10 Key Facts Hospitals Should Know About Denials in 2021
Aside from the number one goal of providing quality patient care, hospital and health system executives will tell you that driving revenue is key. Keeping the doors open and lights on – especially in today’s tumultuous post-pandemic business climate, has become more challenging than ever. Organizations are constantly seeking ways to generate revenue and sustain profit margins by reducing expenses and optimizing processes without impacting care delivery.
One area that’s always ripe for improvement is denials management. According to a recent survey, the average rate of denied claims across U.S. hospitals and health systems ranges between six and 13 percent. More than one-third of hospital reimbursement executives reported that their organizations are nearing the denials danger zone of ten percent.
Preventing denials, managing audits and winning appeals is not easy, especially when teams are stretched thin. Staff cuts and employee turnover in a tough labor market as a result of COVID-19 have impacted most hospitals and made this tough situation even worse.
So what can be done to help organizations do more with less? For starters, a proactive approach can go a long way in heading off denials before they hit the books. It’s definitely easier said than done, but not impossible. Education is key – especially when it comes to training new or less experienced employees and making sure they understand why denials happen and how they can be avoided.
Did you know…
- Front-end revenue cycle issues cause half of all denials.
- Eighty-nine percent of hospital and health systems have experienced an increase in claim denials over the past three years, and 51 percent noted the increase as “significant.”
- Eighty-six percent of denials are potentially avoidable.
- Through the third quarter of 2020, the average denial rate is up 23 percent since 2016, topping 11.1 percent of claims denied upon initial submission.
- Denial write-offs due to medical necessity nearly doubled from 2017 to 2019 jumping from 27 percent to 53 percent.
- The success rate for claim denial appeals for hospitals dropped from a median of 56 percent to 45 percent for private payers over the past two years.
- For Medicaid claims, the median success rate for claim denials appeals dropped from 51 percent to 41 percent.
- Hospitals had more success appealing denials from Medicare and Medicare Advantage. The rate of successful claim denial appeals for hospitals increased from 50 percent to 64 percent.
- In a typical health system, as much as 3.3 percent of Net Patient Revenue, an average of $4.9 million per hospital, may be at risk due to denials.
- When it comes to prior authorizations, incomplete clinical information to support a request is the most common reason for an initial denial. The requested medical service or medication not being evidence-based is the most common reason for a final denial of a prior authorization request.
Knowing the facts about the impact of denials on a healthcare organization is good but understanding what they mean and how to mitigate these issues is what will really make the difference for your organization.
Share the facts with your teams and contact Vyne Medical today to speak with one of our solution experts about how we can help your organization proactively address denial management challenges.