Loading...

Reimbursement issues in healthcare: a guide to resolution

Published: September 26, 2024 by Experian Health

reimbusement-issues-in-healthcare-a-guide-to-resolution-2

Reimbursement issues in the healthcare industry are complex, but reimbursement is essential for healthcare organizations. Proper reimbursement allows providers to run operations efficiently and deliver consistent, high-quality patient care. It also enables organizations to invest in technologies that advance their operations.

Read on to learn more about the causes of reimbursement issues and discover the strategies, tools and automated solutions healthcare providers can use to address them.

Understanding reimbursement issues in healthcare

Healthcare organizations often provide care without upfront payment and hope that healthcare payers will fulfill their obligations and settle their bills. This system impacts all healthcare stakeholders and influences the quality and timeliness of patient care. It also affects staff productivity, satisfaction, hospital operational efficiency, cash flow and bottom line.

However, the reimbursement system is also fraught with long-standing challenges that complicate financial growth for healthcare organizations. Claim denials, changing reimbursement landscape and payer rules, prior authorization hurdles and staffing shortages complicate reimbursement issues in healthcare and cost hospitals billions of dollars in administrative complexities.

Key challenges of healthcare reimbursement concepts

Key challenges that fuel reimbursement issues and impact hospital cash flow include:

  • High patient volumes and submission of inaccurate claims
  • Complex payer policies, compliance issues and poor communication in payer-provider partnerships
  • Increasing claims denials leading to nonpayment
  • Staff shortages and lack of training
  • Slow adoption of data, analytics and automation solutions

Causes of reimbursement issues

By identifying the causes of reimbursement issues that result in delays and nonpayments, healthcare organizations can develop effective strategies to tackle them. Here is a closer look at why reimbursement issues commonly occur:

Rising claim denials

Claim denials lead to delayed or lost reimbursements, which amount to millions of dollars in lost revenue for hospitals. The Journal of AHIMA reports that claim denials cost hospitals $5 million, annually. According to Experian Health’s State of Claims report, 38% of healthcare providers experience claims being denied 10% of the time, or more. 67% of respondents also agreed that reimbursement times are increasing.

A report from the American Hospital Association noted that Medicare Advantage plan payment denials increased by 56% for the average health system between January 2022 and June 2023. These denials led to a 28% decline in cash reserves—even as maintenance expenses rose by 90% and other operational costs increased by up to 35%.

With increasing claim denials, rising operational costs and a drop in cash reserves, revenue cycle leaders are under pressure to address costly claim denials.

Staffing shortages and lack of appropriate training

Challenges with staffing shortages and inadequately trained staff to handle revenue cycle management processes can lead to reimbursement issues for healthcare organizations. New research, published daily, shows that healthcare organizations are grappling with staffing shortages and the associated consequences.

Experian Health’s recent survey, Short Staffed for the Long-Term, identified staffing shortages as being strongly linked with increasing claims denial and declining reimbursement rates in healthcare. In fact, nearly all survey respondents noted that staff shortages have affected their organization’s revenue opportunities.

According to 70% of the survey respondents, staff shortages are seriously impeding payer reimbursement, and 83% report that it has become increasingly challenging to follow up on late payments or provide assistance to patients facing financial difficulties. In another Experian Health survey, The State of Patient Access, 2023: The Digital Front Door, 87% of providers report that healthcare staffing shortages are worsening healthcare access.

Additionally, inadequate and lack of up-to-date training in handling medical coding, eligibility verification, patient estimates and other necessary administrative processesfor preparing and submitting clean claims and receiving reimbursement hamper the efficiency of existing staff.

Complex prior authorization process

When healthcare organizations fail to obtain prior authorization in cases where it is needed, they can inadvertently face healthcare reimbursement issues. Prior authorization is a cost-control mechanism used by payers to confirm the justification for costly healthcare services. When prior authorization is required, providers must receive approval from payers before their services can be eligible for reimbursement.

Prior authorization is a heavy and time-consuming administrative burden. According to the 2023 AMA prior authorization survey, every healthcare physician completes 43 prior authorizations per week on average—a process that takes about 12 hours. Worse, more than a quarter of providers report that prior authorizations are often or always denied.

The complex prior authorization process leads to treatment delays, abandonment and reimbursement hassles. Many denials occur after patients have already started receiving care, or or when required care is only partially covered, causing further challenges.

Changing reimbursement policies and payer rules

Healthcare providers unintentionally fall behind in staying updated on critical reimbursement policies. The reasons vary, but typically include shifts in the reimbursement landscape, inconsistencies in payer rules, unannounced rule changes and poor communication in payer-provider relationships.

