HealthLeaders: Final Denial Rate Increase Highlights Struggles with Payers

By Jasmyne Ray | May 23, 2024

Claim denials are an evergreen issue within revenue cycle operations and new data shows that working with payers will get harder before it gets easier.

A benchmark report by Kodiak found that the final denial rate on inpatient claims increased by 51% between 2021 and 2023. The report used data from patient financial transactions from over 1,850 hospitals and 250,000 physicians nationwide.

An increase in initial denials for prior authorization and precertification errors was also noted.

“The increase in final inpatient claim denials drained $1.2 billion in revenue that hospitals and health systems rely on to provide care to their communities,” Colleen Hall, senior vice president and revenue cycle leader at Kodiak Solutions said in a statement.

“On top of that, more initial claims denials mean hospitals are spending more money and other resources to appeal these denials, adding to the financial impact of the revenue loss from the final denials.”

In addition to being expensive, the process of appealing denials is also time consuming. Revenue cycle leaders have to be more strategic in how they work with payers, as well as ensuring seamless revenue cycle operations overall.

To help stabilize finances and improve facility workflow, Selma Family Medicine Center invested in a new practice management system. In addition to streamlining the facility’s billing processes, the system has a support team that manages the reporting for coding, billing, and collections.

To help with denials management, OSF HealthCare continuously encourages payers to utilize their EHR’s payer payment platform. In doing so, not only does communication with payers get easier, but the automation allows staff to focus on other tasks.

“Sometimes I have to threaten if they don’t get that module turned on, I will turn off the clinical data exchange because we could force them to have to request paper medical records through a vendor,” Cathy Beebe, director of ministry managed care at OSF, previously told HealthLeaders.

“I hate to be mean, but sometimes we have to do that.”

 Jasmyne Ray is the revenue cycle editor at HealthLeaders.