Report: $262B in healthcare claims initially denied last year

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Dive Brief:

  • new report by Change Healthcare found an estimated 9% of claims submitted to payers last year was initially denied. Of the estimated $3 trillion in charges submitted to payers, $262 billion was initially denied.
  • The report said as much as 3.3% of net patient revenue, an average of $4.9 million per hospital, was “put at risk due to denials.”
  • Change Healthcare said 63% of the claims were recoverable and providers spent $8.6 billion to appeal the claims, which cost an average of $118 per claim.

Dive Insight:

Change Healthcare published “Healthy Hospital Revenue Cycle Index” on Monday at the Healthcare Financial Management Association ANI 2017 conference. The organization said the results “reinforce the tremendous opportunity hospitals have to accelerate cash flow and reduce administrative costs by using advanced analytics to better manage the revenue cycle.”

Change Healthcare bases its index on primary institutional inpatient and outpatient claims processed by the organization in 2016. The company reviewed more than 3.3 billion provider transactions at 724 hospitals that valued $1.8 trillion.

The report found that the Pacific states had the highest denial rate (10.89%) and the most common denial causes were “registration/eligibility” (23.9%) and “missing or invalid claim data” (14.6%).

With many hospitals facing razor-thin margins, these kinds of revenue cycle issues play a role in whether a hospital can grow and reinvest in its facilities. This report shows the importance of a strong revenue cycle that provides relevant information that payers can use to approve claims.

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