Unpacking claim denials in light of public backlash against payers

Transcript - Unpacking claim denials in light of public backlash against payers

Kelsey Waddill: Hello and welcome to Healthcare Strategies. I'm Kelsey Waddill, a podcast producer at TechTarget, and thank you for joining us for today's conversation. On December 4th, 2024, UnitedHealthcare CEO Brian Thompson was shot while he was on his way to an investor conference in New York City. Evidence found on the alleged shooter's person and near the site of the crime pointed to a potential motivation for the homicide: discontent with the nation's health insurance system. In the aftermath, intense public conversation flared on platforms across the U.S. as Americans voiced their own grievances with U.S. health insurers. The public outcry against payers reached a record pitch. Gallup reported that American's views on healthcare coverage reached the lowest point in over two decades in 2024, with less than half of all respondents characterizing the state of coverage as excellent or good. Today, I have the pleasure of chatting with my colleague Jacqueline LaPointe, executive editor at Xtelligent Healthcare about one of the issues driving this widespread discontent: claims denials. Jacqueline, thanks so much for coming on to Healthcare Strategies today.

Jacqueline LaPointe: Thank you for having me, Kelsey.

Waddill: Of course. So, we've set the stage here that claims denials are a major factor in the public's discontent with the country's healthcare coverage. A lot of folks have their own personal experience with a claim denial, but I was wondering if you can break down for us what are the major trends in claims denials on a national level? How bad is it really?

LaPointe: Well, how bad is it? Depends on who you ask, but I think like you said, the general consensus is it's pretty darn bad. Let's take a look at claim denial trends, but you have to bear in mind that this data isn't always complete. Obviously, Medicare, Medicaid, those are publicly run health insurance programs. They have a little bit more data because the government, as well as state governments, have to release that data, but private insurance companies don't. So, I wouldn't say what you hear is completely accurate, but based on the data we have, this is what we're looking at. So, if you want to break it down on a high level, public versus private, private insurers deny more. There was a 2023 analysis by KFF that found that people covered by private payers were more likely to have denied claims than those covered by public payers like Medicare and Medicaid. So, approximately 21% of people with employer-sponsored insurance and 28% of those with marketplace insurance reported denied claims versus 10% of people with Medicare and 12% of people with Medicaid.

LaPointe: And now hospitals and health systems and healthcare providers, generally, have the same consensus. A 2024 survey of these types of respondents was conducted by Premier Inc. They found that nearly 15% of medical claims submitted to private payers for reimbursement were initially denied. The rate was similar for Medicare Advantage at 15.7%, Managed Medicaid was 15.1%. So private payers seemed to be the issue when we talk about claims denials. Now, there are some companies that I would say do worse than others. Try not to cast any judgment here, but based on some of the analysis, some insurance companies deny more often than others do.

LaPointe: An analysis by ValuePenguin -- and again, please keep in mind that this data is a ballpark estimate in terms of what these private companies are doing --But an analysis by ValuePenguin found that AvMed and UnitedHealthcare tied for the highest denial rate. Both of those companies denied about a third of in-network claims for plans sold on the marketplace in 2023, respectively. They identified some other insurance companies with high claim denial rates. Those included Sendero Health Plans with 28%, Molina Healthcare 26%, Community First Health Plans 26%. Other major insurance companies included in that analysis were Anthem with a 23% denial rate, Medica with a 23% denial rate, Aetna with 22%. So, this is just what the statistics are telling us about the state of claim denials, particularly from the payer perspective.

Waddill: Thanks for that overview, and I think that really gives a good perspective on how these trends might differ across the health insurance landscape, which is something that's really important to keep in mind. A lot of times we just, especially people who are not necessarily in the healthcare space or working with health insurers, might just view it all as one big system, but actually it's broken down into these two parts, especially with the public and the private.

LaPointe: I think there's something to note there as well is that yes, it's public versus private, but there's also the federal government versus state governments when you're talking Medicare, Medicaid, but also these insurance companies that operate very locally as well. So yes, you may have someone like United where you're seeing them across the country, but they're negotiating with providers at a local level. And then you also have smaller health plans. So, there's a lot of variation in what happens. There's a lot of variations in payer-provider contracts, which are going to dictate claim rules and requirements for reimbursement or if you don't meet those of denial. So, there's a lot going on here.

Waddill: Makes sense. And then these denials that are happening, they obviously have downstream effects, especially on the patients who often are going to end up paying more out of pocket if a health insurer rejects their claim, and they also affect providers. I think you touched on this a little bit there, of the providers that these insurers are contracting with or not who rely on fulfilled claim payments for their paycheck. Talk to us about what are the downstream effects for other stakeholders when insurance companies are denying so many claims?

LaPointe: Absolutely. I'll take the provider aspect first and then we'll move on to the patient consumer one. Just because providers, these are the people I talk to day in and day out with my job, but providers are waiting on reimbursements to keep their lights on. And when you get a denied claim, the worst-case scenario is you lose revenue for whatever services you provided to a patient. Oftentimes you can rework a claim. So just because an insurer initially denies a claim doesn't mean a provider's not going to get reimbursement. But this can lead to a lot of claim delays. I'm just going to talk about the revenue aspect right now, and that's just purely on the revenue side. The problem is most providers simply don't have the financial resources right now to wait for reimbursement or to ultimately not get paid.

