Category Archives: Denial Management

Key Principles for Proactive Management of Patient Denials

Posted on by • Posted in Denial Management, Health Insurance Denial, Medical Denial Management, Medicare Advantage, Medicare Advantage Denials • Tagged , , , , • Leave a comment

https://www.kaufmanhall.com/insights/article/key-principles-proactive-management-patient-denials

The proliferation of claims denials, especially by Medicare Advantage payers, has become a pressing issue for health system operations. In 2023, Medicare Advantage insurers fully or partially denied 3.2 million prior authorization requests—or 6.4% of all requests, according to a Kaiser Family Foundation (KFF) report.

The growth in denials can be partially explained by the increasing popularity of managed Medicare and Medicaid plans, but evolving payer practices, including the adoption of AI for algorithmic denials, have also contributed. Claims denials have emerged as one of the key points of payer-provider tension, and an effective claims denials management and prevention program is a powerful way for health systems to rebalance their payer relationships.

Denied claims result in reduced reimbursement, added administrative burdens, and patient and provider frustrations. Even when denials are successfully appealed and reversed—the KFF report found that in 2023, 82% of Medicare Advantage denials were partially or fully overturned—the time and resources devoted to the appeals process add to the costs of providing healthcare services. Optimizing pre-billing activities to reduce avoidable denials and improve and streamline the patient experience of care is as essential for health systems as a robust appeals strategy. This article addresses critical success factors for both preventing and appealing denials.

Preventing Claims Denials During Pre-Bill Period

Successfully preventing denials requires a centralized program across the workforce, from frontline providers to clinical and revenue cycle staff, to manage pre-bill activities by focusing on identifying the correct patient insurance information, obtaining accurate authorizations, and preventing concurrent denials while the patient is still in the facility. Utilization review nurses, attending providers, and Physician Advisors should be attentive to documenting the full state of patient acuity, while collaborating with the revenue cycle team. This team should focus on the collection and reporting of medically necessary data and documentation, which serves as the evidence payers use to evaluate prior authorization requests. When information about a patient’s condition isn’t recorded, or acknowledged in an authorization request, unnecessary denials can result.

A successful denials prevention program expands beyond the utilization management (UM) team and includes revenue cycle, and provider collaboration. Revenue cycle pre-service procedures should focus on confirming insurance benefits and securing payer authorization for planned services while collaborating with UM and referral sources. A comprehensive and proactive denials prevention program helps conveys to payers the full extent of inpatient clinical work, thanks to a collaborative effort to improve documentation.

The following list can help organize denials prevention programs across all locations, clinics and practices:

  • Establish an enterprise-wide denials prevention strategy which includes a multi-disciplinary denials management committee focused on identifying denials trends, conducting root cause analyses, developing proactive denials mitigation plans, creating enhanced reporting, monitoring improvement, and communicating risk
  • Establish proactive revenue cycle, UM, pre-certification, and peer-to peer workflows procedures to confirm completion of payer requirements prior to scheduled services and discharge
  • Ensure patients are financially cleared through implementation of pre-service protocols, including enhanced medical necessity process for outpatient services, authorization defer and delay procedures to reduce rework and avoidable denials
  • Identify pre-bill edits to increase “clean claim” efficiency, reducing initial denials and expediting reimbursement
  • Deliver education to providers, care management, and nursing teams on key observation concepts, such as clinical documentation improvement, patient status documentation, medical necessity documentation and orders for the Two Midnights rule, and payer reimbursement methodologies

Pursuing Post-Bill Appeals, Reversals and Payer Escalation

A strong denials management and prevention program should include a robust post-bill appeals program with skilled coding, clinical and technical resources. A targeted and strategic appeal process can result in improved overturn rates and increased reimbursement. Appeal letters which are supported by clinical facts, payer policies, and a summary of key components relevant to each case and the associated denial increase the likelihood of success.

Components of the appeal program should include the following:

  • Guidelines for when to appeal based on potential success by payer and appeal level
  • Reviews of upheld appeals for second and third level appeals based on strategy by payer
  • Trends for all upheld appeals by reason and by payer
  • Dashboard for tracking denials activities
  • Appeal letter writing guidelines and tips to support
  • Evaluation process for existing payer escalation workflows, tools and payer communication strategies with consideration for payer
  • Process to measure and monitor overturn rates and improvement opportunities

The collaboration with managed care is vital to the success of the denials management/prevention program. A formal payer escalation process which facilitates transparency between the payer and provider can result in improved relations and a reduction in initial denials. Successful denials management/prevention payer escalation programs are strategic and focus on addressing unfair/incorrect denials and establishing clear bi-directional reporting and communications. These programs can result in improved contract negotiations and reduce incorrect denials.

Artificial Intelligence (AI) can support the post-bill appeals process and can be especially relevant when developing a strategy to combat denials. Not only are payers increasingly using AI to trigger denials, but health systems can also deploy AI to write appeal letters, analyze denial trends, and summarize medically necessary documentation. Although algorithmic denials have become a source of frustration for providers and patients, health systems can also deploy AI to their defense. While payers are often better positioned to devote AI resources to claims, a little bit of investment from health systems, deployed effectively, can go a long way toward evening the playing field.

Closing Thoughts and Seven Questions to Consider

A formal denials management and prevention program is essential to obtaining proper reimbursement for the care provided and reducing rework across the enterprise. A strong program should also improve the patient’s experience of care: ideally, a patient should not need to interact with or hear from their provider between scheduling an appointment and checking in.

Denials management and prevention programs should be led by multi-disciplinary committees and focus on reducing avoidable denials and rework. Reducing denials requires the implementation of a multi-disciplinary program and collaboration between UM, revenue cycle, clinical documentation improvement, managed care, clinical operation and providers. 

Health systems reassessing their claims denials program should consider these questions:

  1. Do you have a reactive or proactive denials management strategy in place?
  2. Does your denials strategy include multi-disciplinary team representation?
  3. What reporting/tools are currently being used to track and manage denials?
  4. What are your top five denial categories and what is being done to address the root cause of these denials?
  5. How are avoidable denial risks managed, communicated and monitored?
  6. Have you implemented a comprehensive denials management strategy with a multi-disciplinary committee?
  7. Are the system’s internal resources and expertise sufficient for addressing identified challenges, or should the system seek external partners to implement changes?

The spotlight is on health insurance companies. Patients are telling their stories of denied claims, bankruptcy and delayed care.

