The volume of commercial payer claim denials continues to rise and the appeals process has slowed, according to a new survey from HFMA.
Claim denial woes continue to plague revenue cycle leaders.
Asked about the greatest threats to their health systems’ revenue cycles, around half pointed to the volume of claim denials from commercial payers, according to a survey conducted by HFMA with sponsorship from Knowtion Health.
Declining reimbursement rates (21.6%) and prior authorization issues (14.6%) rounded out the top three threats identified by the 106 revenue cycle leaders who completed the survey between November and December of last year.
Administrative burden goes up, appeals slow down
Payer requests for information have been increasingly adding to the administrative burden on revenue cycle operations. Just under 90% of survey respondents reported that these requests were slightly or significantly higher than they had been in the previous year.
Meanwhile, commercial payers are moving slower when it comes to processing appeals, with 83% of respondents saying that appeals now take longer or much longer than they did three years ago.
Internal hurdles to revenue recovery
With claim denial volume on the rise, revenue cycle leaders seem unsure how to respond. Asked about the biggest barrier to improving revenue recovery from denials and underpayments, 37.6% pointed to difficulty prioritizing which denials are worked and when based on revenue benefit.
Technology and gaps in identifying documentation and coding errors (26.4%) and not enough clinical support for denial management (17.6%) were the other top barriers to revenue recovery.
Staffing gaps and collaboration woes
If resource limitations affect denial management now, the problem could become even worse. Respondents expect difficulty staffing denial appeal writers (61.0%), denials analysts (58.5%), and clinical documentation improvement (CDI) specialists (53.4%) over the next three years. Meanwhile, 89% expect demand for clinician support for denial management to increase over the next three years, creating a significant resource crunch.
These areas also create internal friction in denial management. Collaborating with clinicians on prior authorization processes (32.4%) and CDI (26.1%) were cited as the greatest points of friction between revenue cycle and clinical teams. This lack of alignment makes it difficult to address the root causes of denials. More than half of the respondents said they can identify payer trends but struggle to pinpoint the root causes behind them.
Technology could light the path ahead
Faced with these challenges, leaders are turning to technology. Asked how they are most successfully addressing the need for clinician input into the appeal process, the top strategy cited was greater automation (60.4%), followed by hiring or repositioning existing staff (50.0%).
This indicates a clear industry trend toward leveraging technology to better allocate scarce clinical and administrative resources in the ongoing battle against denials.
More than 40 payers have voluntarily signed onto to pact to transform prior authorization processes. Here is a breakdown of the six commitments at the core of the initiative.
In response to years of mounting frustration from providers, policymakers, and patients, an AHIP-led coalition of more than 40 payers has promised to transform prior authorization (PA) processes. The agreement is built on six core commitments aimed at reducing administrative burden and streamlining approvals for medically necessary care.
While revenue cycle leaders are skeptical that payers will follow through on the promise, if realized, "it would cut down on delays and reduce friction for both providers and patients," as Seth Katz, vice president of revenue cycle and HIM at University Health Kansas City, told HealthLeaders.
Check out the commitments that payers have made in the infographic below, or read more here.
The patient financial landscape is being reshaped by contradictory forces: rising patient out-of-pocket costs and growing restrictions on providers' ability to collect on those patient liabilities.
In this episode of HL Shorts, Ryan Klein, senior director of patient access and financial experience at UW Health, discusses the compounding challenges health systems face at a time when limits are placed on their ability to collect payments at a time when patient financial responsibility is growing.
A new CMS model will introduce new prior authorization requirements to traditional Medicare in six states, raising provider concerns about administrative burden.
Traditional Medicare will add prior authorization (PA) requirements for certain services in six states, according to a recent announcement from CMS. While the scope of new requirements is limited, the move could indicate a shift ahead for traditional Medicare, which has historically had few PA requirements tied to services.
To conduct PA reviews, CMS will partner with technology companies, rather than the usual Medicare Administrative Contractors, through the Wasteful and Inappropriate Service Reduction (WISeR) Model. This model intends to test the ability of enhanced technologies, including AI, to streamline and expedite PA processes.
How It Will Work for Providers
The PA pilot program for traditional Medicare will go into effect on January 1, 2026, and end on December 31, 2031. Requirements will apply to providers in six states: Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington. Seventeen services particularly vulnerable to waste and abuse will be subject to the new requirements, according to the announcement. These include skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis.
Providers subject to new PA requirements have some choice in how they pursue payment for the target services. They can either submit PA requests before performing service to ensure claims meet new requirements, or have claims go through pre-payment medical review after services are performed.
While technology will be used to support PA requests, final decisions to deny claims will be made by human clinicians, according to CMS.
