When AI starts making medical billing decisions, who is responsible when it gets the coding wrong? In this episode, John Gwin, CEO and co-founder of The Auctus Group, explores AI’s evolving role in medical billing and coding. Tune in to learn where AI can improve revenue cycle workflows, where it can fall short, and why human oversight remains essential. Discover how to evaluate AI solutions and billing partners and leverage technology to improve efficiency while minimizing compliance risks.
Listen to the full episode using the player below, or by visiting one of the links below. Contact ByrdAdatto if you have any questions or would like to learn more.
Transcript
*The below transcript has been edited for readability.
Intro: [00:00] Welcome to Legal 123s with ByrdAdatto. Legal issues simplified through real client stories and real-world experiences. Creating simplicity in three, two, one.
Brad: [00:13] Well, welcome back to Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, with my co-host, Michael Byrd.
Michael: [00:19] As a business law firm for health care practices, we meet a lot of interesting people and learn their amazing stories. This season, Brad, our theme is AI In Health Care. We’re bringing in people a lot smarter than the two of us, which isn’t that hard to help decipher the business risk of using AI in a medical practice.
Brad: [00:36] And remember, audience members, because all this is so new, we don’t really have the client stories that we typically have, and so we’re going to interact with individuals who are going to help really talk about some once-in-a-lifetime shift in the world and business and health care.
Michael: [00:51] Brad, today we have a guest joining us to talk about billing, coding, and where artificial intelligence is showing up in the revenue cycle. But before we get there, Brad, I found a camp that could be useful for your kids someday once you’re able to buy the private jet that you dream of.
Brad: [01:10] Michael, that is so thoughtful of you. I’ve always said that first responsibility of generational wealth is a private jet. Followed closely by sending kids to camp where they learn about buying the private jet, being irresponsible.
Michael: [01:24] Well, yeah, I don’t know about it being irresponsible at that point, Brad. I mean, yeah. But I did read a Wall Street Journal article about an exclusive retreat for wealthy kids not to blow their inheritance. So before you rush to sign up, this is only for families worth at least $100 million.
Brad: [01:46] So at this moment, I’m about $100 million short. Could you spot me something there, Michael, maybe? This feels like a financial requirement. It actually reminds me of Brewster’s Millions. We were just talking about that today. A little movie reference for us old people with gray hair. But I got to say, Michael, I was ready to sign the kids up, but apparently, they don’t really accept confidential or collateral. What’s the requirement? How should they get there?
Michael: [02:12] Well, the article focuses on a particular weekend retreat in Austin. The setting was in an Airbnb.
Brad: [02:20] Okay.
Michael: [02:21] They had a dozen or so ultra wealthy kids, as they said, and they would pose a question like, “Why do you think it is that your parents want you to work?”
Brad: [02:31] Huh. Putting a dozen wealthy, ultra wealthy kids, using the article’s word, in an Airbnb in Austin, to discuss the purpose, sounds like a reality show. What could go wrong?
Michael: [02:42] I, yeah, right. And so, I’m going to test you, Brad. They ask this question, “Why do you think your parents want you to work?” Do you know the right answer?
Brad: [02:52] Of course. The right answer is so that someday they can afford to send their own children to a camp that teaches them why they need to work, and now how generational wealth becomes generational homework.
Michael: [03:03] Okay. Well, that’s a very sarcastic take there, Brad. The answer is to give them purpose. Because they certainly don’t need the income.
Brad: [03:14] Right, purpose. I was going to say, getting them out of the house, build character, stop them from using the Wi-Fi password, because they keep losing it every six minutes. But your answer sounds much better. I don’t know, maybe a brochure?
Michael: [03:28] Yeah, maybe so. Apparently, these retreats are blowing up and offered by multifamily offices, banks, and other organizations targeting the ultra-wealthy as probably looking for a value add. I guess the premise of the article is that since 2020, we have been in an unprecedented period of wealth creation.
Brad: [03:51] Yeah, this explains why these camps are growing. Nothing says unprecedented wealth creation like paying someone to explain to your children why they should not be spending the unprecedented wealth they just created. It’s basically estate planning with trust falls.
