A recent article states, “Hospitals and health systems are spending an estimated $19.7 billion per year to fight denied claims.” As we enter the second quarter of 2024, it’s crucial to examine the emerging patterns and shifts in healthcare claim denials, a critical aspect directly impacting patient care and organizational financial health. Here are five areas to observe regarding emerging healthcare claim denial trends.
5 Emerging Claim Denial Trends
- Rise of Artificial Intelligence (AI) in Claim Denial Management:
The integration of AI technologies is revolutionizing the insurance industry with payors using AI to lower their costs. This recently added component makes it critical for healthcare providers to adopt a similar approach to technology. AI-driven algorithms can analyze vast amounts of data to identify patterns, trends, and potential denial risks. By leveraging AI, healthcare organizations can proactively address denial issues, optimize coding practices, and enhance revenue cycle efficiency.
- Prior Authorization Challenges:
In 2024, prior authorization continues to pose challenges for healthcare providers. About 15 percent of commercial claims are initially denied, including many already pre-approved before treatment. To mitigate this trend, industry stakeholders are advocating for standardized authorization guidelines, streamlined workflows, and enhanced communication between providers and payors.
- High-cost claim denials:
Payors are intensifying their scrutiny of high-cost claims. Denied claims are more prevalent for higher-cost treatments, especially for billed charges related to high-cost drugs, implants, and complex diagnoses.
- Compliance with Regulatory Changes and Scrutiny:
The ever-evolving regulatory landscape significantly impacts claim denial trends. Recent areas of scrutiny include the Office of Inspector General’s (OIG’s) new work item to highly scrutinize sepsis-related billing and diabetes drugs.
- Addressing Documentation and Coding Errors:
Documentation and coding errors remain primary contributors to claim denials. In 2023 MDaudit data revealed that 56% of coders failed audits. Accurate and comprehensive documentation, coupled with adherence to coding guidelines, is essential to minimize denials. A strong auditing platform that promotes collaboration and communication between coders and auditors is imperative to maintain compliance and revenue integrity.
A Call to Action
Overturning denials is possible but comes with a high cost of rework and shifting resources away from other critical areas of the revenue cycle. Technology can help increase your first pass rate while mitigating current claim denial challenges by truly understanding the root cause of payor policy denials. Technology solutions are a large component of implementing a successful strategy.
In 2024, collaborative efforts between healthcare providers, payors, and technology vendors are gaining prominence in denial prevention strategies. Credible claim denial solutions will focus on fostering open communication, sharing data insights, and implementing proactive best practices, so stakeholders can identify denial trends and implement targeted interventions organization-wide.
A Claim Denial Solution Tailored to You
Adopting an effective claim denial management strategy tailored to your organization is critical for achieving positive patient outcomes and financial sustainability. Many healthcare organizations still rely on manual solutions and manpower to navigate today’s revenue challenges. It’s time for an innovative solution that models the same advanced tactics being used by government and commercial payors as well as third-party auditors.
