Study Finds Nearly 15% of Claims Submitted to Private Payers Initially Denied, Impacting Hospitals and Health Systems
The rising trend of denied claims by private payers is costing hospitals and health systems billions of dollars each year, according to a new national survey conducted by Premier. Nearly 15% of all claims submitted for reimbursement are initially denied, with an average of 3.2% of preapproved claims also being rejected.
The impact of these denials is significant, with providers spending an average of $43.84 per claim to fight the denials. This adds up to about $19.7 billion a year in review costs, with $10.6 billion wasted on claims that should have been paid initially. The delays in payment also result in nearly 14% of health system claims being past due for remittance, causing financial strain on hospitals.
Patients are also affected by these denials, with 46% of Americans admitting to skipping or delaying necessary follow-up care due to concerns about costs. Additionally, 49% say they would be unable to pay for an unexpected $1,000 medical bill within 30 days.
The survey data also highlighted the challenges faced by hospitals in discharging patients to post-acute care settings, with over 20% of claims for discharge to skilled nursing facilities being denied by private insurers.
Premier has called on the Centers for Medicare and Medicaid Services to monitor reporting of expenditures on direct patient care, particularly in the Medicare Advantage program, where over a quarter of claims are subject to prior authorization. They also urged CMS to collect data on payment delays and denials between MA plans and contracted providers to ensure compliance with network adequacy expectations.
The financial burden of denied claims is impacting hospitals’ ability to invest in patient care and may lead to downgrades in bond ratings. As the healthcare industry continues to grapple with these challenges, finding solutions to reduce claim denials and improve payment processes will be crucial for ensuring financial stability and access to care for patients.