It has been a record year for healthcare claim denials and underpayments, often leaving providers to foot the bill. Here are 10 suggestions to help providers avoid preventable denials.
Who’s to say that collecting data in healthcare isn’t sexy?
Tracking trends in healthcare claim denials and underpayments can help healthcare executives identify and solve systemic issues, and ultimately bolster the healthcare system’s bottom line.
Healthcare systems have faced an unprecedented rate of claim denials and underpayments following COVID-19, with the financial fall-out impacting providers nationwide. The American Hospital Association reported that 89% of hospital leaders experienced an increase in healthcare claim denials over the past three years.
According to the 2022 Revenue Cycle Denials Index, billions of dollars are at risk each year, with healthcare claim denials on the rise. The Centers for Medicare and Medicaid Services (“CMS”) reported that health plans on the federal health insurance marketplace experienced denials as high as 80%, with approximately 18% of in-network claims being denied on average.
A closer look into the healthcare claims data shows that while front-end denials (i.e., patient registration and eligibility verification issues) remain at the forefront of denials across the nation, back-end denials (i.e., missing, or invalid claim data, and failure to provide requested medical documentation) closely follow.
Healthcare systems in Florida are experiencing a steady uptick in denials and underpayments due to charge audits. In an effort to evade payment to providers for medically necessary healthcare goods and services provided to patients, top insurance carriers and payors (collectively, “payors”) have engaged in these improper claim practices.
Payors have hired third-party auditors to perform prepayment and post-payment reviews of the charges included in the claims that providers submit for payment. Thereafter, the auditors send the providers a report of the audited charges and the reasons for denial or underpayment.
According to further analysis, the most prevalent category for charge audit denials in a hospital setting accounts for bundling errors where the auditor finds that the benefit was included in another service that had previously been adjudicated.
Last year, approximately $2.5 billion dollars of professional and hospital charges were audited, with “bundling” being the number one reason for denied charges nationwide. According to a recent charge audit analysis, 34% of inpatient charges were initially denied at an average value of $5,300, and outpatient charges were initially denied at an average value of $585.
While some healthcare claim denials and underpayments are avoidable, others are not. The data does not lie – knowing, understanding, and talking data will help providers avoid preventable denials, resolve systemic issues, and improve payment outcomes.
Healthcare executives should consider the following suggestions for obtaining resolution of the disputed claim payments.
1. Fact find/gather data about your healthcare denials and underpayments.
2. Analyze the data and identify the trends in healthcare denials and underpayments.
3. Conduct a root cause analysis to assess your findings.
4. Determine the top reasons for denials and underpayments, along with systemic issues your healthcare system may be facing.
5. Conduct a cost analysis to determine how these denials and underpayments are impacting your bottom line.
6. Identify and implement process improvements to avoid preventable denials and underpayments, and that will increase your healthcare system’s revenue.
7. Have your attorney assess your contract language and make changes that account for the denial and underpayment trends your healthcare system is facing.
8. Strategize regarding next steps for obtaining claim payment.
9. List your demands and non-negotiables in preparation for talking with payors.
10. Be prepared to take legal action if you are unable to obtain favorable outcomes.
Thus far, it has been a record year for healthcare claim denials and underpayments, often leaving providers to foot the bill. Changing course for the new year will require a commitment to data analysis and a proactive approach to tackling healthcare claim denials and underpayments, and bettering payor-provider relations.
Lindsay Burrows is an associate attorney at Wolfe | Pincavage, a Florida law firm. She has represented providers in healthcare licensure, fraud, waste and abuse, and compliance matters.