Complex and ever-evolving payer policies also result in substantial losses for hospitals. Hospital revenue and resources, staff productivity and satisfaction and patient experience all bear the brunt. Hospitals relying on manual processes instead of automated software solutions to manage reimbursement hurdles are often hit even harder.

Strategies to resolve healthcare reimbursement issues

Organizations working to achieve impactful reimbursements can adopt strategies for success, including:

Adopt AI and automation to prevent claim denials

In the State of Claims 2024 report, only 31% of providers reported using some form of automation and/or AI technology. Automated solutions provide a time-and-resource-efficient approach for healthcare organizations to streamline claims and revenue cycle management.

For example, ClaimSource® is a single software solution used to automate the claims management process and improve reimbursement rates. This solution automates tasks crucial to claims approval and reimbursements, like eligibility verification and coding, making the process faster and error-free.

Experian Health’s AI Advantage™ is a prime example of an AI-powered solution that works seamlessly with automation solutions to provide organizations with the greatest potential for reimbursement. It offers a two-in-one avenue relevant before claims submission and after claims denial. Organizations can reduce denial rates with Predictive Denials and predict high-value denials that improve reimbursement rates with Denials Triage.

Implementing AI and automation can help strengthen financial performance and increase reimbursement rates for healthcare organizations. When integrated with AI-powered solutions that provide prediction and accuracy, automation takes the claims management burden off the shoulders of overworked staff. Staff can then redirect their efforts towards activities that enhance patient experience, care quality and outcomes.

Automate prior authorizations

Prior authorizations can be time-consuming and expensive, especially with manual, error-prone systems. According to a paper published in the Journal of Perspectives in Health Information Management, 85% of providers consider the burden associated with prior authorization to be “high or extremely high.” Yet, many providers still rely on manual processes, which further complicate prior authorizations and create stumbling blocks to getting reimbursements.

Instead, healthcare organizations can embrace automated solutions, like Experian Health’s Prior Authorizations solution, to streamline this process. This solution automates the prior authorization inquiry and submission process and helps providers achieve prompt payments, ultimately ensuring predictable revenue cycles. By adopting automation, they save staff time and improve operational efficiency, which also improves care delivery and elevates the patient care experience.

Equip staff with technology solutions

Healthcare billing teams can also effectively tackle critical aspects that increase the potential of securing reimbursements using technology solutions designed to help boost productivity without increasing headcount. These include:

  • Denial Workflow Manager to eliminate the need for manual review of claims status and remittance advice, resulting in reduced denials
  • Enhanced Claim Status eliminates manual follow-up tasks and lets providers respond early and accurately to pended, returned-to-provider, denied, or zero-pay transactions before the Electronic Remittance Advice and Explanation of Benefits are processed
  • Patient Payment Estimates to provide better price transparency so patients are empowered to make better decisions and healthcare providers get paid faster

Overcoming reimbursement issues for better healthcare outcomes

Reimbursement issues pose many challenges for today’s healthcare organizations. They burden hospitals with excessive administrative work, cause delays in healthcare delivery and put the patient experience in the backseat. They also impact healthcare provider satisfaction and productivity and worsen hospital financial performance.

Empowering staff with automated solutions enables them to swiftly and accurately manage the different fragments leading to reimbursement. This can result in improved healthcare outcomes and organizational profitability.

Learn more about how Experian Health’s Claims Management and Clearinghouse solutions (ranked #1 Best in KLAS 2024) can help organizations secure reimbursements that boost their bottom lines.

Related Posts

Learn the fundamentals of claims management in healthcare, including key steps, common challenges, and best practices to improve reimbursement rates and reduce denials.

Published: August 7, 2025 by Experian Health

Learn how key provisions in the 2025 budget bill may impact Medicaid, uncompensated care, and hospital finances - and how to prepare with the right revenue cycle tools.