Posted on by • Posted in Bankruptcy, Delayed Care, Denial, Denial Management, Health Insurance Denial, Health Insurance Industry, Health Policy, Healthcare Reform, Medical Debt, Out of Pocket Expenses, Out-of-Network, Profit, Profit Motive, Underinsured, UnitedHealth Group, UnitedHealthcare • Leave a comment

https://www.yahoo.com/lifestyle/spotlight-health-insurance-companies-patients-014648180.html

After UnitedHealthcare CEO Brian Thompson, left, was killed and Anthem released a controversial anesthesia policy, people shared their stories of insurance woes. (UnitedHealth Group via AP, Getty)

After UnitedHealthcare CEO Brian Thompson, left, was killed and Anthem released a controversial anesthesia policy, people shared their stories of insurance woes. (UnitedHealth Group via AP, Getty)

On Wednesday, Brian Thompson, the chief executive of UnitedHealthcare, was fatally shot in midtown Manhattan in what police are calling a “pre-meditated, preplanned, targeted attack.” Days before, Anthem Blue Cross Blue Shield said in a note to providers that it would limit anesthesia coverage in some states if a surgery or procedure exceeded a set time limit (the policy, set to go into effect in February, was swiftly reversed following an uproar).

The U.S. health care insurance system relies on private insurance, which covers 200 million Americans, and government-run programs.

Americans receive coverage through their employers, government programs like Medicaid or Medicare or by purchasing it themselves — often at a high cost. Even when an individual is covered by insurance, medical coverage can be expensive, with co-pays, deductibles and premiums adding up. Going to an out-of-network provider for care (which can be done unintentionally, for example if you are taken by ambulance to a hospital) can lead to exorbitant bills.

And then there’s the fact that, according to data from state and federal regulators, insurers reject about one in seven claims for treatment.

And most people don’t push back — a study found that only 0.1% of denied claims under the Affordable Care Act, a law designed to make health insurance more affordable and prevent coverage denials for pre-existing conditions, are formally appealed. This leaves many people paying out of pocket for care they thought was covered — or skipping treatment altogether.

For many, the cost of life-saving care is too high, and medical debt is the No. 1 cause of bankruptcy in America.

That is to say nothing of the emotional labor of navigating the complex system. With Thompson’s killing and the Anthem policy, there’s been widespread response with a similar through line: a pervasive contempt for the state of health insurance in the United States. The most illustrative reactions, though are the personal ones, the tales of denied claims, battles with insurance agents, delayed care, filing for bankruptcy and more.

‘We sat in the hospital for three days’

Jessica Alfano, a content creator who goes by @monetizationmom, shared her story on TikTok about battling an insurance company while her one-year-old child was in the hospital with a brain tumor. When her daughter needed to have emergency surgery at a different hospital was outside their home state, UnitedHealthcare allegedly refused to approve the transfer via ambulance to New York City. She also couldn’t drive her daughter to the hospital as the insurance company told them they would not cover her at the next hospital if they left the hospital by their own will and did not arrive by ambulance. “I vividly remember being on the phone with UnitedHealthcare for days and days — nine months pregnant about to give birth alone — while my other baby was sitting in a hospital room,” she said.

https://www.tiktok.com/embed/v2/7444723783765740830?lang=en-US&referrer=https%3A%2F%2Fwww.yahoo.com%2Flifestyle%2Fspotlight-health-insurance-companies-patients-014648180.html&embedFrom=oembed

‘Excruciating pain’

While pregnant, Allie, who posts on TikTok as @theseaowl44, went to the hospital in “excruciating pain,” she said in a video. After initially being sent home by a doctor who said she was having pain from a urinary tract infection and the baby sitting on her bladder, she returned to the hospital to learn she was suffering from appendicitis. She was sent to a bigger hospital in St. Louis, where she had emergency surgery. Her son survived the surgery but died the next day after she delivered him.

https://3489f1614246e47166ad8768064e31d6.safeframe.googlesyndication.com/safeframe/1-0-40/html/container.html

About 45 minutes later, Allie suffered a pulmonary embolism and had to have an emergency dilation and curettage (D&C) to remove the placenta, nearly dying in the process. It was after all of this that she learned she had been sent to a hospital that was out of network. “We ended up with a bill from the hospital that was more than what we paid for the home that we live in, and it was going to take probably, I don’t know, 20 to 30 years to pay off this hospital bill,” Allie said. “We opted to have to file bankruptcy, but not before I exhausted every appeal with [insurance company] Cigna — I wrote letters, I spilled my heart out, I talked on the phone, I explained our situation and our story, thinking surely someone would understand this was not my fault.

On the third and final appeal, because they only allow you three, Cigna’s appeal physician told me, point blank, it was my fault that when I was dying from a ruptured appendix in the ER, that I didn’t check and make sure that the hospital I was being sent to by ambulance was in my insurance network.”

https://www.tiktok.com/embed/v2/7445019152714173726?lang=en-US&referrer=https%3A%2F%2Fwww.yahoo.com%2Flifestyle%2Fspotlight-health-insurance-companies-patients-014648180.html&embedFrom=oembed

Hundreds of similar stories are being told, but the comments section on these videos paints a picture in itself. “I wear leg braces and walk with crutches as a paraplegic and they tried to deny my new leg braces and only approve me a wheelchair. They wanted to take my ability to WALK away,” commented TikToker @ChickWithSticks.

“Perfectly healthy pregnancy, until it wasn’t,” TikToker Meagan Pitts shared. “NICU stay was covered by my insurance, the neonatologist group contracted by the NICU: Denied. I’m sorry, what?”

Another wrote that her son was born with a congenital heart defect and needed open heart surgery. “My husband changed jobs & we switched to UHC,” she wrote. “They DENIED my son’s cath lab intervention!”

‘The most stressful time of my life’

One Redditor, @Sweet_Nature_7015, wrote that they struggled with UnitedHealthcare when they and their husband were in a “terrible car accident” that was the other driver’s fault. Since United Healthcare only covered two days in the hospital, the Redditor wrote that the case manager tried to find a way to “kick him out of the hospital” — but since their husband was in a coma, he was unable to be discharged safely. “The stress of being told — your health insurance isn’t covering this anymore, we have to discharge your husband — while he’s in a freaking coma and on a ventilator, etc, rediculous [sic],” they wrote. “I have to sign some papers to give up all of my husband’s benefits via his job – which included his life insurance that he had paid into, so we lost that. This allowed him to be covered by Medicaid. I can’t even put into words how much stress UHC caused on top of my husband (and my) health issues in the most stressful time of my life.”

The kicker, they wrote, was that years later the couple was awarded a court settlement from the other driver in the accident — and “UHC rolled up to the court and took the entire settlement money as their payment for those two days in the hospital they had paid for.”

‘I’m one of the lucky ones’

On the same thread, Redditor @sebastorio wrote that they went to the emergency room for an eye injury, which their doctor said could have resulted in a loss of sight. “UHC denied my claim, and I paid $1,400 out of pocket,” they said. “I’m one of the lucky ones. Can’t imagine how people would feel if that happened for critical or life-saving care.”

