The Meduit Innovation Lab Blog

New Report Reveals Healthcare Organizations Are Paying the Price For Claim Denials.

Posted by Meduit RCM on Apr 23, 2024 10:00:00 AM

Managing denied claims has long put a financial strain on hospitals and health systems. In the past few years, the problem has only worsened as payers use AI to help delay payments and turn the claims process into a labyrinth for hospitals to navigate.

It appears their efforts are adding up – quite literally.

According to a recently published report by Premier, a healthcare purchasing and consulting organization, hospitals and health systems spend an estimated $19.7 billion a year managing denied claims.

(Kacik, Alex. “Claim denials cost hospitals $20 billion a year.” Modern Healthcare. 3/22/24) 

After surveying and examining data from 516 hospitals, Premier found that nearly 15% of the roughly 3 billion claims processed each year are denied, with each denial costing close to $44, excluding associated labor expenses.

These denials and subsequent payment delays add a significant administrative burden to providers as they seek restitution, elevating labor costs, shrinking operating margins, and hampering their ability to expand patient-centered services.

“These delays in payments create an upside-down economic situation for providers,” said Michael Alkire, President and CEO of Premier, as quoted in the Modern Healthcare article. “Providers are the absolute least part of the system that can financially absorb these types of issues.”

Additional takeaways from the Premier survey include the following:

1. Higher Denial Rates for Medicare Advantage and Medicaid Plans

Insurers handling Medicare Advantage and Medicaid managed care plans denied claims at the average rates of 15.7% and 16.7%, respectively.

2. The Majority of Denials are Overturned

Over 54% of denied claims were eventually overturned.

3. Settling a Denied Claim Can Take Months

It takes multiple rounds of reviews to resolve denied claims. As a result, 13.9% of the hospitals surveyed had past-due claims.

4. Pre-Approved Claims Aren’t Guaranteed

3.2% of denied claims were pre-approved.

The conclusions in the Premier report highlight the uphill battle facing healthcare organizations in today’s revenue cycle landscape. With billions being left on the table, providers must evolve with the times and technologies to catch up and recoup money owed.

Meduit’s fully integrated tech-powered RCM solution is designed to level the playing field for hospitals and healthcare organizations. Featuring AI-powered technology guided by our decades of industry experience, our workforce management solution empowers you to:

  • Decrease denials
  • Accelerate cash flow
  • Alleviate staffing challenges
  • Redirect staff to the most complex payment issues

Meduit’s RCM solution is a stabilizing and equalizing force for hospitals and healthcare systems at a time when they absolutely need one.

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