Denied and Defiant: CFOs Must Muscle Up as Payers Get Tougher on Claims

Payer challenges are growing. Here's what CFOs are saying, and what they can do.

Payer denials are a constant and consistent challenge for CFOs. And they're not going away any time soon.

At the recent HealthLeaders CFO Exchange, financial executives from health systems and hospitals across the country talked about payers and their tactics, where the nuanced challenges lie, and if there is any hope for change.

Lay of the Land

According to an Experian report, from 2022 – 2024 the number of providers who said denials are increasing jumped from 42% to 77%. A Kaiser Family Foundation analysis, meanwhile, found that ACA insurers typically deny about 20% of claims.

Additionally, market share in each state plays into how much payers reimburse health systems. Insurance companies have a stranglehold on the market, and CFOs know it.

 A study by AAMC found that the largest systems, on average, have far less market share (a combined 43% of the market share in each state), than the top three large insurers, which collectively hold an average of 82% of the market share in each state. This imbalance drives down the amount that insurers are willing to reimburse hospitals and health systems for patient care.

What CFOs Are Saying

"It's gotten worse, there is no alignment," Julie Soekoro, CFO of Vitruvian Health Care System, said at the Exchange. "We are not growing in the same direction when they have margins as a goal."

CFOs are livid. But they're also exhausted and typically don't feel like there are many options to retaliate against payer tactics. During CFO Exchange roundtables, executives lamented that they don't know how to collaborate with payers or advocate against the stances that payers are taking. Many said they feel that payers typically do not have a sense of what is happening in the market and don't forecast very well, which is why payers are seeing less profits this year.

Generally, CFOs said they are:

* Feeling a little downtrodden by payer negotiation tactics and contracts.

* Want to educate the community and state government on payer challenges.

* Need better cost cutting strategies just to stay afloat.

Contracts

CFOs at the Exchange stressed the need for better negotiations, which would likely lead to contracts with more favorable terms. But they're running up against aggressive tactics.

CFOs could consider taking a negotiation class to bolster their skills, as suggested by Bristol Hospital CEO Kurt Barwis. A background in finance typically doesn't cover communication and negotiation skills, and sharpening their skillset here could help--not only in payer negotiations, but also in day-to-day communications with staff and other executives. CFOs should get curious and ask themselves: What does it take to be a confident, persuasive communicator? 

Bearing With It: Cost-Cutting Strategies

To keep up with payers, CFOs are looking more closely at cost-cutting strategies and other methods of freeing up capital. Executives at the Exchange said strategies that have worked for them include subleasing properties and selling real estate, financing energy management such as HVAC, and other areas of non-clinical spending like landscaping and signage.

Long-Term Strategies: Reform Advocacy

CFOs at the Exchange said they want to educate their community and state governments on payer issues that affect hospital finances and public health, but they are unsure of how to get started.

CFOs can start by doing research on local legislators and connecting with them on important issues.

They can also leverage their financial data and expertise to illuminate the impact of proposed legislation on patient care, cost structures, and healthcare access.

CFOs can also join advocacy groups to discuss strategies, pain points and paths for reform.

Barwis, a registered lobbyist in Connecticut, knows the struggle, and the successes that can come from lobbying.

"In dealing with payer issues, if all you do is focus on the negotiation and dispute resolution processes with your own data and within your four walls - you are missing the leverage a broader organizational voice can yield," he said. "Engaging in advocacy pays untold dividends."