average costs or approval rates.
• Template language reused across claims, rather than patient-specific information.

While these systems help payers manage claim volume, they can also result in legitimate claims being flagged unnecessarily. Insurers also use AI to benchmark claim payments by comparing to similar cases, streamlining pricing negotiations often to your detriment. For O&P clinics, understanding these patterns is essential. Proactive detection - spotting potential issues before the claim is submitted - can prevent costly delays, reduce rework, and protect patient satisfaction.

How does Flywheel’s AI technology support clinics in automating administrative tasks and improving accuracy?

Flywheel’s AI is built to enhance the expertise of clinic staff. It speeds up routine tasks, allowing teams to focus on delivering tailored support for each patient and claim. Like wearing glasses, it helps users see everything more clearly. The system reviews claims by L-Code, payer, and geography, identifying patterns that indicate a higher risk of delay or denial. High-risk claims are flagged for early verification and proactive follow-up—often before the payer has even responded.

“We can spot a claim at risk before it’s even denied–and start working on it right away.”

If an appeal becomes necessary, the AI helps craft a payer-specific strategy, aligning the response with that insurer’s unique policies and incorporating insights from a history of successful appeals. Beyond denial prevention, the technology also handles administrative tasks like data entry and validation, producing drafts for human approval. This combination of automation and oversight helps clinics increase accuracy, reduce rework, and free staff for higher-value patient care activities.

How Do You Keep AI Technology Up-To-Date with Changing Payer Rules?

Payer algorithms change constantly, with new policies, shifting reimbursement timelines, and updated interpretations of medical necessity. Flywheel’s AI is continuously retrained with the latest policy and payment data, learning from both real-time payer behavior and the team’s successful claims. It analyzes customer patterns to generate insights on how to code and submit more effectively, flagging risks and suggesting specific process changes that the team can work with clinics to implement. This proactive approach helps clinics avoid denials and speed up reimbursements.

AI in O&P Billing

Myths vs. Reality

Even with all the hype, there’s still a lot of confusion about how AI actually works in O&P billing. Alexander clears up some of the biggest misconceptions:

Myth: AI can replace human billers.

Reality: AI can produce inaccurate outputs, or “hallucinations”, if not properly guided. Flywheel’s system uses strict guardrails, and all outputs are reviewed by a team member. It’s a specialized tool for O&P RCM, not a chatbot or robocaller.

Myth: AI makes too many mistakes to be reliable.

Reality: AI can be a superpower, if done well. It can handle repetitive admin work like data entry and validation, then hand drafts to humans for review, keeping both speed and accuracy high.

Myth: AI is too expensive for an independent clinic.

Reality: Flywheel’s AI works in the background, continuously retrained as policies, timelines, and payer behaviors change. It helps the team ensure claims are evaluated against the latest standards—without requiring technical expertise from clinics.

Myth: AI is only for large hospital systems.

Reality: Smaller O&P clinics benefit just as much—often more. The hands-on nature of these clinics makes AI especially useful, providing the right insight at the right moment to stay ahead of payers that use automation to deny or delay claims.

By cutting through the myths, clinics can focus on leveraging AI where it adds the most value, expediting reimbursements, reducing denials, and freeing staff for higher-impact work.

How Clinics Can Prepare for AI-Driven Billing

Approach AI adoption with the curiosity of a first grader: open to learning, willing to experiment, and committed to building good habits.

The key? Data Discipline and an Open Mind.

Moving away from paper and into structured, digital formats is the foundation for any AI-driven workflow. “Good data is paramount. Get it into the system, not on paper.”

Once the data is in the system, the flywheel effect takes over:

Better data → better insights → more revenue opportunities → even better data.

“Today is the worst day you’ll ever be using AI. It only gets better from here.”

AI isn’t a “someday” technology; it’s already reshaping how payers process claims and how forward-thinking clinics get paid faster - and it’s fully accessible to every independent clinic. By pairing automation with human expertise, O&P providers can predict risks before they happen, tailor appeals for maximum success, and spend less time fighting denials and more time with patients.

See AI in action.

Book a conversation with our team to learn how Flywheel can help you cut denial rates, speed up reimbursements, and unlock hidden revenue opportunities.

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