Michael: [04:05] Yeah, there. That sounds about right. They also answer questions like, “How do you sit at a board table?” Or “How do you manage conflict?”
Brad: [04:16] I can’t even begin to imagine how that’s going to work for those kiddos. They’re coming from the ultra-wealthy, and they’re going to have to figure out how to sit at a board and deal with conflict. I think conflict is, “My butler can beat up your butler.”
Michael: [04:27] Well, we’re probably laughing because we can’t relate.
Brad: [04:30] No.
Michael: [04:32] In all seriousness, though, living in the United States with a professional job like we have is a true privilege compared to the rest of the world. So you have two well-grounded kids. I know it’s not because of you. So what did Micah do to keep them from catching affluenza?
Brad: [04:51] I would say, in all seriousness, Micah and I, we talk to our kids about faith, gratitude, service, perspective, keeping your family in the center. We definitely want our kids to understand opportunity comes with responsibility, that work does matter, and that no job is beneath them. We also try not to solve every problem for them. Again, our natural instincts sometimes get in the way.
Michael: [05:19] Rescue. Yeah, I know. Well, for us, our Christian faith is definitely kind of our centerpiece, but a practical thing that we have done that seems to have worked, and we don’t have enough time to get into the things that haven’t worked, is that we made them all get jobs in the summers once they started high school, and all of them took to it and even started working during school and have been able to obtain and keep jobs.
Brad: [05:50] Very cool. Well, let’s bring on today’s guest.
Michael: [05:52] Yes. So today joining us is our friend John Gwin. He is the CEO and co-founder of The Auctus Group, a revenue cycle management consultancy that specializes in billing and coding for plastic surgery and dermatology practices. He co-founded the company with childhood friend Kyle Battles, and the two of them built it around the idea that practices should be able to focus on patient care while someone else handles the business end. Educational background for John, he graduated from the DePaul University Honors Program in Chicago and was originally a pre-med student, fun fact. He was also president of DePaul’s men’s club soccer team. Before founding The Auctus Group, John managed a medical billing company and then moved into practice management at a busy plastic surgery practice in the Midwest. He is a self-described tech nerd in the revenue cycle world and has become a go-to voice on where billing, coding, and technology intersect for aesthetic practices. John, thank you for being here today.
John: [07:01] Yeah, thank you for having me. That boot camp for affluenza sounds a lot more fun than those reform ones where they put hoods over the kids’ heads and take them off to school in the middle of the night or whatever it is. There’s a Netflix documentary out there somewhere.
Michael: [07:14] Oh, yeah, I’m familiar with those as well. That’s the more extreme version when you’re maybe in crisis mode.
Brad: [07:23] Before we really jump into your business, have you ever heard of these wealthy accounts for the kids?
John: [07:30] No, I think that might be a different tax bracket from where I’m sitting currently. And I’m not sure it would be something I’d be super interested in. But I have not done a lot of research.
Michael: [07:41] Yeah.
Brad: [07:41] There you go. Same.
Michael: [07:43] Well, let’s jump in. I’d love to start just by having you kind of introduce The Auctus Group and talk about your business focus.
John: [07:52] Yeah, you guys captured it really well. It’s an RCM firm. We’re a medical billing company at the core competency. And I think what differentiated us from the start was really our tech focus, which initially was just getting my hands on as many practice management systems or EMRs as I could. And then the niche focus of really wanting to serve plastics and derm, because about 85% of billing companies try to do everything pretty well, and there’s 20,000 CPT codes, there’s 60,000 diagnosis codes. Every specialty is different, so that focus, I think, allows us to be excellent with a smaller group of our total addressable market. Over the years, we’ve grown from Kyle and me. I bought him out in 2018, and we brought in a really amazing technology team last year and some VC backing through ProCode, which has kind of brought us into the front end on this AI focus in our industry today.
Brad: [08:45] Well, talking about technology, and now we’ve rolled right into AI, not just on your business. Obviously, you’re focusing on that but tell us the impact that AI is having on billing and coding in general in the health care industry.