LaPointe: I just saw some new data coming out from the healthcare consulting firm, Kaufman Hall. It shows that physician payment and productivity actually rose in the last quarter of 2024, which is a great sign because as everyone knows, the pandemic created some very hard economic conditions. Healthcare specifically, I think is still stabilizing from that. So it's a good sign that payment and productivity are up. However, experts at the firm are still concerned about reimbursements. They're actually saying that fee-for-service is no longer sustainable. The problem is providers are generating less revenue per unit of work, and on the hospital side, there's still a lot of stabilization as well. Hospitals are still paying more for supplies and labor, especially compared to pre-2020. They're also battling pretty significant workforce challenges including shortages. I think another big thing to note is that Kaufman Hall found that hospital bad debt and charity care levels have risen in 2024. One of the drivers that they found was increased rates of coverage denials by payers.

LaPointe: So, it really is a huge problem for providers, and I think sometimes in light of what happened with the UnitedHealth CEO, we're hearing a lot more about the discontent with the healthcare system. It may be hard for, especially consumers to have sympathy for hospitals and health systems. But when providers don't get paid, that trickles down to the consumers. Consumers are already being hit with claim denials, but I think it's a harder hit now because they're on the hook for the cost of care more than they have been.

LaPointe: Healthcare is a business. When somebody already pays for more care because of rising premiums and high deductibles, it's extremely frustrating and potentially bankrupting when these claim denials start to affect the consumer. I think it's interesting, too, because medical debt is a leading cause of bankruptcy in the US right now. When those costs trickle down to consumers, it's already an issue. I think the other aspect of that is when providers don't get their revenue, they have to more aggressively go after their patients for those payments. There's already a rise in patient financial responsibility providers are responding to that, but in these more extreme cases where they're not getting the revenue at all, there have been some aggressive collection strategies being put in place.

LaPointe: I'm talking wage garnishing, health systems putting liens on people's homes, all because they aren't getting the patient financial responsibility. So, there's a lot of work being done, especially at the state level, to combat this type of aggressive action. But this is something that's basically when you get a claim denial from your insurer, it's being trickled down to all the stakeholders involved.

Waddill: It really sets off a chain reaction, and it's tough, too, because we're talking about claim denials as a bulk right now. Some claim denials are well within the right of a payer. Like you said, healthcare is a business in the United States. Whether or not it should be is a question for a different podcast episode, but at the current state, it is. And as a result, we have these systems in place in the health insurance world that set up expectations of what an insurer will cover and what they won't. There's a benefit structure that differs per payer, and different payers, like you mentioned before, on a local level, might contract with different providers to have them in the network. That is well within their rights as a company. But those trends you cited at the top of the episode for denial rates are very high. So, I guess my question is, how do we differentiate between what kinds of denials are appropriate and what kinds of denials are inappropriate?

LaPointe: Absolutely. And Kelsey, like you said, denials management, it's just a small blip on something we can talk about what healthcare should be versus what it is, especially in the US. Absolutely. I think we can back up and talk about top denial reasons a little bit more. I think I'll shed some more light on the "appropriateness." I use air quotes there, of claim denials. So, there is a lot of survey data, there's a lot of anecdotal data coming up, but the most common reasons for claim denials are typically pretty administrative. We're talking incorrect or missing information on claims, coding errors, lack of prior authorization, eligibility issues, duplicate claims submitted and timely filing. These can be pretty easy fixes.

LaPointe: As I mentioned before, just because you got a claim denial doesn't mean you're not going to get paid at all. I say that from a provider perspective. Providers can typically rework claims with these issues, with these claim denial reasons and resubmit them for reimbursement. Still, that's a very costly project to take on. It takes away from other aspects of the revenue cycle. So, it's still a problem, but it's a problem that can be fixed pretty easily compared to some of the other claim denial reasons. So, we can take that and see it from the administrative side. Going back to the administrative stuff, so like I said, it's a very costly work to rework a claim, to appeal a claim denial. It takes away from other aspects of the revenue cycle and providers are really feeling the burn from that.

LaPointe: According to Experian Health's State of Claims 2024 report, incomplete and inaccurate data collection and authorizations were actually the more problematic issues related to claim denials compared to other top reasons. The other top reasons included claim errors, staff shortages, poor training, missing coverage, payer policies, and late submissions, just to name a couple. So yes, it may be an easy fix, but it's still extremely burdensome for providers to appeal these and fix these. I think to note, too, prior authorizations are a particular pain point for healthcare providers. American Medical Association has really been advocating for some serious reform around prior authorizations, and we're seeing lawmakers are also starting to target this to note some major data points.

LaPointe: Most physicians say that prior authorization continues to have a negative impact on patient outcomes and employee productivity, and this is from the AMA. Nearly a quarter of physicians also said that prior authorizations led to an adverse event for a patient, while more than nine in 10 reported prior authorization as having a negative impact on patient outcomes and delays in access to care. I think what's especially pertinent here, too, is that over a quarter of physicians in the AMA survey reported prior authorization requests are often or always denied. So again, we're talking some pretty complex administrative stuff going on and it's leading to a lot of claim denials. And, then, as I mentioned before, there's a little bit more of the administrative stuff, but there are other common reasons for claim denials I think question the idea of appropriateness.

