Hospital Claim Denials

Time to feel sorry for hospitals, as Change Healthcare releases an analysis of their problems with claims denials.  (CHC Analysis)   The analysis covered bills submitted by over 700 hospitals and extrapolated to the full set.   According to the firm, hospitals submitted $3 trillion in claims to payers in the US last year, and a paltry $262 billion, or 9%, received an initial denial from the payer.  Denials are highest on the Pacific coast and lowest in the Northern plains region.   An average of $4.9 million in revenue was put at risk by the denials, but 63% of this amount was recoverable.  The cost for reworking claims, however, was put at about $118 per claim or around $8.6 billion annually.  The most common reasons for denial are patient eligibility, missing or invalid data, lack of pre-authorization and an uncovered service.  So note that claims are most commonly denied because of missing basic information about the patient or the service, so it is on the hospitals to get that right in the first place.  Denial management has become a common vendor, i.e. Change Healthcare, service, but more work apparently needs to be done on the very front end of claims submission.  The administrative cost for providers and payers of reworking claims is wasted money, and anything that can avoid that would be good.  Why do I think, however, that all the savings that might accrue for that will just go to the hospitals’ bottom line.  Just hard to be sympathetic to hospital claim denials, when their excessive charges, particularly to commercial plans, are a compelling factor in health spending growth.