John: [09:01] It’s massive. Billing and coding went from a nuance of a nuance into kind of a BPO play, outsourcing essentially internationally for cost of labor savings, and there’s good things and bad things about that. And technology is really now starting to displace that BPO model, and I think rebuild some levels of trust because the outsourcing can get a bad name in some places, but also bring in new types of distrust because I’m not sure we can find anybody out there that can explain how the AI thinks fully. But it is really a new transformation for the entire industry, and it’s all about margin compression.
Michael: [09:35] Talk about, for our audience that’s not as familiar, what do you mean when you mention BPO?
John: [09:44] Business process outsourcing. So it’s really common for medical billing companies to either find international hires in markets like Southeast Asia or potentially Latin America. Starting to see some interesting stuff in Africa. And they will either hire directly, which is less common, or hire through an entity that essentially leases seats. So think of a T-Mobile call center almost, but specialized.
Michael: [10:09] And then talk about, I’m thinking about our plastic surgeons and derms in particular who maybe have not worked with a revenue cycle management company. Talk about what that engagement looks like, what your role is, and just how it works.
John: [10:26] I see it as we’re stewards of the financial backbone of their business. It may be 10, 20% if they’re lucky enough to be largely cosmetic, but it’s integral to the business, and you very quickly get into a key decision-maker role because you’re… My job is to shake down the insurance company so the doctor gets paid for the stuff they did. Otherwise it’s free OR time. But functionally, that typically means the doctor documents, and we take it from there until there’s payment. There’s a ton of nuance, but do we do eligibility checks up front? Do we have a phone number for patients to call for statements? Does the office want to hold that? There’s tons of dynamics therein.
Michael: [11:04] Awesome. So, you mentioned a minute ago that Auctus Group is delving into AI. Talk more about that and what y’all are up to and how that works.
John: [11:21] Yeah, the AI buzzword is not as fresh for RCM, I think, as it maybe feels to just the general public now. Like, we’re getting hit with AI everything at this point, I feel like. But there’s been middleware or PM and EMR systems stating that they’re moving towards AI with certain workflows for a long time. So being bootstrapped, I initially would go to third-party vendors and try to figure out, “Can I plug this in to do this thing, and it’ll help me get a better outcome for the customer and be more efficient?” We then got to a point where we looked at, “All right, can we develop this ourselves?” That’s maybe a half a million dollars to actually develop, and I’m not a tech guy. I’m just a self-proclaimed tech nerd. So, can I manage that? Do I have the capital for that? And part of our growth was, again, that ProCode merger to really bring in a full development and data science team and start actually building our own product. And it’s been transformative for our business and hopefully for our clients as well. But we initially started focusing on coding. So, the baseline of what a biller should do is take the doctor’s operative report and spit out a CPT diagnosis code, modifier, unit count. You want to look at NCCI edits, which is, can these things be done together. And so, leveraging AI to have that outcome was where we started. And we take a bit of a unique approach in that we’re never trying to displace humans. It’s just taking that framework from “What do I do next?” to “Is this right?” So, we still have humans blessing everything at the end of the day, but we get the AI to help them get there faster, more consistently, and then point out where they may have a gap on a day-to-day basis because they were up taking care of their baby or they were out sick last week or whatever. Humans make mistakes. It happens.
Michael: [13:12] Have you-
Brad: [13:13] If-
Michael: [13:13] Oh, go ahead.
Brad: [13:13] Yeah. Well, I was taking a step back here. I was thinking about everything you’re describing and knowing that there are a lot of different software EMRs that are out there that kind of quote, “help” with billing and coding. I mean, knowing who you are, you actually complement them. But for our audience who’s listening thinking, “Well, I guess my EMR is going to take care of me,” explain how you complement any type of a software component like that, your services.