LaPointe: Now those reasons include non-covered services, medical necessity and out-of-network provider. In my mind, these denials make a lot more sense when you're thinking, "Oh, why would a claim be denied?" There's a contract between a plan and a provider. Something broke down in that process, whether you saw an out-of-network provider that would lead to a claim denial. These contracts define what is medically necessary. I want to say clearly define what is medically necessary, but I think that's something we can touch on in a little bit, is that-

Waddill: Not always as clear as it could be.

LaPointe: Exactly. But if you don't follow the contract, then there's a claim denial.

Waddill: Right.

LaPointe: Makes kind of sense. Now, is that appropriate? Maybe, maybe not. I think one might argue that the sheer complexity of the healthcare system, including those contracts, hinders one's ability to really understand how to navigate the system. So, finding an in-network provider or understanding what medical necessity is, it makes it really difficult to stay within the parameters set by payers and providers. I think, too, providers have an issue because while you may have a contract with your plan, they are ultimately the ones who were trained to provide healthcare, the clinical care. So, when you're having a contract trying to define what medical necessity is, a lot of physicians do not appreciate that.

Waddill: I'm sure. You bring up a lot of really great points there, and some of which I think we could spin off into a whole separate episode, especially when it comes to the ethical question of appropriateness within the healthcare insurance world. But I did want to zoom in a bit on you mentioned prior authorizations and how they are a specific pain point for providers. I think that is an interesting bridge into the subject of artificial intelligence. We could probably take a piece of every topic on our podcast these days and spin it off into an artificial intelligence conversation. And I don't want to overdo it on just tying everything back to artificial intelligence, but I do think it actually plays a significant role in the environment that we find ourselves in right now in terms of claims denials, and specifically with prior authorizations.

Waddill: I've been seeing payers use artificial intelligence to good effect for things like member service programs and predictive analytics. But when it comes to prior authorizations, the tool has definitely sent some shockwaves through the healthcare system. For example, and I think you might be able to dig more into this and expand on this example, but I know a class action lawsuit went against UnitedHealth Group alleging that the company pressured its staff to use an AI algorithm called nH Predict to reject Medicare Advantage beneficiaries rehabilitative care claims. And according to a note from certain congress members to CMS on the topic of the lawsuit and concerns around Medicare Advantage plans use of AI and prior authorization in general.

Waddill: UnitedHealth Group allegedly, according to this letter, "set a goal for employees to keep patient rehabilitation stays within 1% of the length of stay predicted by nH Predict." Which is very rigid to say the least. Essentially, what I'm getting at here is that artificial intelligence is being employed in these situations in some ways that are causing a lot of questions, causing a lot of concern amongst the healthcare stakeholders and even amongst lawmakers. So, I was just curious what you have heard about the use of these artificial intelligence tools in the rev cycle management space to manage these claims and what effect that's had?

LaPointe: I think it's interesting, too. Yes, we can talk about UnitedHealth Group, they're in the news a lot lately, but it's not just them. I think it's also worthwhile to add that there was a senate committee report that actually found United, Humana and CVS Health turned down a quarter of all requests for post-acute care among their Medicare Advantage beneficiaries, and the companies used AI to do it. So, it's worthwhile to know payers may be using unregulated AI algorithms to predict when to cut off beneficiaries for treatment. And again, that gets to the idea of who's in charge of healthcare, someone's personal healthcare. I think that's creating a lot of tension with the use of AI here. Yes, it's being used for an administrative process, which we've seen that AI is best used for that right now.

LaPointe: I think the best use cases are on the administrative side of healthcare because I think clearly there's some questions about its clinical applications. We're talking people's lives versus getting paid. A little bit different, but I think we're seeing here where that crosses it. When payers use some of these algorithms and AI applications for claim denials, it is having a real impact on people's clinical care.

LaPointe: So, I think that is just something to note, but I think AI is definitely making a splash in healthcare and when it comes to claims denials management, but not everyone wants to get wet. There's a lot of potential for AI and automation in claims denials management, especially on the provider side of things. We're talking a highly repeatable process where technologies like RPA, robotic process automation, have made a big difference and we're talking about scanning contracts, making a list of rules, and applying them to a claim. That way providers can identify potential issues that might lead to a claim denial. Actually, billing and coding have been touted as one of the biggest use cases for generative AI, and that's obviously something that's on everyone's mind right now. How can we use gen AI in healthcare? So I think there's a lot of opportunity, providers just aren't taking it.

LaPointe: That Experian report I mentioned earlier, it found that nearly half of providers still reviewed their denials manually. I think it's worth noting too that 54% of people said that their healthcare organization's technology is sufficient to address existing revenue cycle management demands. So, we're talking about 50% of people working within healthcare organizations don't think their technology is good enough for some of the rev cycle management aspects of care, including denials management. So, I think there's a huge gap, there's a huge opportunity, but there's not a lot of adoption, and I think there's a lot going on too. This is a huge data project when it comes down to it that perhaps healthcare organizations just don't have the capacity to take on, but even when they do, it's still extremely complex.

LaPointe: Again, those payer-provider contracts have a lot going on within them. Technology has a huge opportunity to resolve some of the issues, especially when you think about some of the common claim denial issues are missing information. Well, maybe if we apply some AI to registration processes, we could improve that, but again, it takes a lot to adopt these sorts of technologies, especially within a provider organization. That being said, this could be a way to reduce some of the problems with claim denials. I don't think that the spotlight that's on claim denials right now is going to dim because provider organizations implement AI and other automation tools. I think there's still going to be that huge ethical issue around it.