Provider Concerns and Industry Context
Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association (MGMA), expressed concern that the new policy will add to the administrative burden that providers already face and claimed it contradicted recent CMS moves to reduce the volume of medical services subject to PA.
"One of the hallmarks of traditional Medicare has been the ability for physicians, not government, to determine what's clinically appropriate for their patient," Gilberg said in a statement.
A key difference between traditional Medicare and Medicare Advantage (MA) has been the latter's extensive use of PA. In 2023, MA plans processed nearly 50 million PA requests, averaging almost two per enrollee, versus 400,000 for traditional Medicare, roughly one for every 100 enrollees, according to an issue brief from KFF. The new model could represent a significant step toward the integration of more utilization management tools into the traditional fee-for-service program, even if on a limited basis.
While CMS announces new PA requirements, more than 40 payers have recently announced that they intend to reduce the volume of services subject to PA. As these developments play out, revenue cycle leaders will need to pay close attention to new rules and consider strategic approaches to managing relations with both government and commercial payers.
From relentless claim denials and payer pressures to policy debates around prior authorization and the 340B program, this mid-year briefing unpacks the six essential stories every revenue cycle leader needs to know.
It's been a busy first half-year for revenue cycle leaders. From the continued rise in claim denial rates to increased scrutiny over the 340B Drug Pricing Program to uncertainty surrounding funding for government-backed health plans, there has been a lot of news to follow.
At the six-month mark, we take a look at the most read stories shaping the revenue cycle landscape.
No Denying There's a Claim Denial Problem
Around 85% of revenue cycle leaders surveyed for the 2024 Experian Health State of Claim say reducing denials is a top priority for their organizations, and about three-quarters say they are seeing more denials.
However, it's not just quantity that's keeping revenue cycle leaders up at night.
“We are seeing more – not only in volume, but in ambiguity and variety and complexity,” Beth Carlson, VP Revenue Cycle at WVU Health, told HealthLeaders earlier this year.
Let's Get Digital: How 2 RCM Leaders Are Tapping Tech to Improve Patient Access
As patients shoulder growing financial responsibility for their healthcare costs, revenue cycle leaders are turning to technology to improve access. Ballad Health, for instance, has partnered with payers on data exchange to streamline patient registration and offer more digital tools for patients to manage scheduling and payments.
"We're really, really pushing our organization forward into the digital," Shana Tate, Ballad Health's chief revenue officer, told HealthLeaders.
Executive Order Puts 340B Drug Pricing Back in the Spotlight
The Trump administration reignited debate over the 340B Drug Pricing Program when it issued an Executive Order on drug pricing for insulin and injectable epinephrine while also instructing HHS to consider reimbursement adjustments for discounted drugs.
Hospitals participating in the program say the 340B discounts are essential to their organizations' financial health. However, critics say many hospitals fail to use the funds for the marginalized populations that the program was intended to help.
Congress Considers Legislation to Restrict Prior Authorization
With provider frustration over prior authorization (PA) reaching a boiling point, policymakers have been exploring legislation to limit burdensome requirements from payers.
Earlier this year, Rep. Mark Green, MD (R-TN) introduced the Reducing Medically Unnecessary Delays in Care Act of 2025. The law would require physician review of PA decisions for payers participating in federal health programs and require increased transparency on claim denial rates and PA criteria.
“No one should lose out on medical care because an AI algorithm is challenging what a doctor has already deemed a necessity,” Kim Shrier, MD (D-Washington), a cosponsor, said in a statement.
Payers' Rising Costs Spell Trouble for Rev Cycle Leaders
Payers were hit with higher-than-expected medical costs and lower-than-expected premium revenue to close out 2024. In January, UnitedHealthcare revealed in an earnings report that high demand for services among Medicare and Medicaid beneficiaries was a main driver behind its poor financial performance. Cigna, too, failed to meet earnings projections in the final quarter of 2024.
Financial woes at some of the largest payers should put revenue cycle leaders on alert. Payers will likely look to premium increases and provider reimbursement to boost their bottom lines.
Payer-Provider Software: 5 Strategies for Smooth Sailing
Revenue cycle teams are increasingly reliant on a wide range of technology, but finding solutions that actually reduce friction is easier said than done, according to Debbie Schardt, vice president of revenue cycle and utilization management at MultiCare Health System.
To ensure that technology solutions are effective, health systems need a clear vision and strategy to properly vet vendors, Schardt says.
Throw out your pens and paper. Technology has transformed not only the way that health systems bill patients, but also the way they communicate with patients about their financial responsbilities.
On this episode of HealthLeaders HL Shorts, Moffitt Cancer Center Senior Director of Patient Financial Services Andy Talford discusses how technology is changing the patient financial experience and helping health systems to develop accurate pricing estimates.