John: [13:39] Yeah, I mean, the software’s the functionality, right? It can do the doing, it has the buttons, it can generate the forms, but somebody has to manage that. Did I get a charge for every appointment the doctor gave me? Did I code that right? Did it get out the door to the insurance company? And the not so dirty little secret in medical billing is like 60% of your day is fighting for the stuff you did that’s getting denied because insurance companies don’t make money by paying doctors. And I don’t… You know, I could get on my tree stump about that, but that’s where the majority of the work goes. So, we functionally handle the operations of that business, and then we like to think we take a consultative and customer service-forward approach. So, we’re leaning in on pre-authorization. We actually have a full stateside call center team that has a budget that I stole from an idea from Tony Hsieh’s book forever ago, where they can send an Amazon gift card because somebody’s having a crappy day. Things like that, where you lean in to have that Disney World experience that a lot of plastics practices want, hopefully is another part of what kind of sets us apart. But that’s all part of what a billing department should deliver, and not just a billing service or a technology platform.
Michael: [14:47] I was going to say too, I’ve noticed, we lawyers see, I guess you’d call it buzz more than anything, or noise, about, is there going to be increased scrutiny on billing that is AI generated. And I’m curious if y’all have experienced that, whether it’s on the insurance side as just yet another reason to deny and then you’re having to fight that, or whether you’re seeing it or have experienced anything from a regulatory perspective.
John: [15:22] Yeah, I mean, the interesting thing for me is voice AI is really big in RCM, and it has been for years. Like, I’m at decision fatigue on vendors with it. No offense to anybody out there. We have several we work with. We love them, all that good stuff. But we use it for authorization processes and contracting processes where if I need to log something or check status, instead of paying somebody to sit on hold for 30 minutes, the voice AI can call in and extract that information through the conversation. And many of the insurance companies are stating that they have a policy that they will not speak to AI, but we all talk to an IVR when we call as consumers, and certainly when we call as billing companies, so it’s this double standard with no regulatory enforcement behind it. So, they’re kind of killing the use of provider AI while they leverage it, which is really interesting to me.
Brad: [16:13] So talk… We talked about in the beginning about revenue cycle management, but for our audience members that are considering using AI, talk about the downsides for a medical practice if they do decide to use AI for revenue cycle management.
John: [16:31] I think if it’s leveraged correctly and it’s implemented correctly and it’s monitored correctly, I don’t see a ton of downside outside of the natural compliance and risk that comes with AI in general. The real risk to me is finding the right partners that do the things in a way you need them done. Because there are a lot of people that have RPA masquerading as AI, or they have a really sexy interface and they’re selling you AI, but it’s a BPO behind it of humans that are actually doing the work. So, the risk is just finding the team that does the thing you want them to do in a way that’s financially viable for you, gets the outcomes, and isn’t just what we call vaporware. It’s not just masquerading as AI.
Michael: [17:13] Interesting. Where do you see it going, if you had your crystal ball, what’s your view on where AI’s going, particularly in billing, but if you have thoughts elsewhere too, in the next five years?
John: [17:31] I mean, in billing it’s going to just get larger. I think the things we’ll see are more third-party vendors that can handle a deep, nuanced single workflow. Again, maybe auths, maybe benefit estimates, maybe an AR decision engine. I think that AR decision engine is going to be kind of the golden goose because it touches 60% of time in billing. So instead of taking app reporting and getting codes, it might be seeing a denial and determining the next best step to take to get payment. There’s just so many data points and so many permutations, and billing is a lot of cult knowledge that sits in people that have been doing it for 30 years, so how do you extract that? But I think there’s going to be a lot of focus there. I think we’ll see a challenge in that the EMR and PM systems are going to develop their own versions of these products. And now you’ve got this decision of, do I pay for something extra or take the solution that’s here, and is it good enough? Then I think we’re also going to see new EMRs and PMs come out that are AI native, and that’s going to be tough because it sounds really nice, but did they really just boil the ocean on the entire billing process, documentation, scheduling? It’s almost a too-good-to-be-true type situation.
Michael: [18:45] Yeah. Interesting.
Brad: [18:47] With that then, did you mean like AI is going to give them almost too much information, and then they’re still back to the drawing board as to really what should they be doing?