LaPointe: There's going to be a huge issue around consumers feeling the effects of it, but perhaps there could be some way to resolve at least part of the problem with claim denials if both sides of the coin, providers and payers, can implement some technology to lighten the load of claims management, denials management.

Waddill: Once again, I think it's important to note that this is not a black-and-white issue across the board. A lot of times when we talk about artificial intelligence's use in rev cycle management, in claims management, when you're talking on the payer side, we've seen some ways that that can be misused. But when we're talking about the provider side, there's a lot of good evidence for ways that it can be effective. And even within each, you're going to have varying experiences. And I do think that's a testament to the fact that we're all still figuring out what AI is capable of right now. And also, it's evidence of the fact that we are also still figuring out what the guardrails around AI will be, and those have not been clearly defined, at least not perhaps as strongly as they could be.

LaPointe: I think, too, we're seeing a lot of news lines about AI being used to deny people care, and I'm sure there's truth to a bunch of it, and there's, like I said, the senate report. You've seen the news articles, but at the same time, why wouldn't payers use AI to help with some of the claims management stuff? Now, I'm not saying to purposely deny people the care they need, but there's a huge opportunity for payers to use this type of technology to get rid of that extremely burdensome administrative task of looking through claims, trying to figure out if they should be approved or denied, how much to get paid. The claims management on both sides, providers and payers, is extremely administrative, and a lot of it has a lot of repeatable processes that could really benefit from automation.

Waddill: Definitely. I think it always comes down to: How are we implementing it? There's so much that we could glean from leveraging AI, but it's still going to be up to the humans to make the final call on how to best implement it. And we're seeing examples across the board of various ways that people are trying to do that, and I totally agree. It's within the right of any organization to see if they can reduce the unnecessary burden using these technologies as long as they do it ethically and well.

LaPointe: I think too, just to add one more thing there, is that you have to look at where we are in the state of adoption. AI is still relatively new with some of these stuff, especially with something like generative AI. With some of these AI technologies, we're still in the process of learning the lessons learned from everything, right? So perhaps we can improve upon it in the future. Right now, I think we're at the point of adoption where we're very clearly seeing some of the issues around using AI for claims management.

Waddill: Just to wrap us up here, bringing us back to the original kind of outcry that has occurred, the historic sort of rallying that has happened across the US of consumers and providers as well, speaking out against claims denial practices. Personally, I haven't seen much movement in the regulatory side or in the health insurance space and response. I know UnitedHealthcare did make a response and talked about its own claims denial rates and offered its own data on that. However, on a larger scale, I'm still looking to see what is going to happen, if anything, as a result of this kind of movement.

Waddill: So, I know it's a big question to end on. I know, as we always say, you don't have a crystal ball. We're not expecting you to tell the future, but what do you think will have to change maybe in the health insurance space to turn this claims management situation around and bring us to a better state of affairs?

LaPointe: Damage control. There's a lot that health payers are going to have to... I think that goes along, too, with the idea of the popularity of high-deductible health plans, that rise in patient financial responsibility. I think, traditionally, it could have been the fight between payers and providers, which is something that most consumers or patients weren't really privy to. But now, since this has come into the public light so much more, I think just the idea of transparency is going to be key not only for providers but also for consumers. And that's something that's been really popular in healthcare right now. We're talking hospital price transparency requirements, payer price transparency requirements. I think there's just going to be a lot more conversation around, there needs to be more on claim denial numbers, even into the contracting aspect of it.

LaPointe: We see the CMS price transparency requirements that consumers have a right to know the contracted, negotiated price from third-party payers and their provider partners. So, I think there's going to be a lot to do with getting that information out there, and I think the next step will be how to make it digestible for consumers. I think perhaps that'll help to get to that better state of affairs like you mentioned earlier, just when we can all understand what's going on. I think the other aspect of that, relatedly, is the simplification of the administrative side of healthcare. We all know that when you get a medical bill in the mail, one, you don't even know if it's a medical bill. It's very hard to determine how much you owe, how much has been paid to the provider. I work in the healthcare reporting space and sometimes when I get a bill, I still don't even know, and I am supposed to break some of these things down for a living. They're extremely complex. I think the idea of simplifying the medical billing process is going to be also a huge priority moving forward in the regulatory space as well as within individual payer organizations and individual provider organizations. And again, I think it's just about trickling it down to the consumer to make this information digestible. They still might not like what they hear, but at least they can understand where it's coming from.

Waddill: There's been a long, long effort towards increasing patient education, and I think that effort is absolutely not in vain, that it's very important. But I think as you're indicating here, on the flip side, we also have to make it easier for patients to understand.

LaPointe: I think you make a good point that it's about making the path clearer to achieve your mission.

Waddill: Here's to hopefully gaining more transparency in the future. And at the very least, you and I will be talking about these things to hopefully shed some light and help people gain some more transparency as we are able. Jacqui, thank you for coming on to the episode today to share a bit about this.

LaPointe: And thank you for having me.

Waddill: And thank you, listener, for tuning in. If you liked what you heard, head over to Spotify or Apple and drop us a review. We'll be choosing some of our reviews to be read on the show in appreciation, so keep listening through to the end because you might get name-dropped. See you next time.