‘Constant stream of hostile collection calls’

Redditor @colonelcatsup opened up about their experience with insurance while having a baby, writing that they went into premature labor while insured under one company but that at midnight, their insurance switched to United Healthcare. “I gave birth in the morning. My daughter was two months early and was in the NICU for weeks so the bill was over $80,000 and United refused to pay it, saying it wasn’t their responsibility,” they wrote. “In addition to dealing with a premature baby, I had a constant stream of hostile collection calls and mail from the hospital for 18 months. My credit took a hit.”

Eventually, their employer hired an attorney to fight UHC, and the insurance company eventually paid. “I will never forgive them for the added stress hanging over me for the first year and a half of my child’s life,” they wrote.

‘Debt or death’

On Substack, on which she posted an excerpt from her Instagram, author Bess Kalb also recounted her experience with health insurance coverage when she was bleeding during her pregnancy and was asked by an EMT what insurance she had before deciding whether they would go to the nearest hospital. When her husband said to take Kalb to the hospital, despite not knowing the insurance implications, their bill was more than $10,000.https://www.instagram.com/p/DDNphXCp3Qu/embed/captioned/?cr=1&v=12

“The private insurance industry forces millions of Americans to choose between debt or death,” Kalb wrote. “Often, ghoulishly, the outcome is both. If I were worried about an ambulance out of coverage, I would have waited at home or waited in traffic for an hour to cross Los Angeles to get to my doctor’s office and sat in the waiting room bleeding out and perhaps would not be here to write this, and neither would my son.”

Empowering healthcare providers against rising payer denials

Posted on by • Posted in Clinical Documentation Improvement (CDI), Denial Management, Denial Rates, Health Insurance Denial, Health Insurance Industry, Health System, Hospital, Hospital Industry, Rev Cycle Management, Revenue Cycle • Leave a comment

https://www.healthcaredive.com/spons/empowering-healthcare-providers-against-rising-payer-denials/712098

In the rapidly evolving landscape of U.S. healthcare, the tug-of-war between payers and providers is continually intensifying, raising the stakes on the strategic maneuvers that shape the industry’s financial and operational dynamics.

The crux of the issue lies in the increasingly sophisticated strategies employed by insurance companies to deny claims: a move that ostensibly aims to safeguard their bottom lines, often at the expense of provider sustainability and patient access.

The rise in denial rates is more than a mere statistic; it’s a symptom of a broader systemic challenge that calls for strategic foresight and robust expertise. In this intricate environment, providers face numerous administrative challenges, working to balance clinical decisions with financial sustainability. 

Drawn from in-depth proprietary analytics, clinical regulatory expertise and decades of experience, CorroHealth addresses what is needed to successfully combat payer denial tactics. Broader industry trends, such as the shift towards value-based care and the increasing emphasis on patient-centric models, will continue to disrupt the historic provider business model. CorroHealth’s insights offer a beacon for steering through these turbulent waters. Their strategic recommendations, from optimizing contract negotiations to leveraging data analytics to managing payer denials, to formalizing escalation paths, reflect a comprehensive approach to mitigating the adverse effects of ever-shifting payer denial tactics.

Delving deeper into the anatomy of payer denials reveals a long-term pattern of deliberate complexity designed to wear down provider resilience. By dissecting the layers of denial management, from initial claim submission to final resolution, CorroHealth uncovers pivotal areas where targeted interventions dramatically shift outcomes in favor of healthcare providers.

This process involves a granular analysis of denial codes, predictive analytics to pre-empt possible denials and rigorous training staff to maneuver through the intricate appeals process effectively. 

Taking a proactive stance towards payer contract management, their approach emphasizes the importance of scrutinizing the fine print and negotiating terms that anticipate and mitigate denial strategies. CorroHealth advocates on the providers’ behalf for clearer definitions of medical necessity, timely filing limits and transparent appeal processes. By equipping providers with negotiation tactics grounded in comprehensive data analysis and a deep understanding of payer methodologies, their contracts become a tool for protection against denials, rather than a source of vulnerability.

Woven throughout this work is CorroHealth’s commitment to advancing the dialogue between payers and providers toward a more equitable healthcare system. Through forums, partnerships and collaborative initiatives, CorroHealth bridges the gap between these two entities, fostering an environment where mutual understanding and respect pave the way for innovative solutions to longstanding challenges.

Hospitals and health systems require an experienced partner to navigate the complexities of the healthcare landscape, balancing financial sustainability with top-tier patient care. CorroHealth offers a comprehensive suite of solutions to address challenges associated with payer denials, enabling providers to recover lost revenues and uphold the fundamental goal of accessible, high-quality patient care. Beyond financial strategies and operational adjustments, the narrative calls for a more productive and transparent dialogue between payers and providers. This aims to encourage an ecosystem where financial sustainability and high-quality patient care are complementary facets of holistic healthcare delivery.

Facing these challenges, the importance of strategic partnerships becomes increasingly vital for healthcare providers. Such alliances are indispensable in maneuvering through the complex healthcare landscape and are strengthened by CorroHealth’s comprehensive understanding of the payer-provider dynamic and dedication to fostering innovation. A collaborative approach is essential for progressing towards a healthcare system characterized by greater equity and efficiency.

The industry stands at an existential crossroads. The insights and strategies shared by CorroHealth serve as a testament to the company’s expertise and its dedication to shaping a future where healthcare is accessible, affordable and effective for all. 

JPM 2024 just wrapped. Here are the key insights

Posted on by • Posted in Artificial Intelligence Generative, Cost Management, Cost Reduction, Denial, Denial Management, Denial Rates, Digital Health, Disruption, Financial Distress, Financial Instability, Financial Performance, Financial Pressure, Financial Strength, Financial Transparency, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Independence, Labor Spend Management, Medicare Advantage, Operating Margin, Operating Margin Drivers, Operating Metrics, Pharmacy Benefits Management, Quality Measures, Quality of Care, Workforce Retention, Workforce Shortages • Leave a comment

https://www.advisory.com/daily-briefing/2024/01/23/jpm-takeaways-ec#accordion-718cb981ab-item-4ec6d1b6a3

Earlier this month, leaders from more than 400 organizations descended on San Francisco for J.P. Morgan‘s 42nd annual healthcare conference to discuss some of the biggest issues in healthcare today. Here’s how Advisory Board experts are thinking about Modern Healthcare’s 10 biggest takeaways — and our top resources for each insight.

How we’re thinking about the top 10 takeaways from JPM’s annual healthcare conference 

Following the conference, Modern Healthcare  provided a breakdown of the top-of-mind issues attendees discussed.  

Here’s how our experts are thinking about the top 10 takeaways from the conference — and the resources they recommend for each insight.  

