62% of Hospitals Don’t Automate Any Part of Denials Management

Most hospitals and health systems are not automating any component of denials management, according to a recent survey of healthcare finance and revenue cycle leaders.

Commissioned by technology provider AKASA, the survey fielded responses from more than CFOs and revenue cycle leaders at hospitals and health systems across the US through the Healthcare Financial Management Association’s (HFMA) Pulse Survey program.

The survey found that just 38 percent of the hospitals and health systems represented by respondents had some level of denials management automation. Meanwhile, the majority—62 percent—said their organizations are not currently automating any part of denials management.

However, denials management is an emerging area of revenue cycle automation.

In the survey, 44 percent of healthcare CFOs and revenue cycle leaders indicated they plan to automate at least some aspect of denials management by the end of the year. Another 32 percent of respondents said they plan to automate in 2024.

Still, about a quarter of respondents (24 percent) said they did not have current plans to apply automation to denials management.

Revenue cycle automation is a top priority for hospitals and health systems. Previous research commissioned by AKASA found that 78 percent of organizations already apply automation to revenue cycle operations generally. But denials management does not seem to be benefiting from the revenue cycle’s overall digital transformation despite being a major pain point for most hospitals.

Healthcare leaders identified claim denials as their organization’s biggest challenge in a survey published earlier this month. About 42 percent of leaders also said in the survey that denials management is one of the stages of the revenue cycle management process that regularly gets backlogged.

Backlogs in denials management and other challenges is an expensive problem for hospitals and health systems. More than one in five respondents said their organization loses more than half a million dollars in annual revenue each year because of denied claims. Ten percent of respondents claimed denials result in over $2 million in annual losses.

“We’ve been trying to fix the broken denials process for decades, without success,” said Amy Raymond, VP of deployments and revenue cycle operations at AKASA. “Throwing more people at the problem isn’t working.”

But run-of-the-mill automation like robotic process automation (RPA) isn’t going to cut it if healthcare organizations want to improve denials management, Raymond indicated.

“Most organizations start their automation efforts with discrete tasks, such as claim status checks,” Raymond stated. “As early automation efforts demonstrate success, denials management is a natural next area of focus for two reasons. The first is that AI and machine-learning-based automation is capable of handling more complex workflows than ever before — thanks to breakthroughs driven by generative AI models. The second reason is that denials management is an increasingly significant pain point for providers.”

Artificial intelligence (AI) is proving to be a boon to revenue cycle management. The technology is being applied to various aspects of the process, including medical coding, prior authorizations, and claims and cost management. However, budgetary constraints and data security concerns remain major barriers to AI adoption in revenue cycle management.