Unpacking claim denials in light of public backlash against payers

Kelsey Waddill: Hello and welcome to Healthcare Strategies. I'm Kelsey Waddill, a podcast producer at TechTarget, and thank you for joining us for today's conversation. On December 4th, 2024, UnitedHealthcare CEO Brian Thompson was shot while he was on his way to an investor conference in New York City. Evidence found on the alleged shooter's person and near the site of the crime pointed to a potential motivation for the homicide: discontent with the nation's health insurance system. In the aftermath, intense public conversation flared on platforms across the U.S. as Americans voiced their own grievances with U.S. health insurers. The public outcry against payers reached a record pitch. Gallup reported that American's views on healthcare coverage reached the lowest point in over two decades in 2024, with less than half of all respondents characterizing the state of coverage as excellent or good. Today, I have the pleasure of chatting with my colleague Jacqueline LaPointe, executive editor at Xtelligent Healthcare about one of the issues driving this widespread discontent: claims denials. Jacqueline, thanks so much for coming on to Healthcare Strategies today.

Jacqueline LaPointe: Thank you for having me, Kelsey.

Waddill: Of course. So, we've set the stage here that claims denials are a major factor in the public's discontent with the country's healthcare coverage. A lot of folks have their own personal experience with a claim denial, but I was wondering if you can break down for us what are the major trends in claims denials on a national level? How bad is it really?

LaPointe: Well, how bad is it? Depends on who you ask, but I think like you said, the general consensus is it's pretty darn bad. Let's take a look at claim denial trends, but you have to bear in mind that this data isn't always complete. Obviously, Medicare, Medicaid, those are publicly run health insurance programs. They have a little bit more data because the government, as well as state governments, have to release that data, but private insurance companies don't. So, I wouldn't say what you hear is completely accurate, but based on the data we have, this is what we're looking at. So, if you want to break it down on a high level, public versus private, private insurers deny more. There was a 2023 analysis by KFF that found that people covered by private payers were more likely to have denied claims than those covered by public payers like Medicare and Medicaid. So, approximately 21% of people with employer-sponsored insurance and 28% of those with marketplace insurance reported denied claims versus 10% of people with Medicare and 12% of people with Medicaid.

LaPointe: And now hospitals and health systems and healthcare providers, generally, have the same consensus. A 2024 survey of these types of respondents was conducted by Premier Inc. They found that nearly 15% of medical claims submitted to private payers for reimbursement were initially denied. The rate was similar for Medicare Advantage at 15.7%, Managed Medicaid was 15.1%. So private payers seemed to be the issue when we talk about claims denials. Now, there are some companies that I would say do worse than others. Try not to cast any judgment here, but based on some of the analysis, some insurance companies deny more often than others do.

LaPointe: An analysis by ValuePenguin -- and again, please keep in mind that this data is a ballpark estimate in terms of what these private companies are doing --But an analysis by ValuePenguin found that AvMed and UnitedHealthcare tied for the highest denial rate. Both of those companies denied about a third of in-network claims for plans sold on the marketplace in 2023, respectively. They identified some other insurance companies with high claim denial rates. Those included Sendero Health Plans with 28%, Molina Healthcare 26%, Community First Health Plans 26%. Other major insurance companies included in that analysis were Anthem with a 23% denial rate, Medica with a 23% denial rate, Aetna with 22%. So, this is just what the statistics are telling us about the state of claim denials, particularly from the payer perspective.

Waddill: Thanks for that overview, and I think that really gives a good perspective on how these trends might differ across the health insurance landscape, which is something that's really important to keep in mind. A lot of times we just, especially people who are not necessarily in the healthcare space or working with health insurers, might just view it all as one big system, but actually it's broken down into these two parts, especially with the public and the private.

LaPointe: I think there's something to note there as well is that yes, it's public versus private, but there's also the federal government versus state governments when you're talking Medicare, Medicaid, but also these insurance companies that operate very locally as well. So yes, you may have someone like United where you're seeing them across the country, but they're negotiating with providers at a local level. And then you also have smaller health plans. So, there's a lot of variation in what happens. There's a lot of variations in payer-provider contracts, which are going to dictate claim rules and requirements for reimbursement or if you don't meet those of denial. So, there's a lot going on here.

Waddill: Makes sense. And then these denials that are happening, they obviously have downstream effects, especially on the patients who often are going to end up paying more out of pocket if a health insurer rejects their claim, and they also affect providers. I think you touched on this a little bit there, of the providers that these insurers are contracting with or not who rely on fulfilled claim payments for their paycheck. Talk to us about what are the downstream effects for other stakeholders when insurance companies are denying so many claims?

LaPointe: Absolutely. I'll take the provider aspect first and then we'll move on to the patient consumer one. Just because providers, these are the people I talk to day in and day out with my job, but providers are waiting on reimbursements to keep their lights on. And when you get a denied claim, the worst-case scenario is you lose revenue for whatever services you provided to a patient. Oftentimes you can rework a claim. So just because an insurer initially denies a claim doesn't mean a provider's not going to get reimbursement. But this can lead to a lot of claim delays. I'm just going to talk about the revenue aspect right now, and that's just purely on the revenue side. The problem is most providers simply don't have the financial resources right now to wait for reimbursement or to ultimately not get paid.

