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Are Commercial Payers to Blame for Majority of Rev Cycle Claim Denials, Payment Delays?

Analysis  |  By Amanda Norris  
   May 25, 2023

One study says yes.

 

A new KPI benchmarking report shows that one in three inpatient claims submitted by providers to commercial insurers in first quarter 2023 weren’t paid for over three months.

Through the first quarter of 2023, commercial payers initially denied 15.1% of inpatient and outpatient claims for any reason compared to 3.9% for Medicare over the same period, according to the data from Crowe Revenue Cycle Analytics.

These numbers are nearly three times the number of claims delayed for that amount of time by traditional Medicare and over four times the initial denial rate for traditional Medicare claims over the same period, the study said.

Although the study said most initially denied claims become paid claims, the administrative effort to bring an initial denial to positive resolution is very costly for providers.

The study, which analyzed data from over 1,800 hospitals and 200,000 physicians, also found that eight cents of every dollar providers bill to commercial insurers will never be received or will be taken back once received.

When it comes to prior authorizations, the data showed that traditional Medicare plans tend to be easier to work with.

The initial prior authorization/precertification denial rate for inpatient claims for commercial payers was at more than 3% through the first three months of 2023. By comparison, the denial rate for traditional Medicare was 0.2% through the first quarter of 2023, the study said.


So is it time for revenue cycle leaders to start canceling commercial payer contracts? According to the data, not so fast.

“If you ask hospitals and health systems to pick which type of payer they’d prefer to have more of in their payer mix, the answer still likely would be commercial,” the study authors said.

According to the report, the data shows that commercial payers still reimburse providers at a higher amount on a per-case basis compared with Medicare:

  • $18,156.50 is paid by commercial payors compared with $14,887.10 paid by Medicare in average net revenue per inpatient case.
  • $1,606.86 is paid by commercial payors compared with $707.30 paid by Medicare in average net revenue per outpatient case.

The higher reimbursement rates may be worth the headache for most. 

Amanda Norris is the Associate Content Manager of Finance, Payer, Revenue Cycle, and Strategy for HealthLeaders.


KEY TAKEAWAYS

Commercial payers initially denied 15.1% of inpatient and outpatient claims for any reason compared to 3.9% for Medicare over the same period.

One in three inpatient claims submitted by providers to commercial insurers in first quarter 2023 weren’t paid for over three months.

So, is it time for revenue cycle leaders to start canceling commercial payer contracts? Probably not. 


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