1. Ambulatory care provides a growth opportunity for some health systems

By Elizabeth Orr, Vidal Seegobin, and Paul Trigonoplos

At the conference, many health system leaders said they are evaluating growth opportunities for outpatient services. 

However, results from our Strategic Planner’s Survey suggest only the biggest systems are investing in building new ambulatory facilities. That data, alongside the high cost of borrowing and the trifurcation of credit that Fitch is predicting, suggests that only a select group of health systems are currently poised to leverage ambulatory care as a growth opportunity.  

Systems with limited capital will be well served by considering other ways to reach patients outside the hospital through virtual care, a better digital front door, and partnerships. The efficiency of outpatient operations and how they connect through the care continuum will affect the ROI on ambulatory investments. Buying or building ambulatory facilities does not guarantee dramatic revenue growth, and gaining ambulatory market share does not always yield improved margins.

While physician groups, together with management service organizations, are very good at optimizing care environments to generate margins (and thereby profit), most health systems use ambulatory surgery center development as a defensive market share tactic to keep patients within their system.  

This approach leaves margins on the table and doesn’t solve the growth problem in the long term. Each of these ambulatory investments would do well to be evaluated on both their individual profitability and share of wallet. 

On January 24 and 25, Advisory Board will convene experts from across the healthcare ecosystem to inventory the predominant growth strategies pursued by major players, explore considerations for specialty care and ambulatory network development, understand volume and site-of-care shifts, and more. Register here to join us for the Redefining Growth Virtual Summit.  

Also, check out our resources to help you plan for shifts in patient utilization:  

2. Rebounding patient volumes further strain capacity

By Jordan Peterson, Eliza Dailey, and Allyson Paiewonsky 

Many health system leaders noted that both inpatient and outpatient volumes have surpassed pre-pandemic levels, placing further strain on workforces.  

The rebound in patient volumes, coupled with an overstretched workforce, underscores the need to invest in technology to extend clinician reach, while at the same time doubling down on operational efficiency to help with things like patient access and scheduling. 

For leaders looking to leverage technology and boost operational efficiency, we have a number of resources that can help:  

3. Health systems aren’t specific on AI strategies

By Paul Trigonoplos and John League

According to Modern Healthcare, nearly all health systems discussed artificial intelligence (AI) at the conference, but few offered detailed implementation plans and expectations.

Over the past year, a big part of the work for Advisory Board’s digital health and health systems research teams has been to help members reframe the fear of missing out (FOMO) that many care delivery organizations have about AI.  

We think AI can and will solve problems in healthcare. Every organization should at least be observing AI innovations. But we don’t believe that “the lack of detail on healthcare AI applications may signal that health systems aren’t ready to embrace the relatively untested and unregulated technology,” as Modern Healthcare reported. 

The real challenge for many care delivery organizations is dealing with the pace of change — not readiness to embrace or accept it. They aren’t used to having to react to anything as fast-moving as AI’s recent evolution. If their focus for now is on low-hanging fruit, that’s completely understandable. It’s also much more important for these organizations to spend time now linking AI to their strategic goals and building out their governance structures than it is to be first in line with new applications.  

Check out our top resources for health systems working to implement AI: 

4. Digital health companies tout AI capabilities

By Ty Aderhold and John League

Digital health companies like Teladoc, R1 RCM, Veradigm, and Talkspace all spoke out about their use of generative AI. 

This does not surprise us at all. In fact, we would be more surprised if digital health companies were not touting their AI capabilities. Generative AI’s flexibility and ease of use make it an accessible addition to nearly any technology solution.  

However, that alone does not necessarily make the solution more valuable or useful. In fact, many organizations would do well to consider how they want to apply new AI solutions and compare those solutions to the ones that they would have used in October 2022 — before ChatGPT’s newest incarnation was unveiled. It may be that other forms of AI, predictive analytics, or robotic process automation are as effective at a better cost.  

Again, we believe that AI can and will solve problems in healthcare. We just don’t think it will solve every problem in healthcare, or that every solution benefits from its inclusion.  

Check out our top resources on generative AI: 

5. Health systems speak out on denials

By Mallory Kirby

During the conference, providers criticized insurers for the rate of denials, Modern Healthcare reports. 

Denials — along with other utilization management techniques like prior authorization — continue to build tension between payers and providers, with payers emphasizing their importance for ensuring cost effective, appropriate care and providers overwhelmed by both the administrative burden and the impact of denials on their finances. 

  Many health plans have announced major moves to reduce prior authorizations and CMS recently announced plans to move forward with regulations to streamline the prior authorization process. However, these efforts haven’t significantly impacted providers yet.  

In fact, most providers report no decrease in denials or overall administrative burden. A new report found that claims denials increased by 11.99% in the first three quarters of 2023, following similar double digit increases in 2021 and 2022. 

  Our team is actively researching the root cause of this discrepancy and reasons for the noted increase in denials. Stay tuned for more on improving denials performance — and the broader payer-provider relationship — in upcoming 2024 Advisory Board research. 

For now, check out this case study to see how Baptist Health achieved a 0.65% denial write-off rate.  

6. Insurers are prioritizing Star Ratings and risk adjustment changes

By Mallory Kirby

Various insurers and providers spoke about “the fallout from star ratings and risk adjustment changes.”

2023 presented organizations focused on MA with significant headwinds. While many insurers prioritized MA growth in recent years, leaders have increased their emphasis on quality and operational excellence to ensure financial sustainability.

  With an eye on these headwinds, it makes sense that insurers are upping their game to manage Star Ratings and risk adjustment. While MA growth felt like the priority in years past, this focus on operational excellence to ensure financial sustainability has become a priority.   

We’ve already seen litigation from health plans contesting the regulatory changes that impact the bottom line for many MA plans. But with more changes on the horizon — including the introduction of the Health Equity Index as a reward factor for Stars and phasing in of the new Risk Adjustment Data Validation model — plans must prioritize long-term sustainability.  

Check out our latest MA research for strategies on MA coding accuracy and Star Ratings:  

7. PBMs brace for policy changes

By Chloe Bakst and Rachael Peroutky 

Pharmacy benefit manager (PBM) leaders discussed the ways they are preparing for potential congressional action, including “updating their pricing models and diversifying their revenue streams.”

Healthcare leaders should be prepared for Congress to move forward with PBM regulation in 2024. A final bill will likely include federal reporting requirements, spread pricing bans, and preferred pricing restrictions for PBMs with their own specialty pharmacy. In the short term, these regulations will likely apply to Medicare and Medicaid population benefits only, and not the commercial market. 