LaPointe: I just saw some new data coming out from the healthcare consulting firm, Kaufman Hall. It shows that physician payment and productivity actually rose in the last quarter of 2024, which is a great sign because as everyone knows, the pandemic created some very hard economic conditions. Healthcare specifically, I think is still stabilizing from that. So it's a good sign that payment and productivity are up. However, experts at the firm are still concerned about reimbursements. They're actually saying that fee-for-service is no longer sustainable. The problem is providers are generating less revenue per unit of work, and on the hospital side, there's still a lot of stabilization as well. Hospitals are still paying more for supplies and labor, especially compared to pre-2020. They're also battling pretty significant workforce challenges including shortages. I think another big thing to note is that Kaufman Hall found that hospital bad debt and charity care levels have risen in 2024. One of the drivers that they found was increased rates of coverage denials by payers.

LaPointe: So, it really is a huge problem for providers, and I think sometimes in light of what happened with the UnitedHealth CEO, we're hearing a lot more about the discontent with the healthcare system. It may be hard for, especially consumers to have sympathy for hospitals and health systems. But when providers don't get paid, that trickles down to the consumers. Consumers are already being hit with claim denials, but I think it's a harder hit now because they're on the hook for the cost of care more than they have been.

LaPointe: Healthcare is a business. When somebody already pays for more care because of rising premiums and high deductibles, it's extremely frustrating and potentially bankrupting when these claim denials start to affect the consumer. I think it's interesting, too, because medical debt is a leading cause of bankruptcy in the US right now. When those costs trickle down to consumers, it's already an issue. I think the other aspect of that is when providers don't get their revenue, they have to more aggressively go after their patients for those payments. There's already a rise in patient financial responsibility providers are responding to that, but in these more extreme cases where they're not getting the revenue at all, there have been some aggressive collection strategies being put in place.

LaPointe: I'm talking wage garnishing, health systems putting liens on people's homes, all because they aren't getting the patient financial responsibility. So, there's a lot of work being done, especially at the state level, to combat this type of aggressive action. But this is something that's basically when you get a claim denial from your insurer, it's being trickled down to all the stakeholders involved.

Waddill: It really sets off a chain reaction, and it's tough, too, because we're talking about claim denials as a bulk right now. Some claim denials are well within the right of a payer. Like you said, healthcare is a business in the United States. Whether or not it should be is a question for a different podcast episode, but at the current state, it is. And as a result, we have these systems in place in the health insurance world that set up expectations of what an insurer will cover and what they won't. There's a benefit structure that differs per payer, and different payers, like you mentioned before, on a local level, might contract with different providers to have them in the network. That is well within their rights as a company. But those trends you cited at the top of the episode for denial rates are very high. So, I guess my question is, how do we differentiate between what kinds of denials are appropriate and what kinds of denials are inappropriate?

LaPointe: Absolutely. And Kelsey, like you said, denials management, it's just a small blip on something we can talk about what healthcare should be versus what it is, especially in the US. Absolutely. I think we can back up and talk about top denial reasons a little bit more. I think I'll shed some more light on the "appropriateness." I use air quotes there, of claim denials. So, there is a lot of survey data, there's a lot of anecdotal data coming up, but the most common reasons for claim denials are typically pretty administrative. We're talking incorrect or missing information on claims, coding errors, lack of prior authorization, eligibility issues, duplicate claims submitted and timely filing. These can be pretty easy fixes.

LaPointe: As I mentioned before, just because you got a claim denial doesn't mean you're not going to get paid at all. I say that from a provider perspective. Providers can typically rework claims with these issues, with these claim denial reasons and resubmit them for reimbursement. Still, that's a very costly project to take on. It takes away from other aspects of the revenue cycle. So, it's still a problem, but it's a problem that can be fixed pretty easily compared to some of the other claim denial reasons. So, we can take that and see it from the administrative side. Going back to the administrative stuff, so like I said, it's a very costly work to rework a claim, to appeal a claim denial. It takes away from other aspects of the revenue cycle and providers are really feeling the burn from that.

LaPointe: According to Experian Health's State of Claims 2024 report, incomplete and inaccurate data collection and authorizations were actually the more problematic issues related to claim denials compared to other top reasons. The other top reasons included claim errors, staff shortages, poor training, missing coverage, payer policies, and late submissions, just to name a couple. So yes, it may be an easy fix, but it's still extremely burdensome for providers to appeal these and fix these. I think to note, too, prior authorizations are a particular pain point for healthcare providers. American Medical Association has really been advocating for some serious reform around prior authorizations, and we're seeing lawmakers are also starting to target this to note some major data points.

LaPointe: Most physicians say that prior authorization continues to have a negative impact on patient outcomes and employee productivity, and this is from the AMA. Nearly a quarter of physicians also said that prior authorizations led to an adverse event for a patient, while more than nine in 10 reported prior authorization as having a negative impact on patient outcomes and delays in access to care. I think what's especially pertinent here, too, is that over a quarter of physicians in the AMA survey reported prior authorization requests are often or always denied. So again, we're talking some pretty complex administrative stuff going on and it's leading to a lot of claim denials. And, then, as I mentioned before, there's a little bit more of the administrative stuff, but there are other common reasons for claim denials I think question the idea of appropriateness.

