Nearly 15% of claims submitted to private payers are initially denied
Nearly 15% of medical claims submitted to private payers for reimbursement are initially denied, according to new survey data released Thursday.
Denied claims are more prevalent for high-cost treatments, with the average rejected charges at $14,000 and up, Premier Inc. reported. Medicare Advantage and other private payers eventually overturned more than half (54%) of denials, with the claims paid, but only after “multiple, costly rounds of provider appeals.”
The findings are from a national survey of hospitals, health systems and post-acute providers, conducted by the Charlotte-based healthcare improvement company.
“To address these potentially dire impacts on Medicare beneficiaries and providers, we urge CMS to stringently monitor MA plans’ reporting of expenditures on direct patient care,” Premier and 118 member organizations wrote in a March 21 letter to the head of the Centers for Medicare & Medicaid Services. “It is imperative that CMS leverage its full authority to ensure that MA plans’ medical loss ratio requirements for revenue used for patient care are satisfied in alignment with the benefits to which Medicare beneficiaries are entitled.”
Premier partnered with member hospitals to conduct the survey from October to December 2023. A total of 516 hospitals across 36 states, representing 52,123 acute care beds responded. Answers were based on claims submitted to private payers in 2022.
On average, hospitals and other providers incurred a cost of $43.84 per claim to fight denials. With insurers processing about 3 billion claims per year, this equates to $19.7 billion per year in expenses for these reviews. An average of about 3% of all claims denied included those that were already preapproved via prior authorization, Premier noted.
The continued burden from these delays and denials has impacted hospital finances. During the past year, average days of cash on hand at hospitals declined by 44 days or 17%. Meanwhile, days of cash on hand increased among insurers such as UnitedHealth Group (up 25.5% on average since 2019) and Cigna (24.4% on average).
The letter writers—who included numerous large health systems and other provider organization—want CMS to take enforcement action against MA plans that “fail to abide by the coverage rules of Medicare.”
“Additionally, we note that CMS has moved away from holding MA plans accountable for [Consumer Assessment of Healthcare Providers and Systems] and other patient experience measures in recent rulemaking by reducing the weighting of patient experience and access measures in the Star Ratings program. We recommend that CMS return to its past policy of weighting patient experience and access measures more heavily in the MA Star Ratings methodology, empowering beneficiaries to hold their health plans financially accountable” the letter stated.
The analysis does not specifically mention radiology services, but it mirrors ongoing problems imaging providers have had with prior authorization and the No Surprises Act (links to previous coverage below).
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.