Claims Reimbursement Speed, Denial Rate Tied to Location

Does your practice experience claims reimbursement delays? That may be because of where your practice operates, according to a recent analysis of financial transaction data.

The new Crowe report, “10 Best and Worst States for Provider Claims Payment,” draws a connection between how quickly and accurately payers reimburse providers and the state in which the hospital or practice operates. The analysis for the report leverages patient financial transaction data from more than 1,800 hospitals and 200,000 physicians nationwide.

Overall, providers in Louisiana, Oregon, and New Mexico receive claims reimbursement faster and more accurately compared to hospitals and practices in other states based on two KPIs: initial denial rate and accounts receivable (A/R) greater than 90 days. Pennsylvania, Indiana, Wisconsin, Iowa, Arizona, Illinois, and Ohio round out the top ten best states based on claims-paying performance by payors to providers.

Meanwhile, the top ten worst states in the analysis, starting with the worst, were South Carolina, Mississippi, Arkansas, North Carolina, Missouri, Kansas, Georgia, Kentucky, New Jersey, and Idaho.

In general, aged A/R in the bottom five states is twice the amount of aged A/R in the top states. The analysis also found that healthcare claims were more than five times more likely to not get paid at all in the worst-performing states for final denials.

“Final denial rates have been rising nationwide, but this data helps us zero in on the states where payors consistently refused to pay claims during the first half of 2023, Colleen Hall, managing principal of the healthcare group at Crowe, said in a press release. “This ongoing issue is plaguing the industry because it puts an immense strain on health systems’ revenue. Providers’ financial health is inextricably tied to the quality of care they can provide, so this has a direct impact on patients as well.”

Healthcare providers across the care continuum have faced significant financial challenges since the start of the pandemic in 2020. And this challenging financial environment is seemingly here to stay, according to the most recent hospital financial performance report from Kaufman Hall.

The report showed that financial performance worsened for hospitals in July 2023 despite some margin improvements compared to the previous year. The median year-to-date operating margin index calculated by the healthcare firm was 1.3 percent that month. Outpatient volumes also continued to decrease while expenses remained high.

Additionally, bad debt and charity care rose month-over-month as providers dealt with Medicaid eligibility redeterminations—another issue that has impacted providers in certain states more than others.

Authors of the Crowe analysis acknowledge that providers cannot simply move the locations of their hospitals and practices to see better financial performance. However, the data can help them to have meaningful conversations with payers to fix systemic issues, according to the report.

“Identifying outlier behaviors and backing that up with credible statistics can go a long way in correcting systematic and chronic problems,” the authors wrote.