LaPointe: Now those reasons include non-covered services, medical necessity and out-of-network provider. In my mind, these denials make a lot more sense when you're thinking, "Oh, why would a claim be denied?" There's a contract between a plan and a provider. Something broke down in that process, whether you saw an out-of-network provider that would lead to a claim denial. These contracts define what is medically necessary. I want to say clearly define what is medically necessary, but I think that's something we can touch on in a little bit, is that-

Waddill: Not always as clear as it could be.

LaPointe: Exactly. But if you don't follow the contract, then there's a claim denial.

Waddill: Right.

LaPointe: Makes kind of sense. Now, is that appropriate? Maybe, maybe not. I think one might argue that the sheer complexity of the healthcare system, including those contracts, hinders one's ability to really understand how to navigate the system. So, finding an in-network provider or understanding what medical necessity is, it makes it really difficult to stay within the parameters set by payers and providers. I think, too, providers have an issue because while you may have a contract with your plan, they are ultimately the ones who were trained to provide healthcare, the clinical care. So, when you're having a contract trying to define what medical necessity is, a lot of physicians do not appreciate that.

Waddill: I'm sure. You bring up a lot of really great points there, and some of which I think we could spin off into a whole separate episode, especially when it comes to the ethical question of appropriateness within the healthcare insurance world. But I did want to zoom in a bit on you mentioned prior authorizations and how they are a specific pain point for providers. I think that is an interesting bridge into the subject of artificial intelligence. We could probably take a piece of every topic on our podcast these days and spin it off into an artificial intelligence conversation. And I don't want to overdo it on just tying everything back to artificial intelligence, but I do think it actually plays a significant role in the environment that we find ourselves in right now in terms of claims denials, and specifically with prior authorizations.

Waddill: I've been seeing payers use artificial intelligence to good effect for things like member service programs and predictive analytics. But when it comes to prior authorizations, the tool has definitely sent some shockwaves through the healthcare system. For example, and I think you might be able to dig more into this and expand on this example, but I know a class action lawsuit went against UnitedHealth Group alleging that the company pressured its staff to use an AI algorithm called nH Predict to reject Medicare Advantage beneficiaries rehabilitative care claims. And according to a note from certain congress members to CMS on the topic of the lawsuit and concerns around Medicare Advantage plans use of AI and prior authorization in general.

Waddill: UnitedHealth Group allegedly, according to this letter, "set a goal for employees to keep patient rehabilitation stays within 1% of the length of stay predicted by nH Predict." Which is very rigid to say the least. Essentially, what I'm getting at here is that artificial intelligence is being employed in these situations in some ways that are causing a lot of questions, causing a lot of concern amongst the healthcare stakeholders and even amongst lawmakers. So, I was just curious what you have heard about the use of these artificial intelligence tools in the rev cycle management space to manage these claims and what effect that's had?

LaPointe: I think it's interesting, too. Yes, we can talk about UnitedHealth Group, they're in the news a lot lately, but it's not just them. I think it's also worthwhile to add that there was a senate committee report that actually found United, Humana and CVS Health turned down a quarter of all requests for post-acute care among their Medicare Advantage beneficiaries, and the companies used AI to do it. So, it's worthwhile to know payers may be using unregulated AI algorithms to predict when to cut off beneficiaries for treatment. And again, that gets to the idea of who's in charge of healthcare, someone's personal healthcare. I think that's creating a lot of tension with the use of AI here. Yes, it's being used for an administrative process, which we've seen that AI is best used for that right now.

LaPointe: I think the best use cases are on the administrative side of healthcare because I think clearly there's some questions about its clinical applications. We're talking people's lives versus getting paid. A little bit different, but I think we're seeing here where that crosses it. When payers use some of these algorithms and AI applications for claim denials, it is having a real impact on people's clinical care.

LaPointe: So, I think that is just something to note, but I think AI is definitely making a splash in healthcare and when it comes to claims denials management, but not everyone wants to get wet. There's a lot of potential for AI and automation in claims denials management, especially on the provider side of things. We're talking a highly repeatable process where technologies like RPA, robotic process automation, have made a big difference and we're talking about scanning contracts, making a list of rules, and applying them to a claim. That way providers can identify potential issues that might lead to a claim denial. Actually, billing and coding have been touted as one of the biggest use cases for generative AI, and that's obviously something that's on everyone's mind right now. How can we use gen AI in healthcare? So I think there's a lot of opportunity, providers just aren't taking it.

LaPointe: That Experian report I mentioned earlier, it found that nearly half of providers still reviewed their denials manually. I think it's worth noting too that 54% of people said that their healthcare organization's technology is sufficient to address existing revenue cycle management demands. So, we're talking about 50% of people working within healthcare organizations don't think their technology is good enough for some of the rev cycle management aspects of care, including denials management. So, I think there's a huge gap, there's a huge opportunity, but there's not a lot of adoption, and I think there's a lot going on too. This is a huge data project when it comes down to it that perhaps healthcare organizations just don't have the capacity to take on, but even when they do, it's still extremely complex.

LaPointe: Again, those payer-provider contracts have a lot going on within them. Technology has a huge opportunity to resolve some of the issues, especially when you think about some of the common claim denial issues are missing information. Well, maybe if we apply some AI to registration processes, we could improve that, but again, it takes a lot to adopt these sorts of technologies, especially within a provider organization. That being said, this could be a way to reduce some of the problems with claim denials. I don't think that the spotlight that's on claim denials right now is going to dim because provider organizations implement AI and other automation tools. I think there's still going to be that huge ethical issue around it.

