6 reasons healthcare claim denials are increasing – and how to fix them

Published: November 29, 2022 by Experian Health

6 reasons healthcare claim denials are increasing – and how to fix them-blog

Experian Health’s recent report on The State of Claims 2022 reveals a worrying trend in the increasing rate of healthcare claim denials. Three-quarters of the 200 health professionals surveyed said that claims are denied 5%–15% of the time. Nearly a third see claims denied 10–15% of the time. Denials at this scale represent billions of dollars in lost or delayed reimbursements plus extra overhead to rework and resubmit claims. It’s no wonder that reducing denials is a top concern for revenue cycle decision-makers.

In June 2022, Experian Health surveyed 200 revenue cycle decision-makers to understand the current state of claims management. Watch the video to see the results:

While challenges in claims management are nothing new, the pandemic introduced a host of new obstacles to reimbursement. For 72% of respondents, claims management is more important now than it was prior to the pandemic. Six operational challenges were identified as the main drivers of the increase in denials, summarized below. Despite awareness of the role of technology in optimizing denial management, many providers are yet to fully embrace the power of automation to alleviate additional pressures. Could a second look at current digital solutions help overcome these obstacles and achieve the ROI providers desire?

Denials are increasing by 10-15%, and reducing them is priority #1 for many healthcare providers. Download our new report to get the latest insights.

6 operational challenges that increase healthcare claim denials

Respondents who said that denials are increasing pointed to six main operational challenges, primarily linked to unsuitable technology and staffing issues:

  • 62% said their organization did not have sufficient data and analytics technology to identify submission issues
  • 61% cited a lack of automation in the claims submission and denials prevention process as the main problem
  • 46% said lack of staff training was a top challenge
  • 44% had a lack of in-house expertise in denials management
  • 33% of respondents said their organization’s technology was out-of-date and inadequate for effectively managing insurance denials
  • 30% said staffing shortages were a key factor behind healthcare claim denials.

Given these technological and staffing challenges, it’s unsurprising that the main reasons for the denials themselves reflect procedural, technical and quality control issues. Authorizations, provider eligibility and coding inaccuracies featured most often in respondents’ top three reasons for denials. As respondents observed, accurate and efficient claims submissions cannot be achieved without robust processes and reliable data – which cannot be delivered without the necessary tools and resources.

Leveraging automation to reduce claim denials

Providers recognize that digital technology can help improve claims management. The right automation and analytics can significantly improve the speed and accuracy of claim submissions. For example, with Denials Workflow Manager providers can track claim status and appeals, and quickly identify those that need to be followed up on. Automation eliminates the need for manual review, while analysis and reporting give staff insights into the root causes of denials so they can optimize performance.

This can be integrated with tools like Enhanced Claim Status, which sends automatic status requests based on the type of claim and specific payer timeframes, generating accurate adjudication reports within 24-72 hours to accelerate the revenue cycle. The output can be viewed in ClaimSource to streamline workflows and manage the entire claims process in a single online application.

Automation and digital technology are also useful counterweights to the shortage of qualified staff. More than half (53%) of respondents said that staff shortages continue to slow submission speed and undercut the efficient resubmission of denials. By reducing the need for manual input, claims management can be accelerated while freeing up staff to focus their attention where it matters most. Perhaps it’s for these reasons that 52% of respondents said they’d upgraded or replaced previous claims process technology in the last 12 months.

Determining a great ROI for denial management in healthcare

If reducing denials is priority number one for providers, priority number two is improving performance and increasing ROI. In fact, 78% of respondents said their organizations are at least somewhat likely to replace their existing claims management solution if convinced something else can deliver better ROI.

What does better ROI look like? For survey respondents, the top metric was the number of hours spent appealing or resubmitting claims (61%). This was closely followed by time spent appealing or resubmitting claims versus reimbursement totals (52%), clean claims rate (47%) and denials rate (41%).

Patients also want to see improved performance when it comes to reducing denials. If healthcare organizations cannot offer a reliable, error-free system, they risk losing patients’ trust and loyalty. Providers that can demonstrate a well-managed claims system with swift and accurate results will inspire confidence and improved engagement from patients.

Automation can make a meaningful impact on all these metrics. While many respondents have evaluated their claims technology in the last two years, a quarter haven’t reviewed their claims technology for over three years. Given the scale of change and disruption over the last few years, it’s important to take stock of how existing solutions are performing against these metrics and implement upgraded solutions that can deliver a stronger ROI.

Download the State of Claims 2022 report to discover more insights about the current healthcare claims environment. Get in touch to find out how Experian Health can help your organization reduce denials and increase ROI today with data-driven claims management technology.

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