John: [18:58] I think it’s more about how many workflows it touches because you could leverage AI for scheduling through a chatbot with patients online, and you could leverage it for billing and coding like we’ve been talking about. Or you could leverage it for maybe a tool to monitor whether or not your patient care coordinator is tackling the quotes that are outstanding in the right way. There’s just so many different workflows. And then you still have the junk-in, junk-out problem with a lot of these systems because you’ve got, with all due respect, front desk staff who have phones ringing and people in front of them doing the clicks, and then the AI’s not necessarily smart enough to know what to include or exclude in its decision-making. So, if somebody solved all of those problems and the 15 other ones, we didn’t just touch on, good for them. They’re going to do well.
Michael: [19:43] That’s fascinating. I’m going to take a step back, a little bit from AI. I’m thinking about conversations we’ve had with clients over the years that are making that decision of, do I outsource or do I hire someone to help me with my billing and coding? And I’m sure you have that conversation. I’d love to hear your observations of when is the right time to outsource and use a company like yours versus it may be a better fit to have someone full-time in-house.
John: [20:26] The salesman in me wants to say now is the perfect time and they’re ready. But I think honestly it has to do with the scale of the business and the resources you have, and by that, I mean outsourcing initially may be very attractive. But we don’t always get net new practices because we’re structured and at this point large enough where I can’t take clients without minimums, and that’s unusual. There’s a ton of really good kitchen table billers that don’t do that. So, it may make sense to have it off your plate while you’re setting the entire business up, and then there’s this middle phase where you’re scaling. Truly, if you look at the economics of it, if you’re doing more than a million two or a million five in insurance receipts, as long as you don’t have too much lost opportunity cost by managing an internal team, it’s going to be cheaper for you, just flat out. But the risk is, are they doing it right? Are you monitoring them to make sure they’re continuing to do it right? And when John or Susie goes out for a week, is the cash still flowing? So, I think it’s got a lot to do with whether they have the ability to manage billing in-house more than almost anything else.
Michael: [21:29] Yeah, I would share that observation, that a lot of times the person they put in that seat may not actually know how to do it, and it can be super costly because they think something’s being handled, but it’s not, and then they find themselves in a financial crisis.
Brad: [21:53] Yeah. Going back to what-
John: [21:54] Yeah.
Brad: [21:54] Go, sorry. Go, John.
John: [21:56] I was just going to say, the MGMA, I think, publishes a statistic that says somewhere between 7 and 13% of payable revenue is lost every year due to bad billing. So that’s your risk profile.
Brad: [22:08] And going back to your example that you just gave, where you do have one person in-house, does your company come along and still partner with somebody who’s like, “I know I have a person, but I want you to help double-check or do audits four or five times a year”? Is there other opportunities for those listening who are like, “Well, I have someone, so I guess I don’t need to call John”? Or would you be a resource for them even though they already have someone in-house?
John: [22:35] Yeah. We do a billing scope, we call it, but it’s essentially getting a look under the hood at the metrics. We look at your kind of three to five major KPIs, and it’s just our way of giving back to the community and offering honest feedback on here’s where you might have some places you can make some changes. And by having that conversation, I’m inherently selling and I’m opening a relationship. So, it’s not like it’s fully altruistic, but we’re happy to do that for anybody. I don’t know that getting a formal audit done is going to be the juice worth the squeeze on that. But I do think if you get the opportunity, it’s worth getting a second set of eyes.
Michael: [23:12] Sure.
Brad: [23:12] That’s amazing.
Michael: [23:12] And I use the term audit, so don’t… But it’s like a practice assessment. So you’re just trying to figure out where they are in their life cycle of billing and collecting and what’s the person’s capability to actually do it correctly. Because I’m sure you’ve talked to many of your clients, and when we speak with clients, they’ll know what they believe to be their top five codes. It’d be fascinating to know how many of those codes they’re actually billing consistently correctly if that’s the five codes that they get paid the most on.
John: [23:44] Right. And it’s also interesting. There’s so much focus on how am I getting paid for this, what are my codes, et cetera. Taking a step back and looking at, even assuming you get paid 100% of the time, 100% correctly, is this worth my time in the OR because of my contracts?
Michael: [23:58] Right.
John: [23:58] Because if you look at a breast reduction, a two- to three-hour surgery, it’s 500 to 600 bucks an hour generally. A Roto-Rooter makes more for a toilet consult. That’s obscene.