Congress isn’t the only entity calling for change. Several states passed bills in the last year targeting PBM transparency and pricing structures. The Federal Trade Commission‘s ongoing investigation into select PBMs looks at some of the same practices Congress aims to regulate. PBM commercial clients are also applying pressure. In 2023, Blue Cross Blue Shield of California‘s (BSC) decided to outsource tasks historically performed by their PBM partner. A statement from BSC indicated the change was in part due to a desire for less complexity and more transparency. 

Here’s what this means for PBMs: 

Transparency is a must

The level of scrutiny on transparency will force the hand of PBMs. They will have to comply with federal and state policy change and likely give something to their commercial partners to stay competitive. We’re already seeing this unfold across some of the largest PBMs. Recently, CVS Caremarkand Express Scripts launched transparent reimbursement and pricing models for participating in-network pharmacies and plan sponsors. 

While transparency requirements will be a headache for larger PBMs, they might be a real threat to smaller companies. Some small PBMs highlight transparency as their main value add. As the larger PBMs focus more on transparency, smaller PBMs who rely on transparent offerings to differentiate themselves in a crowded market may lose their main competitive edge. 

PBMs will have to try new strategies to boost revenue

PBM practice of guiding prescriptions to their own specialty pharmacy or those providing more competitive pricing is a key strategy for revenue. Stricter regulations on spread pricing and patient steerage will prompt PBMs to look for additional revenue levers.   

PBMs are already getting started — with Express Scripts reporting they will cut reimbursement for wholesale brand name drugs by about 10% in 2024. Other PBMs are trying to diversify their business opportunities. For example, CVS Caremark’s has offered a new TrueCost model to their clients for an additional fee. The model determines drug prices based on the net cost of drugs and clearly defined fee structures. We’re also watching growing interest in cross-benefit utilization management programs for specialty drugs.  These offerings look across both medical and pharmacy benefits to ensure that the most cost-effective drug is prescribed for patients. 

Check out some of our top resources on PBMs:  

To learn more about some of the recent industry disruptions, check out:   

8. Healthcare disruptors forge on

 By John League

At the conference, retailers such as CVS, Walgreens, and Amazon doubled down on their healthcare services strategies.

Typically, disruptors do not get into care delivery because they think it will be easy. Disruptors get into care delivery because they look at what is currently available and it looks so hard — hard to access, hard to understand, and hard to pay for.  

Many established players still view so-called disruptors as problematic, but we believe that most tech companies that move into healthcare are doing what they usually do — they look at incumbent approaches that make it hard for customers and stakeholders to access, understand, and pay for care, and see opportunities to use technology and innovative business models in an attempt to target these pain points.

CVS, Walgreens, and Amazon are pursuing strategies that are intended to make it more convenient for specific populations to get care. If those efforts aren’t clearly profitable, that does not mean that they will fail or that they won’t pressure legacy players to make changes to their own strategies. Other organizations don’t have to copy these disruptors (which is good because most can’t), but they must acknowledge why patient-consumers are attracted to these offerings.  

For more information on how disruptors are impacting healthcare, check out these resources:  

9. Financial pressures remain for many health systems

By Vidal Seegobin and Marisa Nives

Health systems are recovering from the worst financial year in recent history. While most large health systems presenting at the conference saw their finances improve in 2023, labor challenges and reimbursement pressures remain.  

We would be remiss to say that hospitals aren’t working hard to improve their finances. In fact, operating margins in November 2023 broke 2%. But margins below 3% remain a challenge for long-term financial sustainability.  

One of the more concerning trends is that margin growth is not tracking with a large rebound in volumes. There are number of culprits: elevated cost structures, increased patient complexity, and a reimbursement structure shifting towards government payers.  

For many systems, this means they need to return to mastering the basics: Managing costs, workforce retention, and improving quality of care. While these efforts will help bridge the margin gap, the decoupling of volumes and margins means that growth for health systems can’t center on simply getting bigger to expand volumes.

Maximizing efficiency, improving access, and bending the cost curve will be the main pillars for growth and sustainability in 2024.  

 To learn more about what health system strategists are prioritizing in 2024, read our recent survey findings.  

Also, check out our resources on external partnerships and cost-saving strategies:  

10. MA utilization is still high

By Max Hakanson and Mallory Kirby  

During the conference, MA insurers reported seeing a spike in utilization driven by increased doctor’s visits and elective surgeries.  

These increased medical expenses are putting more pressure on MA insurers’ margins, which are already facing headwinds due to CMS changes in MA risk-adjustment and Star Ratings calculations. 

However, this increased utilization isn’t all bad news for insurers. Part of the increased utilization among seniors can be attributed to more preventive care, such as an uptick in RSV vaccinations.  

In UnitedHealth Group‘s* Q4 earnings call, CFO John Rex noted that, “Interest in getting the shot, especially among the senior population, got some people into the doctor’s office when they hadn’t visited in a while,” which led to primary care physicians addressing other care needs. As seniors are referred to specialty care to address these needs, plans need to have strategies in place to better manage their specialist spend.   

To learn how organizations are bringing better value to specialist care in MA, check out our market insight on three strategies to align specialists to value in MA. (Kacik et al., Modern Healthcare, 1/12)

*Advisory Board is a subsidiary of UnitedHealth Group. All Advisory Board research, expert perspectives, and recommendations remain independent. 

For-profit hospital operators strained by physician fees, payer relations in Q3

Posted on by • Posted in Denial, Denial Management, Denial Rates, For-Profit, Health Insurance Denial, Health Insurance Industry, Health System, Hospital, Hospital Industry, Hospitalist, No Surprises Act, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Margin Drivers, Operating Performance, Operating Revenue, Physician Shortage, Physician Specialist, Physician Staffing, Physician Staffing - Private Equity Backed, Rev Cycle Management, Revenue Cycle • Leave a comment
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The nation’s largest for-profit hospital systems by revenue — HCA Healthcare, Community Health Systems, Tenet Healthcare and Universal Health Services — reported mixed results during the third quarter of 2023, despite announcing strong demand for patient services.

With the exception of HCA, each operator reported lower profits in the third quarter compared with the same period last year. Health systems CHS and HCA reported earnings that fell short of Wall Street expectations for revenue.

Major operators posted declining profits in the third quarter compared to the same period in 2022

Q3 net income in millions, by operator

Health SystemProfitPercent Change YOY
Community Health Systems$−91−117%
HCA Healthcare$1,80059%
Tenet Healthcare$101−23%
Universal Health Services$167−9%

Admissions rose across the board compared to the same period last year: Same facility equivalent admissions rose 4.1% at HCA , 3.7% at CHS and 0.6% at Tenet, and adjusted admissions at acute hospitals rose 6.8% at UHS. 

Although the for-profit operators began cost containment strategies earlier this year — recognizing that rising expenses, including costs of salary and wages, were pressuring hospital profitability post-pandemic — expenses also rose, with growth in salaries and benefit costs once again pressuring most operators’ revenue.

