Payer Denial Tactics — How to Confront a $20 Billion Problem

Payer Denial Tactics — How to Confront a $20 Billion Problem. A stamp with DENIED on it in reverse with the word DENIED stamped on the paper in front of the stamp.

The high cost to health care providers to obtain reimbursement from insurers shows no signs of abating.

A recent report from the group purchasing and consulting organization Premier highlights the long-standing problem. It found that:

  • Hospitals and health systems spent an estimated $19.7 billion in 2022 trying to overturn denied claims.
  • Denied claims tended to be more prevalent for higher-cost treatments, with the average denial pegged to charges of $14,000 or more.
  • Nearly 15% of all claims submitted to private payers initially are denied, including many that were preapproved during the prior authorization process. Overall, 15.7% of Medicare Advantage and 13.9% of commercial claims were initially denied.
  • More than half of denied claims (54.3%) by payers ultimately were overturned but typically only after providers went through multiple rounds of costly appeals.

The High Cost of Reimbursement

The Premier findings track with the AHA's most recent survey that was conducted between December 2021 and February 2022. In that survey, 78% of hospitals reported that their experience with commercial payers was getting worse.

Moreover, 84% of respondents said the cost of complying with insurer policies was increasing and 95% of hospitals and health systems reported that their staffs were spending more time on prior approval processes. Respondents also said that 62% of prior authorization denials and 50% of initial claims denials that were appealed were overturned.

The impact of some payer policies can cause dangerous delays in patient care, result in undue burden on providers and add billions of dollars in unnecessary cost to the nation’s health care system.

As health care organizations continue to face financial headwinds this year, the strategic imperative to manage claims denials effectively has become a higher priority in many organizations.

Learn More

Two recent AHA webinars provide a deep-dive discussion and analysis of how to strategically address payer denials.

In “Strategies to Counter Payer Denial Tactics,” experts from the revenue-cycle management firm CorroHealth explore innovative strategies to counteract the increasing denial tactics used by Medicare Advantage payers.

In “FAQs: Payer Escalations & Strategic Denials Management,” CorroHealth leaders address issues such as:

  • How to identify the impact of payer denial tactics and strategies to hold payers accountable.
  • Effective methods for managing DRG (diagnosis-related group) downgrades, denials and appeals; leveraging analytics for strategic decision-making; and revenue management.
  • Actionable insights for specific challenges.

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