Health systems view rise in claim denials as payor 'delay tactic'

Health systems view rise in claim denials as payor ‘delay tactic’

Health systems across the country have seen a significant increase in denied claims over the past year, leading to more paperwork for providers, less cash for hospitals and, in some cases, delayed care. to patients.

According to a Kaufman Hall report, about 67% of health officials have seen an increase in claim denials over the past year. In 2021, 33% of executives reported an increase.

Although claim denials rose for several years before 2020, navigating increases amid the pandemic has piled stress on patients and hospitals, forcing health systems to shift funds and add staff to request payment of claims.

UnityPoint Health has seen a 50-200% increase in information request denials from its commercial and managed care payers over the past 15 months, said Dennis Shirley, vice president of revenue cycle for the system. health.

During the same period, the system based in Des Moines, Iowa, Medicare information request denials have remained steady, about four to 10 times less than commercial and managed care plan denials, he said.

“These denials generally do not result in permanent cancellation, loss or payment, but they do require additional staff work and processing effort, and such denials also disable the timely payment provisions of our contracts with payers,” Shirley said. .

At Rush University Medical Center in Chicago, rising denial rates have forced the hospital to devote additional resources to its claims and appeals processes, hiring more staff to try to ensure its providers are paid, said Dr. Brian Stein, the center’s chief quality officer. officer.

“[Insurers] are tightening screws everywhere to try to cut costs,” Stein said. “We are at their mercy with what they decide.”

The rise in refusals has not been the case throughout the pandemic. At first, payers weren’t turning down claims as frequently, in part because there weren’t as many claims being processed, said Colleen Hall, managing partner of health services and head of revenue cycle at Crowe, a consulting firm.

With stable premiums as patients sought less care due to fear of contracting COVID-19, insurance companies were making unprecedented profits, Hall said.

But as more patients begin to seek elective procedures and other care they’re putting off, insurers are catching up and having to pay more than expected, she said.

The initial claim denial rate for hospitals fell from 10.2% in 2021 to 11% in 2022, according to Crowe’s Revenue Cycle Analysis System, which collects data from 1,700 hospitals around the world. national scale. This equates to approximately 11,000 denied claims for an average-sized hospital.

The value of denials increased to 2.5% of gross healthcare system revenue in August, from 1.5% in January 2021, primarily due to pre-authorization denials on hospital patient accounts.

Payer denial on service usage and prices typically comes from insurance companies and employers grappling with rising health care costs, said Konstantine Costalas, senior vice president of managed care contracts at Northwell Health.

“From the hospital’s perspective, it just delays payment,” Costalas said. “We returned the serve, it’s just a delay tactic in which we see an increase.”

Insurers are taking up to seven days to adjudicate post-acute care claims, denying or significantly delaying authorizations for patients to go to a sub-acute care facility or receive home care.

The denials have placed additional burden and stress on hospitals and patients, Costalas said.

In addition to a higher number of refusals, providers are waiting longer to be paid by insurers. Crowe found that the proportion of claims paid more than 90 days after being received rose to 37% in August from 32% in January 2021.

The longer a claim remains unpaid, the more it affects hospital operations.

“We’re seeing that our customers are really struggling with decreased cash flow,” Hall said. “If they’re going through this increased administrative burden and all these additional costs, then that can impact the amount of charitable care and the amount of special programs that [hospitals] can contribute to their communities that benefit patients.

Another issue for hospitals has been the increasing frequency of “reprises,” where insurers take back part of their reimbursement after saying the claim should have been assigned a lower diagnosis-related group payment level, Hall said. .

While denials are necessary to manage the use of low-value services and reduce costs, it’s important for providers and patients to know how insurance companies make these decisions, said Sol professor Glenn Melnick. Price School of Public Policy at the University of Southern California.

The Centers for Medicare and Medicaid Services should follow the Department of Health and Human Services’ recommendation to issue more specific guidance on when and how insurers should use their own criteria to decide whether to pay for care, a said Melnick.

As an example, Shirley of UnityPoint Health noted that some commercial payers use a different definition of clinical criteria for sepsis than CMS, resulting in a higher level of denial of sepsis-related care at her facilities. .

“We understand that payers have the right to set their own guidelines, but it is difficult for hospitals to have to choose between standards of care when the CMS and commercial and managed care plans use different standards,” did he declare.

The government needs to do more with the data and resources it has access to, to create a more centralized system to track and regulate claim denials, Melnick said.

“If you have these risk-based organizations, where they manage care and claims, is that data reported to CMS in a timely manner, so Medicare can monitor whether their members are receiving appropriate care? If the data is stuck at a lower level, it’s a giant black hole for CMS,” he said.

In the meantime, systems like Northwell Health are partnering with insurers to identify claims issues ahead of time, sending out coordination of benefits claims before care is delivered, and setting out a process to facilitate post-authorizations. -treble faster, said Costalas.

“Some of them have a very good relationship with some of these plans, and sometimes they enforce your contract through various means, such as demand letters and other remedies,” he said.

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