Drug companies are more likely than hospitals to violate 340B regulations, according to a recent American Hospital Association report.
The 340B Drug Pricing Program has been under constant attack on multiple fronts, although drug companies have arguably led the charge. Now, the American Hospital Association (AHA) is firing back.
In a recent review of Health Resources and Services Administration (HRSA) data, AHA found that participating drug companies are less likely to be audited and more likely to violate 340B rules than hospitals.
AHA Turns the Tables with HRSA data
HRSA was given authority to issue 340B regulations and to audit 340B participants, including both hospitals and drug companies, when the program was established in 1992.
Among the rules governing hospital participation, one prohibits participants from giving 340B discounts to ineligible patients and another prohibits them from receiving both a 340B discount and Medicaid rebate on the same drug. The first type of violation is referred to as a diversion and the second as a duplicate discount. HRSA can require repayment of 340B discounts to drug companies if a hospital violates either rule.
HRSA audits approximately 160 participating hospitals each year, or around 6% of the total number of participating hospitals.
AHA determined that adverse findings for either type of violation declined by 62.1% between 2018 and 2022. The AHA report showed that 39.7% of audited hospitals violated diversion rules and 30.8% violated duplicate discount rules in 2018 compared to 13.2% and 10.7%, respectively, in 2022.
Among its rules governing participating drug companies, HRSA prohibits the sale of 340B-eligible drugs to participating hospitals at or above the 340B ceiling price. HRSA can require companies violating this rule to repay affected hospitals for the total amounts of the overcharge.
HRSA audits approximately five drug companies per year, or 0.6% of all participating drug companies.
Of the 25 HRSA audits conducted between 2018 and 2022, 60% revealed a violation. Of these, only one did not require repayment. Meanwhile, the violation rate for hospitals fell each year from a five-year-high of 71% in 2018 to a five-year-low of 26% in 2021, and then rose slightly to 28% in 2022, according to the report.
Drug Companies and Lawmakers Push for Stricter Oversight
In recent years, drug companies have consistently accused provider organizations of using 340B funds for purposes beyond the original scope of the program and blamed HRSA for lax oversight.
Pharmaceutical Research and Manufacturers of America (PhRMA), an industry group representing drug companies, claimed in an October 2024 letter to HRSA that growth in Medicaid managed care organizations has increased the risk of duplicate discount violations and accused the agency of ignoring government watchdog recommendations to ramp up oversight.
“We continue to have serious concerns about persistent and often illegal abuse of 340B, which is driving up costs for patients, employers and taxpayers,” PhRMA Senior Vice President Alex Schriver said in a November 2024 statement.
“Hospitals are taking a ‘just trust me’ approach to requesting 340B discounts on medicines despite well-documented abuses,” the statement continued. “For too long, the Department of Health and Human Services has refused to implement basic transparency and accountability requirements needed to prevent illegal activity.”
Drug companies aren’t the only ones suspicious of how hospitals use the 340B program. As the program has grown, federal legislators have taken note. In a report on the program released earlier this year, Senator Bill Cassidy (R-Louisiana) called on Congress to consider stricter oversight.
“This investigation underscores that there are transparency and oversight concerns that prevent 340B discounts from translating to better access or lower costs for patients,” Cassidy said in an April 24 statement. “Congress needs to act to bring much-needed reform to the 340B Program.”
However, AHA has now turned the tables on drug companies, suggesting that legislators and regulatory agencies should turn a more watchful eye on them.
“Policymakers should reject the baseless claims made by drug companies of widespread program abuse by 340B hospitals and urge HRSA to increase their audits of drug companies,” the AHA report concluded. “Greater oversight of these drug companies is necessary to ensure the continued success of the 340B program for the millions of vulnerable patients and communities nationwide who rely on it.”
Inconsistent payer rules are a major pain point for revenue cycles with direct clinical and financial impact on patients, according to Northwell Health's Christine Migliaro.
The prior authorization process is a well-known source of frustration for providers and a significant driver of administrative burden. In this HL Short, Christine Migliaro, vice president of front-end revenue cycle operations at Northwell Health, discusses the top challenges she encounters in the PA process. She outlines how a lack of standardization, staffing issues and slow payer response times create confusion and frustration for providers and patients alike.
Migliaro was a panelist during a recent HealthLeaders Revenue Cycle NOW Online Summit. Read more about the discussion or watch a recording of the full event here.
More than 40 payers have voluntarily committed to significant prior authorization reforms, but will this time be any different?
More than 40 payers have signed onto an agreement to limit and simplify prior authorization (PA), according to an announcement from AHIP.
AHIP maintains that PA safeguards patients from exposure to low-value and inappropriate care that deviates from evidence-based guidelines, but also recognizes the frustration that patients and providers feel when provider-recommended care is delayed or denied during PA review.
