AI-Powered Medical Coding: How Startups Are Tackling Healthcare's $250B Claims Crisis

The U.S. healthcare system hemorrhages billions annually due to claim denials. With close to $265 billion in claims rejected each year, healthcare organizations are increasingly turning to artificial intelligence to streamline operations and protect revenue streams.

The Root Causes Behind Rising Denials

The scale of the problem is staggering. Incorrect medical coding accounts for over 40% of claim rejections, while delayed submissions contribute another 35%. Eligibility verification and prior authorization issues compound these challenges further. For hospital administrators and revenue cycle teams, these denials represent not just lost income but mounting operational friction.

The complexity of coding has exploded in recent years. Diagnosis code classifications ballooned from 19,000 options under ICD-9 to nearly 120,000 under ICD-11. Keeping pace with evolving NCCI edits, Medicare policy shifts, and payor-specific requirements has become practically impossible for human teams working at scale.

RapidClaims Emerges With $3.1M to Revolutionize Medical Coding Automation

Recognizing this systemic pain point, RapidClaims has officially launched from stealth with $3.1 million in seed funding to automate medical coding at enterprise scale. The round was anchored by Together Fund, a $250 million global software-focused investment vehicle, with backing from Better Capital, Neon Fund, Peercheque, and DeVC.

The company’s leadership team—Dushyant Mishra (CEO), Jot Sarup Sahni (CTO), and Abhinay Vyas (CDO)—combines deep healthcare expertise with proven product scaling capabilities. Mishra first identified the opportunity in 2018 while working at Abbott Healthcare, observing firsthand how hospitals struggled across fragmented revenue cycle processes. The concept gained urgency in 2022 as denial rates spiked nationally and large language models demonstrated clear potential for solving coding challenges.

Notably, RapidClaims has assembled an advisory network drawn from prominent U.S. healthcare institutions, including Oscar Benavidez (Executive Director at Mass General), Ankit Jain (Founder & CEO of Infinitus), and Sachin Jain (President & CEO of Scan Health).

Three Purpose-Built AI Products for the Revenue Cycle

RapidClaims is deploying three distinct solutions targeting different segments of the medical coding workflow:

RapidCode delivers fully autonomous medical coding, eliminating manual entry bottlenecks through end-to-end automation that reduces administrative workload while improving accuracy.

RapidAssist functions as an intelligence layer for existing coding teams, auditing chart documentation, flagging gaps, and building custom query tools powered by intelligent rule-set engines to enhance human coder productivity rather than replace it.

RapidRisk leverages advanced AI to calculate risk-adjusted metrics (HCC and RAF scores) while recommending documentation improvements based on frameworks developed collaboratively with leading CDI (Clinical Documentation Improvement) specialists.

Market Momentum and Early Validation

The timing is strategic. A joint analysis by Bain & Company and KLAS found that 80% of U.S. healthcare providers are expanding IT and software budgets, with AI technologies receiving prioritized investment. Revenue cycle transformation consistently ranks as the #1 operational focus for health system executives seeking to contain administrative expenses and recover lost revenue.

RapidClaims validated product-market fit rapidly, completing six pilot deployments within two months of beta launch in June 2023, with five additional pilots already queued for deployment.

Manav Garg, co-founder of Together Fund, stated: “The transformation potential of AI in streamlining administrative workflows across revenue cycles is profound. The RapidClaims team demonstrates the rare combination of deep healthcare systems knowledge and genuine AI execution capability—exactly what’s needed to unlock value at scale.”

Dushyant Mishra added: “We’re observing tangible results in cost reduction, processing speed, and net revenue improvement through AI. While automation is essential, we recognize that expert human coders remain invaluable for navigating nuanced regulations and edge cases. RapidAssist represents our commitment to augmenting—not eliminating—skilled coders.”

Healthcare organizations confronting surging denial volumes, constrained coding workforces, and mounting administrative overhead have increasingly limited options. AI-driven solutions like RapidClaims represent a structural shift in how the industry manages one of its most persistent operational bottlenecks.