LaPointe: There's going to be a huge issue around consumers feeling the effects of it, but perhaps there could be some way to resolve at least part of the problem with claim denials if both sides of the coin, providers and payers, can implement some technology to lighten the load of claims management, denials management.

Waddill: Once again, I think it's important to note that this is not a black-and-white issue across the board. A lot of times when we talk about artificial intelligence's use in rev cycle management, in claims management, when you're talking on the payer side, we've seen some ways that that can be misused. But when we're talking about the provider side, there's a lot of good evidence for ways that it can be effective. And even within each, you're going to have varying experiences. And I do think that's a testament to the fact that we're all still figuring out what AI is capable of right now. And also, it's evidence of the fact that we are also still figuring out what the guardrails around AI will be, and those have not been clearly defined, at least not perhaps as strongly as they could be.

LaPointe: I think, too, we're seeing a lot of news lines about AI being used to deny people care, and I'm sure there's truth to a bunch of it, and there's, like I said, the senate report. You've seen the news articles, but at the same time, why wouldn't payers use AI to help with some of the claims management stuff? Now, I'm not saying to purposely deny people the care they need, but there's a huge opportunity for payers to use this type of technology to get rid of that extremely burdensome administrative task of looking through claims, trying to figure out if they should be approved or denied, how much to get paid. The claims management on both sides, providers and payers, is extremely administrative, and a lot of it has a lot of repeatable processes that could really benefit from automation.

Waddill: Definitely. I think it always comes down to: How are we implementing it? There's so much that we could glean from leveraging AI, but it's still going to be up to the humans to make the final call on how to best implement it. And we're seeing examples across the board of various ways that people are trying to do that, and I totally agree. It's within the right of any organization to see if they can reduce the unnecessary burden using these technologies as long as they do it ethically and well.

LaPointe: I think too, just to add one more thing there, is that you have to look at where we are in the state of adoption. AI is still relatively new with some of these stuff, especially with something like generative AI. With some of these AI technologies, we're still in the process of learning the lessons learned from everything, right? So perhaps we can improve upon it in the future. Right now, I think we're at the point of adoption where we're very clearly seeing some of the issues around using AI for claims management.

Waddill: Just to wrap us up here, bringing us back to the original kind of outcry that has occurred, the historic sort of rallying that has happened across the US of consumers and providers as well, speaking out against claims denial practices. Personally, I haven't seen much movement in the regulatory side or in the health insurance space and response. I know UnitedHealthcare did make a response and talked about its own claims denial rates and offered its own data on that. However, on a larger scale, I'm still looking to see what is going to happen, if anything, as a result of this kind of movement.

Waddill: So, I know it's a big question to end on. I know, as we always say, you don't have a crystal ball. We're not expecting you to tell the future, but what do you think will have to change maybe in the health insurance space to turn this claims management situation around and bring us to a better state of affairs?

LaPointe: Damage control. There's a lot that health payers are going to have to... I think that goes along, too, with the idea of the popularity of high-deductible health plans, that rise in patient financial responsibility. I think, traditionally, it could have been the fight between payers and providers, which is something that most consumers or patients weren't really privy to. But now, since this has come into the public light so much more, I think just the idea of transparency is going to be key not only for providers but also for consumers. And that's something that's been really popular in healthcare right now. We're talking hospital price transparency requirements, payer price transparency requirements. I think there's just going to be a lot more conversation around, there needs to be more on claim denial numbers, even into the contracting aspect of it.

LaPointe: We see the CMS price transparency requirements that consumers have a right to know the contracted, negotiated price from third-party payers and their provider partners. So, I think there's going to be a lot to do with getting that information out there, and I think the next step will be how to make it digestible for consumers. I think perhaps that'll help to get to that better state of affairs like you mentioned earlier, just when we can all understand what's going on. I think the other aspect of that, relatedly, is the simplification of the administrative side of healthcare. We all know that when you get a medical bill in the mail, one, you don't even know if it's a medical bill. It's very hard to determine how much you owe, how much has been paid to the provider. I work in the healthcare reporting space and sometimes when I get a bill, I still don't even know, and I am supposed to break some of these things down for a living. They're extremely complex. I think the idea of simplifying the medical billing process is going to be also a huge priority moving forward in the regulatory space as well as within individual payer organizations and individual provider organizations. And again, I think it's just about trickling it down to the consumer to make this information digestible. They still might not like what they hear, but at least they can understand where it's coming from.

Waddill: There's been a long, long effort towards increasing patient education, and I think that effort is absolutely not in vain, that it's very important. But I think as you're indicating here, on the flip side, we also have to make it easier for patients to understand.

LaPointe: I think you make a good point that it's about making the path clearer to achieve your mission.

Waddill: Here's to hopefully gaining more transparency in the future. And at the very least, you and I will be talking about these things to hopefully shed some light and help people gain some more transparency as we are able. Jacqui, thank you for coming on to the episode today to share a bit about this.

LaPointe: And thank you for having me.

Waddill: And thank you, listener, for tuning in. If you liked what you heard, head over to Spotify or Apple and drop us a review. We'll be choosing some of our reviews to be read on the show in appreciation, so keep listening through to the end because you might get name-dropped. See you next time.