Healthcare Claim Review Shifts to Prepayment With AI
Summary
ExlService and Waystar say AI is moving healthcare claim review ahead of payment, with outcome-based fees that lift bookings but delay revenue recognition.
ExlService Holdings (EXLS) and Waystar Holding (WAY) both described an AI-driven shift to prepayment claim review on their third-quarter 2026 earnings calls, held between October 28 and November 2, 2026. Healthcare claim checks are moving from sampling after payment to reviewing each claim before payment or before a bill goes out, and both companies are paid on the losses they recover or prevent.
How AI moves claim review ahead of payment
After a US hospital treats a patient, it sends a claim to the health insurer, which reviews it and then pays. Checking whether a claim is accurate, overbilled or fraudulent is called payment integrity. Because manual review was expensive, insurers usually paid first, sampled a share of claims afterward and clawed back money from hospitals when they found problems. EXL management said that as AI spreads through payment integrity, the work is shifting from post-payment to prepayment, and the company now looks at all claims in the system rather than a percentage of them [1].
The same change is showing up on the hospital side. Waystar sells revenue-cycle software to hospitals, and its Iodine unit uses AI to flag missing documentation and inaccuracies before a hospital sends its bill [2][3]. With AI lowering the cost of checking every claim, both payers and hospitals have a reason to move the check earlier. The stricter insurers are before they pay, the more a hospital gains from checking its own bills first.
Outcome-based pricing raises demand but delays revenue
EXL management said the company is compensated on an outcome basis entirely in payment integrity, meaning it is paid on the losses it finds or stops for clients [1]. Waystar said early adopters of its anomaly detection saw about $3 million in incremental recovered revenue per 10,000 admissions [4]. As of the third quarter of 2026, Iodine bookings were 74% ahead of the year-to-date plan [2].
Outcome pricing also stretches the time before revenue is recognized. Waystar said its Pre-Bill Anomaly Detection uses performance-based pricing, which widens the gap between booking and recognized revenue, delays fourth-quarter contributions and should make the product accretive in 2027; it also contributed to lower-than-anticipated FY2026 revenue [2]. EXL warned that commercial contracts are moving to outcome-based AI models more slowly than the technology itself is being embedded, leaving margins uncertain during the transition [1]. Taken together, the two companies show demand rising, but this business is not yet fully visible in revenue.
What prepayment review changes for vendors and hospitals
Once review moves from sampling to every claim, a vendor handles far more claims, which EXL described as a larger surface area for its work [1]. Its revenue is tied directly to the money clients save or recover. For hospitals, insurer checks before payment make weakly documented claims more likely to be held up, which makes pre-bill self-checking tools more attractive. Outcome pricing, however, creates a lag between bookings and revenue, so reported revenue growth may trail bookings by a wide margin.
Only two companies have disclosed this shift directly. On the hospital side, HCA and Tenet did not disclose any effect from prepayment review, and the one downstream example that can be checked comes from a regulatory requirement unrelated to AI. Two measures are worth tracking: whether Waystar's Iodine bookings turn into revenue in 2027, and how margins in EXL's payment integrity business change.
Companies exposed to the prepayment shift
- CorVel (CRVL): Its CERIS business reviews medical bills for insurers and is moving post-payment services into prepayment workflows; management said the prepayment model can shorten its revenue realization cycle from more than six months to one to two months [5]. It faces the same kind of buyer and the same shift as EXL, though it remains to be seen whether the migration lifts revenue.
- Claritev (CTEV): Its payment and revenue integrity business charges insurers and third-party administrators based on savings [6]. Its customers overlap with buyers of prepayment review, but the company has not disclosed a move to prepayment.
- Encompass Health (EHC): The rehabilitation hospital operator will have 75 more hospitals enter 100% prepayment review under a Medicare program from January 2027 [7]. It sits on the receiving end of review and could face slower collections and bad-debt risk; that review is driven by regulators and is not directly tied to AI.
Sources
[1] Drillr · ExlService Holdings (EXLS) · 2026-10-28 · Q3 2026 earnings call
And what that means is instead of us looking at a certain percentage of the claims that a healthcare payer might be making, We're taking a look at 100% of the claims that go through the system.
[2] Drillr · Waystar Holding (WAY) · 2026-11-02 · Q3 2026 earnings call
[3] Waystar · Prebill Anomaly Detection product page · 2026-11-02 · Company website · https://www.waystar.com/our-platform/clinical-integrity-revenue-capture/prebill-anomaly-detection/
[4] Drillr · Waystar Holding (WAY) · 2026-07-29 · Q2 2026 earnings call
[5] Drillr · CorVel (CRVL) · 2026-05-20 · Fiscal Q4 2026 earnings call
[6] Drillr · Claritev (CTEV) · 2026-08-07 · Q2 2026 earnings call
[7] Drillr · Encompass Health (EHC) · 2026-10-29 · Q3 2026 earnings call
This article highlights industry changes and companies that may be overlooked. It is not a stock recommendation.