Claim Denials Pose Expensive Problem for Providers

Claim denials are posing a serious and expensive problem for healthcare revenue cycle management (RCM), according to a recent survey of healthcare leaders.

A survey conducted by Plutus Health connected with several healthcare organizations with annual revenue between $25 million and $5 billion with RCM teams between 50 and 700 people. Healthcare organizations cited claim denials as their organization’s greatest RCM challenge, with more than half of respondents (58 percent) giving it top rank behind “specific payer challenges” (44 percent). Other RCM challenges included staffing (41 percent), cost of collections (26 percent), and policy changes like The No Surprises Act (21 percent).

Denials management is one of the stages in the RCM process that is regularly backlogged, according to nearly 42 percent of respondents. What’s more, claim denials cost healthcare organizations.

More than one in five respondents (22 percent) said their organization loses more than half a million dollars in annual revenue each year because of denied claims. For 10 percent of organizations, claim denials result in over $2 million in losses.

Many healthcare organizations struggle to achieve clean claim rates and lower denial rates. However, 43 percent of respondents said denials management is among their top priorities this year. 

Additionally, healthcare organizations said other RCM priorities this year include patient eligibility and benefits verification (38 percent), prior authorization (32 percent), claim submission (29 percent), and patient collections 26 percent).

The survey indicates that artificial intelligence (AI) and robotic process automation (RPA) can help healthcare organizations achieve their goals.

Almost 30 percent of respondents who used AI and RPA for their overall healthcare operations said it resulted in faster cash flow and collections. Meanwhile, about 20 percent said it resulted in more insightful and readily accessible business analytics, and 18 percent said they saw faster and more comprehensive supply chain management. Some respondents also noted improved patient flow and scheduling.

AI and RPA also has the potential to prevent costly claim denials. About one in five respondents said their RCM teams have seen improved efficiency in filing claims since using the technologies for RCM, while 16 percent said they have seen a reduction in data entry errors.

Despite the proven benefits of AI and RPA for RCM operations, about three-quarters of survey respondents said their organizations are not planning to implement AI and/or RPA in RCM processes this year. Approximately 80 percent also have no current plans to use RPA for end-to-end RCM in 2023.

Healthcare organizations are more focused on unifying the RCM process “to remove silos in an effort to improve the integrity of their revenue.” More than a quarter (27 percent) of respondents also said their organizations plan to invest in educational resources for their internal RCM team. About one in five (21 percent) said they plan to work with a trusted external advisor.

However, technology like AI and RPA presents an opportunity to tackle some of RCM’s greatest challenges if healthcare organizations can overcome their hesitancy, survey authors said.