Hospital operators faced new challenges this quarter, executives said, including increased physician staffing fees and what hospital executives characterized as aggressive behavior from payers.

Hospitals highlight rising physician fees

Rising physician fees were a topic of concern on earnings calls this quarter, with executives reporting fees that were 15% to 40% higher compared with the same period last year.

Third-party staffing firms charge hospitals physician fees, a percentage of physicians’ salaries, on top of the salaries themselves. Physician fees are separate but related to contract labor costs, which plagued hospitals during the COVID-19 pandemic as they attempted to stem staffing shortages.

Hospitals typically contract specialty hospitalist roles — like anesthesiologists, radiologists and emergency department physicians — and incur associated staffing costs.

Physician fees at HCA, the country’s largest hospital chain, grew 20% year over year in the third quarter, according to CFO Bill Rutherford.

Physician fees were up by as much as 40% at UHS — making up 7.6% of total operating expenses this quarter and surpassing the company’s initial projections for the year, CEO Marc Miller said during an earnings call. Historically, physician fees accounted for about 6% of UHS’ total expenses.

Likewise, Franklin, Tennessee-based CHS attributed some of its third-quarter losses to “increased rates for outsourced medical specialists,” according to a release on the operator’s earnings.

Tenet CEO Saum Sutaria noted that physician fee expenses were up 15% year over year, but said on an earnings call that the operator had spied rising physician fees during the pandemic, and had begun efforts to contain costs — including restructuring staffing contracts and in-sourcing critical physician services.

As a result, physician fee costs at Tenet had remained “relatively flat” from the second quarter to the third quarter this year, according to the Sutaria.

Physician fee increases may be a delayed consequence of the No Surprises Act, which went into effect in January of last year, experts say.

On an earnings call, UHS CFO Steve Filton said “the industry has largely had to reset itself” in wake of the law. Tenet and CHS executives echoed the sentiment, noting that the law had disrupted staffing firms’ business models and complicated payment processes.

The No Surprises Act prevents patients who unknowingly receive out-of-network care at an in-network facility from being stuck with unexpected bills. However, the act has had unintended ripple effects, experts say.

Staffing firms and hospitals allege that the arbitration process created to resolve disputes between providers and insurers is unbalanced and incentivizes insurers to withhold reimbursement for care. In an August survey, over half of doctors reported insurers have either ignored decisions made by arbitrators or declined to pay claims in full.

In other cases, a backlog prevents claims from being adjudicated at all. Last year, the CMS found the federal arbitration process had only reached a payment determination in 15% of cases. Federal regulators have been forced to pause and restart the arbitration process multiple times in the wake of federal court decisions challenging arbitration methodology.

Although the act went into effect more than a year ago, many hospitals are just now feeling the strain, said Loren Adler, associate director at the Brookings Institute’s Schaeffer Initiative on Health Policy.

That’s because most insurers, hospitals and medical groups operate on three-year contracts, according to Adler. Staffing firms, which have struggled since the No Surprises Act was enacted, have passed on costs to hospitals as contracts come up for negotiation and insurers charge firms higher rates.

In the face of rising costs, some hospitals may opt to follow Tenet and CHS and in-source physicians — either to retain contracts with physicians who worked with firms that have folded or because the passing of the No Surprises Act makes outsourcing less attractive.

CHS hired 500 physicians from staffing firm American Physician Partners after the company collapsed in July. CFO Kevin Hammons said on an earnings call that hiring the physicians had saved CHS “approximately $4 million sequentially compared to the subsidy payments previously paid” to the staffing firm. 

However, in-sourcing may not be an effective cost containment strategy for all operators. HCA reported it was hemorrhaging money following its first-quarter majority stake purchase of staffing firm Valesco, which brought about 5,000 physicians onto its payroll. HCA CEO Sam Hazen said the system expects to lose $50 million per quarter on the venture through 2024, citing low payments as the primary issue.

Payer problems

Hospital executives also tied quarterly losses to aggressive behavior from insurers during third-quarter earnings calls.

UHS executives said payers were improperly denying high volumes of claims and disrupting payments to its hospitals, with UHS’ Miller characterizing insurers as “increasingly aggressive” during the third quarter. Though insurers had reduced their number of claims audits, denials and patient status changes during the early stages of the pandemic, payers were increasing denials and reviews, according to UHS’ Filton.

Tenet’s Sutaria said that claims denials were “excessive and inappropriate” during a third-quarter earnings call, adding that the hospital system was working to push back on the volume of claims denials.

Their number one strategy is to provide “excellent documentation” to refute denials quickly, Sutaria said.

Still, excessive claims denials can drive up administrative costs for hospitals, according to Matthew Bates, managing director at Kaufman Hall.

“That denial creates a lot more work, because now I have to deal with that bill two, three, four times to get through the denial process,” Bates said. “It starts to rapidly eat into the operating margins… [becoming] both a cashflow problem and an administrative costs burden.”

Executives across the four for-profit operators said they planned to negotiate with insurers to receive more favorable rates and limit the number of denials in subsequent quarters.

HCA’s Hazen said that it was important for HCA to maintain its in-network status with insurers “to avoid the surprise billing and that [independent dispute resolution] process,” but that it would work with its payers to get “reasonable rates” going forward.

Claim denials and payer audits are affecting the revenue cycle

Posted on by • Posted in Cash Management, Cash-Flow Improvements, Cost to Collect, Denial, Denial Management, Denial Rates, Health Insurance Denial, Health Insurance Industry, Health System, Hospital, Hospital Industry, Medicare Advantage, Medicare Advantage Denials, Operating Revenue, Rev Cycle Management, Revenue Cycle • Leave a comment

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Claim denials are increasing, especially in Medicare Advantage, and it’s affecting hospital’s revenue cycles and patient care.

“We definitely are seeing an increase in denials,” said Sherri Liebl, executive director of Revenue Cycle, CentraCare Health, a large multispecialty system in Minnesota. CareCare has two acute care hospitals, seven Critical Access Hospitals and 30 standalone clinics, many of them in rural areas. 

CentraCare reported a positive margin this year, but in no way realizes the profits of insurers, especially the national insurers where Liebl is having the most difficulty with claims.

CentraCare’s goal in its cost to collect – not all-around denials – is to be at 2%. The health system is closer to 7% on its cost to collect. 

“The cost for our organization is exorbitant,” Lieble said.

Much of the blame for denials is falling to artificial intelligence being used in algorithms to deny claims.

UnitedHealthcare has been sued in a class action lawsuit that alleges the insurer unlawfully used an artificial intelligence algorithm to deny rehabilitative care to sick Medicare Advantage patients.

Cigna has also been sued for allegedly using algorithms to deny claims. The lawsuit claims the Cigna PXDX algorithm enables automatic denials for treatments that do not match preset criteria, evading the legally required individual physician review process.

