Denials have long been a sore spot for revenue cycle leaders and now they seem to have a worsening effect on an organization’s bottom line.
A new benchmarking analysis illustrates the negative financial impact of denied claims and delayed payments.
The data, compiled by Kodiak Revenue Cycle Anayltics (RCA), found that the value of claims taking longer than 90 days to paid has increased by 33% for commercial insurers and over 40% by Medicare Advantage plans since 2020. The main driver for these delays, according to the analysis, is a surge in initially denied claims.
“The initial denials cause delays sending bills to patients, and the longer patient billing is delayed after a procedure or hospital stay, the lower the collection rate for providers,” Colleen Hall, senior vice president and revenue cycle leader at Kodiak Solutions said in a statement.
“This amplifies the financial impact on provider organizations at a time when they are already under tremendous financial pressure.”
Nicole Clawson, vice president of finance and revenue cycle at Pennsylvania Mountains Healthcare Alliance (PMHA), previously spoke to HealthLeaders about her efforts to reduce denials and increase revenue.
“Our core revenue cycle model includes its shared service management division along with the technology in the systems it uses to gain efficiencies, best practices, and create an overall increase in cash collections and a reduction in denials and bad debt.” Clawson said.
She added that PMHA spent years developing their current system and making it specific to the region they serve, as well as payers. This included designing algorithms for billing workflows, optimizing function for cash acceleration and reimbursement.
A larger report by Kodiak RCA notes that patients themselves are taking longer to pay providers as they have begun to shoulder more of their healthcare costs. In the third quarter of 2023, commericially insured patients were responsible for 23% of their bill for inpatient and outpatient care.
While this isn’t a problem for the revenue cycle, so long as patients can afford to pay, the number of aged accounts receivable older than 90 days is growing for both commercial insurers and Medicare Advantage plans.
The self-pay after insurance collection rate for these patients was 36.1% of the claim’s value.
Jasmyne Ray is the revenue cycle editor at HealthLeaders.
KEY TAKEAWAYS
A surge in intially denied claims is forcing providers to wait longer for payment for their services.
With patient responsibility for the cost of their care growing, number of aged accounts recieveable (AR) older than 90 days is also increasing.