Addressing Rising Denials In 2021

Causes – And Solutions – For Revenue Challenges

In today’s current environment, hospitals face more denied claims for clinical reasons than in previous years. In fact, payers deny 20% more claims on clinical grounds now than in 2016. But why? And how can hospitals prevent these denials in the first place?

Recent studies, including a report from the American Hospital Association (AHA), indicate that hospitals and health systems face a growing volume of claim denials, with private plan prior authorization issues driving the recent increase.

The Elephant In The Room

The COVID-19 outbreak and pandemic impacted the rate of clinical denials nationwide. At the end of 2019, the national denial rate for claims denied upon initial submission was 9.5%, representing a modest half-percent increase compared to 2016. However, by the third quarter of 2020, the national rate of denials exceeded 11% – a 23% jump from 2016.

The pandemic appears to have adversely affected hospitals in specific parts of the country. Hospitals in states on the West Coast, Pacific Northwest, and Northeast saw the highest clinical denial rates. Not coincidentally, these regions also faced the first waves of COVID-19 at the start of the pandemic. In these regions, denial rates neared 14%, while the average clinical denial rate in most other parts of the U.S. held steady at 8.5%

What was it about the pandemic that contributed to these higher rates of clinical denials? Indeed, care delivered in these regions was as necessary as in other parts of the country. Then why would hospitals face such challenges from payers?

A Revealing Pattern

The disproportionately high volume of claims denied for clinical reasons in these early-hit parts of the country reveals how the pandemic affected administrative and financial processes, particularly at the front end of the patient’s hospital stay.

In fact, patient-facing, front-end revenue cycle issues cause half of clinical denials. In other words, the errors attributed to clinical denials during the claims process often occur during the registration, insurance verification, and eligibility phases of hospital admission. And, considering the chaos and confusion that plagued hospitals facing early outbreaks of COVID-19, it’s not surprising that more errors occurred at the entry point than would have otherwise during calmer circumstances.

Learning From History

Hospitals and health systems can learn from the challenges faced by the organizations on the leading edge of the pandemic. We can better address potential errors made by patient intake professionals to avoid denials later.

Efforts to prevent clinical denials should begin the minute a patient enters the hospital, including taking proactive steps during the intake process to avoid the potential pitfalls that can follow. Actionable steps include deploying better systems that provide staff with full access to a patient’s financial account and access to his or her carrier to verify coverage and eligibility.

In addition, clear communication with patients and their families about the cost of care before delivering service greatly increases the likelihood of collecting the patients’ share of expenses. Moreover, by engaging the patient in discussions about the cost of care, they are more likely to advocate with their insurance companies for coverage.

When Front-End Prevention Fails

Unfortunately, front-end denial prevention efforts are not infallible, so providers need a strong appeal process and follow-up strategy to ensure a high overturn rate. This is especially critical for clinical denials, which present unique challenges for providers because they require additional medical or clinical clarification for payment. The problem is most organizations do not have the qualified clinical and medical resources available to submit appeals for all of their denials.

To explore solutions for your organization’s clinical denials, including proven successes overturning denied claims, contact us today.