A Cigna Healthcare spokesperson said the vast majority of claims reviewed through PXDX are automatically paid, and that the PXDX process does not involve algorithms, AI or machine learning, but a simple sorting technology that has been used for more than a decade to match up codes. Claims declined for payment via PXDX represent less than 1% of the total volume of claims, the spokesperson said.

Industry consultant Adam Hjerpe, who formerly worked for UnitedHealth Group, said there’s nothing new about payers using artificial intelligence. AI has been used for 20 years in robotic processes, statements in Excel and algorithms, he said.

Everybody is working with good intent, Hjerpe said. There are reasonable controls in place to avoid fraud and abuse.

Claims are being denied for missing information, or for the information being out of sequence, or for the claim giving an incomplete picture of the care.

“We don’t want care delayed,” he said.

Nobody wins in claims denials, said Susan Taylor, Pega’s vice president of Healthcare and Life Sciences.

While payers save money in the short-term, in the long-term, the best arrangement is to have payers and providers work together to prevent denials, said Taylor, who has worked in healthcare for more than 25 years, starting on the health system side before moving into IT. 

“There are more claims of note being denied,” Taylor said. “If you look at the ecosystem, there are a lot of opportunities for error.” 

The solution is building an agility layer to streamline workflows throughout the revenue cycle, from initial claim submission to the complex denials processing stage. 

WHY THIS MATTERS

Liebl said that denials have increased over the past two years and that there’s also been an uptick in payer audits months after payment has been made. 

Insurers want justification for why CentraCare should keep its payments, and this is especially true for Medicare Advantage claims, she said. 

One insurer said the claim didn’t meet inpatient criteria and downgraded the claim to an observation patient.

“We have a pretty good success rate as far as being able to justify we did the right care,” Liebl said.

Asked what’s driving the higher denial rates Lieble said, “Everybody wants to keep margins and expand their business. I think it comes down to profit margins, trying to keep profit margins high; we’re just trying to stay afloat.”

To combat denials and work with payers, CentraCare founded a joint operating committee to have successful partnerships. They’ve been more successful with the local Minnesota plans than the national plans, but Liebl is optimistic, she said.

“I am hopeful we can create partnerships …” she said. “Some of the denials we receive are against their payer policy. We need to be able to hold payers accountable.”

Larger health systems have a little more clout, and CentraCare is able to partner with other health systems through the Minnesota Hospital Association.

What’s being lost in all this is the patient, Liebl said. Sometimes a patient is getting a bill up to a year after a procedure.

“Sometimes the patient focus is lost when we work through some of this,” she said.

“They keep our money longer,” Liebl said. “They hold our money hostage. We have denials sitting out there for 300 days. It’s a lot of administrative burden on our part. We’ve spent a lot of money just to get the money in the door. Finally when that claim has been resolved, it’s a year later. No one wins? I think there is some winning going on one side.”

American Hospital Association: Medicare Advantage denials jump 56%

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Medicare Advantage and commercial claims denials have spiked across the country, leaving hospitals increasingly financially strapped, according to research published Nov. 17 by the American Hospital Association and Syntellis. 

The report analyzed data from a national sample of 1,300 hospitals and health systems. From January 2022 to July 2023, revenue reductions related to Medicare Advantage denials increased 55.7% for the median hospital. During the same period, denial-related revenue reductions rose 20.2% for commercial plans. For denials relative to net patient service revenue for the median hospital, Medicare Advantage plans saw an increase of 63.3% and commercial plans rose 20%.

“[Hospitals] must take larger revenue reductions to account for those lost reimbursements from commercial payers and Medicare Advantage plans, which cover more than 31 million Americans and make up about half of all Medicare beneficiaries,” the report said. “The challenges will only worsen as Medicare Advantage enrollment continues to grow.”

In November 2022, an AHA survey found that half of hospitals and health systems reported having more than $100 million in unpaid claims that were more than 6 months old. As of June 2023, health systems had a median of 124 days cash on hand, down from 173 days in January 2022. 

The new data coincides with recent reporting from Becker’s about hospitals across the country that have ended some or all Medicare Advantage contracts. The reasons behind contract terminations vary by system and by payer offering the plan. Some systems have cited steep losses amid excessive prior authorization denial rates and slow payments from insurers. Others have noted that most MA carriers have faced allegations of billing fraud from the federal government and are being probed by lawmakers over their high denial rates.

“It’s become a game of delay, deny and not pay,” Chris Van Gorder, president and CEO of San Diego-based Scripps Health, told Becker’s in September.

According to data shared with Becker’s by FTI Consulting, among the 64 contract disputes reported in the media this year through Sept. 30, 37 involved Medicare Advantage plans, and 10 disputes exclusively involved MA plans. In the third quarter alone, 15 disputes involved MA plans, compared to seven in the third quarter of 2022, a 115% increase year over year.

2023 State of Healthcare Performance Improvement Report: Signs of Stabilization Emerge

Posted on by • Posted in Denial, Denial Management, Denial Rates, Financial Distress, Financial Instability, Financial Performance, Financial Pressure, Financial Stewardship, Financial Strength, Health System, Hospital, Hospital Industry, Labor Cost Structure, Labor Shortages, Labor Spend Management, Medicare Advantage, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue, Physician, Recruiting, Retention, Rev Cycle Management, Revenue Cycle, Talent Imperative, Talent Management • Leave a comment
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Executive Summary

Hospitals and health systems are seeing some signs of stabilization in 2023 following an extremely difficult year in 2022. Workforce-related challenges persist, however, keeping costs high and contributing to issues with patient access to care. The percentage of respondents who report that they have run at less than full capacity at some time over the past year because of staffing shortages, for example, remains at 66%, unchanged from last year’s State of Healthcare Performance Improvement report. A solid majority of respondents (63%) are struggling to meet demand within their physician enterprise, with patient concerns or complaints about access to physician clinics increasing at approximately one-third (32%) of respondent organizations.

Most organizations are pursuing multiple strategies to recruit and retain staff. They recognize, however, that this is an issue that will take years to resolve—especially with respect to nursing staff—as an older generation of talent moves toward retirement and current educational pipelines fail to generate an adequate flow of new talent. One bright spot is utilization of contract labor, which is decreasing at almost two-thirds (60%) of respondent organizations.

Many of the organizations we interviewed have recovered from a year of negative or breakeven operating margins. But most foresee a slow climb back to the 3% to 4% operating margins that help ensure long-term sustainability, with adequate resources to make needed investments for the future. Difficulties with financial performance are reflected in the relatively high percentage of respondents (24%) who report that their organization has faced challenges with respect to debt covenants over the past year, and the even higher percentage (34%) who foresee challenges over the coming year. Interviews confirmed that some of these challenges were “near misses,” not an actual breach of covenants, but hitting key metrics such as days cash on hand and debt service coverage ratios remains a concern.