Signatories to the pact include Aetna, Cigna, Humana, UnitedHealthcare, and numerous affiliates of the Blue Cross Blue Shield Association. Proposed changes would benefit more than 250 million patients across multiple insurance markets, including the commercial, Medicare Advantage, and Medicaid managed care markets, according to the announcement.
The 6 Pillars of the Pact
Signatories to the pact have voluntarily committed to a set of six specific reforms.
Standardizing Electronic Prior Authorization
Lack of technological standardization across payers has long frustrated revenue cycle leaders. For instance, Ochsner Health has successfully automated some components of the PA process, but too few payers use digital platforms that cooperate with its core EHR to drive significant efficiency.
“We’re not able to connect this way to all of the payers and see that big volume that we would like,” Savanah Arceneaux, director of pre-service & financial clearance at Ochsner, said during a recent HealthLeaders Revenue Cycle NOW Online Summit.
As part of their pact to improve PA, signatories say they will develop standardized data and submission requirements using Fast Healthcare Interoperability Resources (FHIR) APIs.
Reducing the Scope of Claims Subject to Prior Authorization
Signatory payers offering Affordable Care Act marketplace and Medicare Advantage coverage say they will limit the use of PA to services most prone to variation. They will also share data to allow industry reporting on PA volume.
Ensuring Continuity of Care When Patients Change Health Plans
Currently, patients frequently require new PA approval when they switch health plans. Under the pact, signatories say that they will honor previous health plans’ PA approvals for 90 days when a patient changes health plans.
Enhancing Communication and Transparency on Determinations
Signatory payers are committing to improving member communications on PA denials. This will include notices that clearly explain next available steps for assistance to their affected members and clear instructions on how to appeal decisions.
Expanding Real-Time Responses
Electronic PA has the potential to reduce the administrative burden for providers and reduce turnaround times associated with the PA process. However, interoperability issues have limited widespread adoption.
Only 35% of PA interactions between providers and payers were fully electronic in 2024, according to a recent Council for Affordable Healthcare report.
As part of their commitment to adopt FHIR standards, signatory payers are also committing to submit 80% of electronic PA approvals in real time by 2027.
Ensuring Medical Review of Non-Approved Requests
AI has the potential to streamline and automate components of the PA process, but providers are concerned about using the technology to deny care. Signatory payers have agreed to only use AI to facilitate quicker approvals and require provider review for all PA denials based on medical necessity.
What are Revenue Cycle Leaders Saying?
There is a sense of muted optimism among revenue cycle leaders in response to the announcement from AHIP and signatory payers, particularly around the potential for standardization in electronic PA processes.
“The most noteworthy commitment for me is the push towards real-time authorizations using FHIR APIs,” Seth Katz, vice president of revenue cycle and HIM at University Health Kansas City, said in an email. “If that’s truly realized, it would cut down on delays and reduce friction for both providers and patients.”
These specific commitments largely align with requirements established by the Interoperability and Prior Authorization Final Rule issued by the the Centers for Medicare and Medicaid Services (CMS) in 2024, which would mandate the adoption of an API for PA by 2027. While those requirements would only apply to plans participating in government programs, healthcare leaders have applauded payers for embracing the proposed changes to commercial plans as well.
“Today’s commitment by health insurers, much of which is a plan to implement the CMS requirements established in the Interoperability and Prior Authorization final rule, presents a meaningful opportunity to reduce the patient and provider burden associated with prior authorization,” Terrance Cunningham, senior director of administrative simplification policy for the American Hospital Association, said in a statement to HealthLeaders.
“We are encouraged to see their commitment to implementing these changes beyond federally regulated insurance offerings and across their commercial lines of business, which will enable these reforms to impact a greater number of patients,” Cunningham added.
Despite the optimism, years of push-and-pull between providers and payers has led to an acrimony that tempers expectations.
“I’ll admit, I’m cautious,” Katz said. “Health plans have been promising improvements for years, yet frontline staff still spend hours chasing faxes or sitting on hold resulting in delays of care impacting patients and frustrating physicians.”
“In short, the intent is right, but until there is accountability and measurable progress, most of us on the provider side are reserving judgment,” he concluded.
The numbers are in, revealing a clear performance gap between providers on eight KPIs. See the metrics that separate top-performing provider organizations from the rest and benchmark your own success.
Recent data from Kodiak Solutions shows a clear performance gap, with top-performing provider organizations outpacing their peers on eight revenue cycle KPIs. However, organizations that did not make the highlight reel should not despair. The variations in performance offer revenue cycle leaders a roadmap to plot their own success.
Read more here, or see the infographic below for additional details.
