R1 RCM (“R1”), a leader in healthcare revenue management solutions, has launched Phare Audit, a comprehensive AI-native tool designed to transform mid-revenue cycle performance by ensuring healthcare providers capture the full reimbursement they are entitled to for care delivered. This groundbreaking solution, built on R1’s Revenue Operating System and enhanced with advanced agentic AI aims to reduce revenue leakage, improve coding accuracy and enhance documentation quality before claims are submitted.
Traditionally, many health systems rely on fragmented, reactive processes like post-billing DRG (Diagnosis-Related Group) validation and retrospective audits to uncover missed revenue opportunities. However, the most significant reimbursement decisions occur before a bill is ever generated when clinical care must be accurately translated into coded claims. Phare Audit addresses this by scanning full medical records, identifying documentation or coding gaps and enabling corrections prior to billing, which reduces downstream rework, denials and compliance risk.
Phare Audit builds on R1’s industry-leading DRG Validation (DRG-V) solution, which was ranked #1 for underpayment recovery services and is trusted by more than 165 clients, delivering over $900 million in annual value. By bringing that same clinical intelligence further upstream in the revenue cycle, R1 is establishing a new standard for documentation and coding integrity, backed by both AI and expert human validation.
How Phare Audit Works
Phare Audit’s capabilities include:
Full Record Review: AI scans entire medical charts to identify coding and clinical documentation improvement (CDI) opportunities at scale.
Evidence Tracking: It provides traceable, clinically supported recommendations that help defend reimbursement decisions.
Pre-Bill Correction: Discrepancies are identified and fixed before billing, lowering denial rates and costly rework.
Expert Validation: R1’s clinical auditors validate complex cases and confirm AI findings.
Customized Models: Custom AI models tailored to specific health systems help align results with local policies and guidelines.
Impact on the Revenue Industry
The launch of Phare Audit marks a significant change in Revenue Cycle Management (RCM). It moves from reactive billing to proactive, AI-driven revenue capture. Healthcare providers now use advanced automation and AI more than ever. This helps cut operational friction and boosts financial performance.
Traditional revenue cycle operations face issues like fragmented data and manual tasks. Rising payer complexity adds to these problems, often causing missed revenue and higher costs. AI technologies, like those in Phare Audit, can help. They automate tedious tasks, improve accuracy, and offer better insights into claims workflows.
By using AI earlier in the revenue cycle, providers can rely less on post-bill interventions. These interventions are usually slower and less efficient. The ability to audit 100% of cases rather than a small sample means fewer missed opportunities and cleaner claims that satisfy payer requirements — ultimately improving cash flow and reducing administrative overhead.
Business Effects for Healthcare Providers and RCM Firms
For hospitals, health systems, and physician practices, the implications are profound:
Better Revenue Capture: With more accurate coding and documentation, providers can ensure that their revenues are accurately reflected in relation to the complexity of care provided.
Lower Denials and Repairs: With pre-bill repairs, there will be less denials and appeals, thereby resulting in faster cash flow.
Improved Quality and Compliance: Recommendations for action and auditing trails can lead to improving compliance and preparedness for regulation.
Efficient Operations: Personalized AI developed for a particular healthcare system has the potential to optimize operations and allow medical staff to perform value-adding tasks by relieving them of mundane work.
R1’s foray into the development of artificial intelligence-native solutions in the form of Phare Audit reflects the larger industry shift towards the use of sophisticated automation and machine learning to redefine the performance of the revenue cycle. This is even as the environment of health care payments becomes increasingly complex.