Michael: [24:08] Yeah.
John: [24:09] And the highest ROI procedure is going to be a lesion removal. It’s 500 to 700 bucks a procedure. You could probably crank five of those out an hour, but do you want to be a mole-removal factory as a plastic surgeon? Probably not.
Michael: [24:22] Great question. Yeah, really interesting. Well, as we wrap up today, tell the audience how they can find you and any other contact information.
John: [24:36] Yeah. AuctusGroupConsulting.com is our website. I’m john@AuctusGrp.com. We are a scaling company but still try to keep that family feel. So, if you email me, I will actually respond. And again, that scope is wide open to not just clients of ours or people that might be clients, but any surgeon of any specialty. We will do a scope audit, but if we can’t take them on, it’s just, again, our way of giving back.
Michael: [24:59] Awesome. Well, thank you so much for joining us on the Legal 123s with ByrdAdatto. We’re grateful for you and your time. We’ll go to break, and then when we come back, give a few quick legal wrap-up insights. Thank you.
John: [25:13] Thank you.
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Brad: [25:48] Welcome back to Legal 123s with ByrdAdatto. I’m your host, Brad Adatto. I’m still here with my co-host, Michael Byrd. Now, Michael, for those who don’t remember, this season our theme is AI in health care. We just had a really great conversation with John, and for the ladies out there, if you want to go see a good-looking boy, just tune in. Drop Michael and me off. He definitely helped us look a lot better. We know John in person, and I can’t tell you how many times John would walk off, and every single woman would be, “Woo, he is a good-looking boy.” So just keep that in mind if you want to watch it on video. You’ll see what I’m talking about. But we’re not talking about John and his good looks. We’re actually here to talk about AI, and I thought it was fascinating, the things he was talking about, how the impact it’s having with billing and coding and just the revenue cycle in general. But what were some of your thoughts, Michael?
Michael: [26:33] Well, first, I thought when you were talking about good looks, you were about to talk about me-
Brad: [26:36] Nope, I was not.
Michael: [26:36] And so I’m a little hurt there, Brad. But yeah, it’s an interesting area, and it’s one where, from a regulatory perspective, we’re starting to see some governmental interest and scrutiny. And really, the idea is that if AI makes billing and coding more efficient, what they’re looking for is, is it being too efficient? In other words, is it optimizing the amount of money that a practice can get by the codes that you use for the billing, and is that a form of fraud or some other type of violation? So, it’s a fascinating area to watch if you have an AI component to your billing and coding, and it does bring back the human element.
Brad: [27:32] Yeah, totally agree, and John said that earlier. Michael, I just agree with you on that. There’s an accountability issue when it comes to billing and collecting correctly. And as much as you want to rely on these tools that are out there, from a compliance perspective, the physician or medical provider is ultimately responsible for making sure those codes are correct. And so, if you’re relying too heavily on an AI component, which has no responsibility to the medical board or to the commercial payer or to the federal payer, there’s exposure there. So be very mindful of not just relying purely on AI to help tell you what the right code is. Spend the time and energy understanding the why, or work with teams like John who will tell you why it’s going to work or not going to work. But believe it or not, Michael… Maybe, you know… Any final thought after that?
Michael: [28:22] Yeah, totally agree.
Brad: [28:23] Well, I think we’re out of time, ladies and gentlemen, but next Wednesday we’ll be back, where we discuss using AI with marketing, this time with Josh Suchanek.
Brad: [28:36] Thanks again for joining us today. And remember, if you liked this episode, please subscribe. Make sure to give us a five-star rating and share with your friends.
Michael: [28:42] You can also sign up for the ByrdAdatto newsletter by going to our website at byrdadatto.com.
Outro: [28:49] ByrdAdatto is providing this podcast as a public service. This podcast is for educational purposes only. This podcast does not constitute legal advice, nor does it establish an attorney-client relationship. Reference to any specific product or entity does not constitute an endorsement or recommendation by ByrdAdatto. The views expressed by guests are their own, and their appearance on the program does not imply an endorsement of them or any entity they represent. Please consult with an attorney on your legal issues.