As in last year’s survey, an increased rate of claims denials has had the most significant impact on revenue cycle over the past year. Interviewees confirm that this is an issue across health plans, but it seems particularly acute in markets with a higher penetration of Medicare Advantage plans. A significant percentage of respondents also report a lower percentage of commercially insured patients (52%), an increase in bad debt and uncompensated care (50%), and a higher percentage of Medicaid patients (47%).

Supply chain issues are concentrated largely in distribution delays and raw product and sourcing availability. These issues are sometimes connected when difficulties sourcing raw materials result in distribution delays. The most common measures organizations are taking to mitigate these issues are defining approved vendor product substitutes (82%) and increasing inventory levels (57%). Also, as care delivery continues to migrate to outpatient settings, organizations are working to standardize supplies across their non-acute settings and align acute and non-acute ordering to the extent possible to secure volume discounts.

Survey Highlights

98% of respondents are pursuing one or more recruitment and retention strategies
90% have raised starting salaries or the minimum wage
73% report an increased rate of claims denials
71% are encountering distribution delays in their supply chain
70% are boarding patients in the emergency department or post-anesthesia care unit because of a lack of staffing or bed capacity
66% report that staffing shortages have required their organization to run at less than full capacity at some time over the past year
63% are struggling to meet demand for patient access to their physician enterprise
60% see decreasing utilization of contract labor at their organization
44% report that inpatient volumes remain below pre-pandemic levels
32% say that patients concerns or complaints about access to their physician enterprise are increasing
24% have encountered debt covenant challenges during the past 12 months
None of our respondents believe that their organization has fully optimized its use of the automation technologies in which it has already invested

Hospitals are in a world of denial

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Hospital and insurer contract negotiations are often framed as an industry gauntlet, a defined period of time with an objective outcome where big talk does not translate to money. But reimbursement rates secured in new contracts are only one piece of hospitals’ payer-induced headaches.

Traditionally, a health system and commercial insurer would occasionally run into a wall in the contract negotiation process. This could play out into a dispute palpable enough to consumers that it warranted headlines. These impasses generally lasted a matter of weeks with no significant disruptions before outside pressure drove the parties to compromise. 

Over the past five years or so, the nature of provider-payer conflicts intensified and may be on the cusp of unprecedented severity given health systems’ financial pressures. At the same time, agreed-upon reimbursement rates are only the tip of the iceberg when it comes to payment health systems can expect from commercial insurers, who have many more defensive plays in their playbook. 

They boil down to a classic line from a 1968 movie: deny, deny, deny. 

Russ Johnson is CEO of LMH Health, a 102-year-old, independent, nonprofit health system based in Lawrence, Kan. The $350 million organization is anchored by a 174-bed hospital. As he puts it: “We’re not tiny, but we’re not very big.”

Mr. Johnson has spent 37 years working in healthcare, holding senior leadership positions in hospitals and health systems in rural communities and large cities. It’s difficult to identify many things going well when it comes to provider-payer relationships, but Mr. Johnson told Becker’s that it’s the payer movements beneath the reimbursement rates that are worsening and causing greater pain today.

“The part that’s getting worse is the practices behind and underneath the contracts — the sophistication and implementation of pay practices, information systems, artificial intelligence and computer algorithms that are just denying claims by the thousands every month,” he said.

The reimbursement rates secured in contracts are what you can see above water. Beneath, health insurers are moving faster and kicking harder. Throughout the first three months of 2023, about one-third of inpatient and outpatient claims submitted by providers to commercial payers went unpaid for more than 90 days, according to an analysis from Crowe. 

“So many more claims are now surfacing with some kind of a fallout on a denial, a downcoding or a pre-authorization — you know, the proverbial dotting the i’s and crossing the t’s, sometimes. But what is abundantly clear is it is not fundamentally about a clinical difference,” Mr. Johnson said. 

Denials were once reserved for a sliver of expensive treatments and have now become common occurrence for mundane, ordinary medical care and treatments such as inhalers or familiar medications for chronic conditions a patient has managed for years. The administrative burden is something close to a requirement to prove residency every month to receive electricity or verifying eligibility to work in the U.S. every week for a paycheck — redundant, time-wasting activity for ordinary, essential things. 

“For our business office to keep up with what I frankly think is mischief by the payers in terms of denials, pre-authorization, DRG downcoding and a completely unengaged experience trying to negotiate — or to have our physicians call in and do a peer-to-peer conferences about clinical necessity — it’s demoralizing, frankly,” Mr. Johnson said. “Dealing with denial from our payers is one of the biggest dissatisfiers our physicians face.”

Authors of the 2010 Affordable Care Act worried that provisions to expand health insurance access — such as barring health insurers’ refusal to cover patients with preexisting conditions — could cause them to ratchet up other tactics to make up for the change. With this in mind, the law charged HHS with monitoring health plan denial rates, but oversight has been unfulfilled, leaving denials widespread. 

Data and numbers on denial rates are not easy to find, but some examination paints a picture rich with variation. An analysis of 2021 plans on Healthcare.gov conducted by KFF found nearly 17 percent of in-network claims were denied, with rates varying from 2 percent to 49 percent. The reasons for the bulk of denials are unclear. About 14 percent were attributed to an excluded service, 8 percent to lack of pre-authorization or referral and 2 percent to questions of medical necessity. A whopping 77 percent were classified as “all other reasons.” 

Adding to the inconsistency is the fact that health plan denial rates fluctuate year over year. In 2020, a gold-level health plan offered by Oscar Insurance in Florida denied 66 percent of payment requests; in 2021 it denied 7 percent.

There is much to learn about the ways AI will shape healthcare, and its potential to further expedite and increase denials is concerning. Cigna faces a class-action lawsuit alleging it bypassed requirements for claim review before denial by having an algorithm — dubbed “PXDX” — complete review before having physicians sign off on batches of denied claims. The lawsuit followed a ProPublica report on the practice, which said Cigna physicians denied more than 300,000 claims over two months in 2022 through the system, which equated to 1.2 seconds of review per claim on average.

AI is often touted as a potential, looming replacement to hardworking healthcare professionals, but in the day to day it exacerbates the administrative burdens that already bring them down.  

“Nobody becomes a physician because they hope to feel like a cog in a factory,” Michael Ivy, MD, deputy chief medical officer of Yale New Haven (Conn.) Health, told Becker’s. “However, between meeting the demands of payers for referrals, denials of payment and increased documentation requirements in order to assure proper reimbursement and risk adjustment, as well as an increasing number of production metrics, it can be difficult not to feel like a cog.”