Hospital claim denial rates have hit new highs, with a 20% increase in those rates over the past five years, suggesting that better claims-denial management-processes are necessary, finds a new survey from research firm Harmony Healthcare.

The ongoing COVID-19 pandemic has only made the trend worse, as 33% of hospital executives report average claims denial rates of 10% or more. Nationally, hospitals are facing average denials rates between 6% and 13%, which hospital leaders say is nearing the "danger zone."

Broken down even further, 31% of hospital executives reported average denial rates of less than 5%; 20% reported rates of 5% to 7%; and 16% reported rates between 8% and 10%.

WHAT'S THE IMPACT?

The public health emergency has diverted some attention away from this issue, but with the crisis beginning to pass, many hospitals and health systems are ready to recommit to lower denials, as it's seen as a facet of achieving financial recovery.

Research showed that about 85% of denials are preventable, but successfully preventing them requires strengthened leadership and improved skills of hospitals' prevention and recovery teams. Hospital reimbursement leaders reported a variety of high-dollar concerns when it comes to denials and their strategies in preventing them.

Thirty-two percent of respondents cited their top concern as coding; 30% cited medical necessity acute IP; 20% cited the front end; and 18% cited clinical validation denials.

Since payers continue to deny claims, healthcare facilities and their revenue cycle teams need to focus on finding and correcting systemic issues, the report found. A total of 131 hospital executives responded to the LinkedIn survey conducted from April 27 to May 20.

A 2017 analysis by Change Healthcare found that, out of roughly $3 trillion in medical claims submitted by U.S. hospitals in the prior year, almost 9% of those charges were initially denied. Such a high rate of denials creates challenges for maximizing revenue, all but necessitating the use of tools and technology to curb the problem.

Relevant technologies include those that can perform eligibility checking and help with prior authorization, although staff training on these procedures can be almost as important as the tools themselves.

Just this month, UnitedHealthcare, UnitedHealth Group's insurance arm, re-examined its policy on emergency department claims, making it easier for the insurer to retroactively deny claims if they determine certain visits weren't truly necessary for its commercially insured members. The move was reversed after backlash, but only temporarily, with the changes still slated to take effect at an undetermined date.

Anthem instituted a similar policy in 2017, deciding not to cover certain ED visits if the precipitating incident was deemed not to be an emergency. Anthem backtracked on this policy somewhat the following year after objections poured in from providers, who said patients are put in harm's way when they have to decide whether their condition constitutes an emergency.