Healthcare Revenue Integrity Trends: Inpatient Denials and Denial Volume Down, Opportunities for Targeted Improvements Up
Insights from MDaudit reveal an uptick in Outpatient and Professional claims denials and denial volumes despite overall downward movement for Q1 2022. These healthcare revenue cycle management trends reflect the ongoing decline in inpatient volumes as payers, hospitals, and health systems seek out lower-cost options, and patients demand the greater convenience of outpatient care.
The decrease in denials and improved revenue capture also represents an important shift from the predicted fallout of 2021. The American Hospital Association pointed to hospital revenue losses of $53 billion in an optimistic scenario and as much as $122 billion on the more negative side.
The Q1 analysis compares findings from the Healthcare Auditing and Revenue Integrity: 2021 Benchmarking and Trends Report with 2022 insights from the same base of MDaudit users. The sample includes more than 50,000 providers and 900 facilities providing data to MDaudit to be used for auditing, charge, and denial analysis.
Downward Trends in Denials in Medical Billing
Positive Q1 trends reveal:
- 10% decrease in total initial denials (volume)
- 8% decrease in total initial denials ($)
- 33% decrease in COVID-19-related denials ($)
- 37% decrease in COVID-19-related hospital inpatient denials ($)
- 21% decrease in telehealth-related denials ($)
Notably, the drop in telehealth-related denials was anticipated as hospitals and health systems are now fully open, and utilization of these services has declined. Similarly, inpatient volumes are flat compared to 2021, which has driven down denials.
With the current inflationary trends and increasing focus on profitability and cost management within healthcare, the decrease in denials and volumes on the inpatient side augurs well for the hospitals and health systems. Furthermore, COVID-19 cases are increasingly seen on the outpatient side, driving down the dollar value of denials relative to 2021.
Denial Trouble
While overall and inpatient COVID-19 denial trends reveal a positive turn, the same cannot be said for outpatient and professional claims. COVID-19-related hospital outpatient denials increased by 10%, while professional denials were up by 13%.
Pent-up demand for elective surgery and other services is driving an increase in claims and, therefore, overall denials in this area. Furthermore, external audits are ramping up exponentially in specialty drugs, DME including implants, and complex COVID-19-related cases billed last year, while modifiers are under scrutiny for professional office visits.
This trend of increased denials is especially troubling for healthcare organizations hoping to protect margins, as outpatient claims – with lower costs than inpatient stays – are among their most profitable services.
Opportunities for Improvement
As staffing challenges and inflation erode healthcare organizations’ margins, denial management and ensuring payment on initial outpatient claims submissions is more important than ever.
The MDaudit analysis identified a 9.4% increase in lag days between initial claim submission and adjudication. A new approach to claims reviews and an increase in payer use of machine learning (ML) technologies may contribute to this number. Whereas payers once paid first and then audited, ML now allows plans to screen large volumes of claims, resulting in intense scrutiny prior to paying any claim that may be an anomaly.
A recent OIG study of Medicare Advantage Organizations (MAOs) found that “18% of payment denials fully met Medicare coverage rules and MAO payment policies. Because of these denials, payment was delayed or precluded for services that should have been paid.”
As payers become more sophisticated with advanced analytics and ML tools, hospitals and health systems must respond in kind to optimize revenue.
Proactive measures to avoid potential issues require the right infrastructure to support prospective and retrospective analytics. MDaudit uses a proprietary payer-centric rules engine to help healthcare organizations avoid potential problems by detecting anomalies in at-risk claims prior to submission for adjudication, reducing first-pass denial rates, and accelerating payment. Its powerful analytics discovery tool can also automate the previously manual process of mining thousands upon thousands of claims lines across denials to identify root causes and problematic revenue trends in healthcare for process improvement.
Request a demo to learn more about how MDaudit can help your audit team identify revenue and billing compliance risks and enable corrective action.