Published: August 4, 2025 by Experian Health

Manual prior authorization workflows represent one of the most tedious and expensive aspects of the healthcare revenue cycle. However, despite access to automated prior authorization software, only 31% of providers use electronic prior authorizations, according to the Council for Affordable Quality Healthcare (CAQH). The CAQH predicts that providers who switch to automated prior authorization software could not only gain back valuable staff time, but also see significant cost savings. What is prior authorization and why is it important? In healthcare, prior authorizations are when providers and payers decide in advance if a patient's insurance plan will pay for a specific treatment. Prior authorizations are crucial to reimbursements and keeping revenue cycles on track. Providers that offer services without prior authorization are unlikely to receive reimbursement from the patient's insurer. This can result in unpaid medical bills, leaving billing teams chasing patient collections or writing off bad debt. During the prior authorization process, providers submit a rationale for a proposed treatment to the payer. The request is approved or denied based on certain criteria, including payer policies and medical necessity. The payer may reject a prior authorization request if the treatment or service isn't covered under the patient's insurance plan, if it's not considered medically necessary or if a more affordable alternative is available. Simple paperwork errors, like missed deadlines or incomplete documentation when submitting a prior authorization, may also result in a denial. Challenges of manual prior authorization processes Despite the importance of prior authorizations in the revenue cycle, tedious manual prior authorization processes present challenges for many healthcare providers. Some of the key obstacles providers face using manual prior authorization include: Heavy administrative burden Healthcare providers spend a significant amount of time starting, completing and revising prior authorization paperwork. An AMA survey found that 86% of physicians say prior authorization has increased healthcare resource usage. At the same time, additional AMA data reports that providers spend around 13 hours working on 39 prior authorizations each week, and nearly one-third of providers report that these prior authorization requests usually end up being denied. Changing payer policies Keeping up with multiple payers and ever-evolving payer policies adds strain on staff and ultimately results in prior authorization denials. Changes are often unannounced, making it hard for providers to stay on top of updates. As a result, prior authorization submissions aren’t always accurate and may be based on outdated rules. This can lead to instant rejection and wasted time correcting and resubmitting requests. Inefficient workflows Prior authorization requirements can be complicated, especially when providers are juggling different payers, standards and service lines. Coping with these complexities often puts strain on manual systems, especially when multiple staff and notetaking methods are involved. Staff members may each get different pieces of information from payer websites (or over the phone) and not have the ability to benefit from their shared knowledge efficiently. Navigating communication hurdles and rapid payer information changes can result in workflow inefficiencies that snowball quickly. How prior authorization software can improve efficiency Replacing manual prior authorizations processes with automated prior authorization software can help providers improve efficiency. Here are some key ways providers benefit from automated prior authorization solutions, like Experian Health's Authorizations. Reduces manual interventions: This solution limits guesswork, human errors, and misinterpretations by automating data originating from the EMRs. Automation saves staff time and energy and prevents frustration. Stays current with latest payer policies: The prior authorization system stays up-to-date with the latest regulations and payer requirements. Automatic updates provide staff with the most current information, eliminating the need for staff to visit multiple payer websites or cross-check data by hand. Provides real-time updates: Providers can promptly clear authorizations for service by proactively identifying authorization status as pending, denied or authorized. This allows physicians to make timely treatment plans and for patients to avoid disruptions in care. Reduces risk of denials: Through automation, electronic prior authorization software ensures the accuracy and completeness of submissions by automatically checking with payers and vendors to validate that the authorization is on file. Payers and providers also get a shared view of account information, reducing the need for prolonged discussions about the status of authorization and rework requests. Key features to look for in prior authorization software When implementing prior authorization software, look for a solution that offers a wide range of features to automate and streamline the prior authorization process. Experian Health's prior authorization solution, Authorizations, for instance, offers healthcare providers the following key features: Real-time knowledgebase: Access to up-to-date prior authorization requirements and criteria in the National Payer Rulesets Submissions support: Removes guesswork and directs users to the correct payer portal based on procedure Automated inquiries: Automates the prior authorization payer inquiry process Enhanced workflow: Dynamic work queues display status and guides users through next steps Postback: Allows users to easily send authorization status, number and validity dates to health information systems (HIS) and practice management systems (PMS) Image storage: Receives and securely stores payer responses in an integrated document imaging system Reconciliation: Provides insights into authorization variations and helps resolve them, so staff can take proactive steps to prevent denials and appeals Integration with electronic health records and billing systems: Why it matters Providers often choose a prior authorizations platform that seamlessly integrates with existing Electronic Health Records (EHR) and billing systems for maximum efficiency. Solutions like Experian Health's automated prior authorization management tool, Authorizations, easily adapt to existing processes. This eliminates the need for a complete workflow overhaul and minimizes the learning curve for staff. Embracing prior authorization software for a more efficient revenue cycle Revenue cycle leaders who implement prior authorization automation strategies could see significant savings – $494 million annually as an industry, according to CAQH data.  Claims and revenue management processes are often complex and outdated, costing healthcare organizations time and money. High denial rates and slow reimbursements can hurt cash flow and get in the way of financial stability. Automating prior authorization can reduce claim denials, speed up reimbursements and improve the bottom line. Learn more about how Experian Health's electronic prior authorization software, Authorizations, uses automation to achieve greater consistency and efficiency for healthcare organizations. Learn more Contact us

Published: July 30, 2025 by Experian Health

Subscribe to our blog

Enter your name and email for the latest updates.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Subscribe to the Experian Health blog

Get the latest industry news and updates!
Subscribe