A recent Revenue Cycle Intelligence article highlighted a continuing problem for hospitals. There is a continued increase in the claims denial rate for hospitals. The impact of COVID-19 has only accelerated the problem.
Hospitals are receiving more claim denials from payers, with the average rate increasing by 23 percent in 2020 compared to four years ago, according to a recent analysis.
The hospital claim denial rate has been steadily increasing since 2016, Change Healthcare reported in the analysis. But the recent COVID-19 pandemic has accelerated that upward trajectory, pushing the denial rate up from 20 percent in the second quarter.
Claims denied upon initial submission also grew from 9 percent in 2016 and 10 percent at the start of 2020 to a total of 11 percent by the third quarter of 2020, the internal analysis of about 102 million hospital claim remits showed.
The good news for hospitals though is that most of these claim denials are potentially avoidable, the analysis indicates. Approximately 25% of denials originate in registration and eligibility.
Overall, the analysis suggests that 86 percent of claims denials processed between July 2019 and June 2020 were potentially avoidable, meaning hospital staff could have intervened to prevent the denial.
In contrast, only 14 percent of the claim denials were unavoidable and nearly one in four potentially avoidable denials cannot be recovered. Prevention is the key to averting hospital revenue loss, researchers at Change Healthcare stated.
Strategies such as staff education and automation of front-end steps can help hospitals prevent common reasons for claim denials, which include coordination of benefits, benefit maximum, and plan coverage, according to the analysis.
A recent AHA report confirms that 89 percent of hospital leaders have experienced an increase in payment denials over the last three years, with about half of those respondents describing the increase as significant.
Identifying root causes of denials, prioritizing remediation where it is most needed, and leveraging technology are all strategies hospitals should be considering when aiming to reduce claim denial rates.
Our revenue cycle experience suggests that the billing and collection staffs should work closely with the front desk/reception. The teamwork by these two functions can significantly reduce the number of denied claims.