40% of Charges for COVID-19 Services Initially Ended in Claim Denials

Providers are having a difficult time billing for services related to COVID-19, with 40 precent of charges for coronavirus-related care initially winding up as claim denials in the first 10 months of 2021, according to a recent analysis of more than $100 billion worth of denials and $2.5 billion in audited claims.

The analysis performed by healthcare technology company Hayes also found that 40 percent of professional outpatient audits for COVID-19 and 20 percent of hospital inpatient audits for COVID-19 failed.

Top audit failure reasons included “secondary diagnosis/documented but not billed”, “no documentation,” “ICD procedure documented but not billed,” “additional information needed,” and “condition code documented but not billed for hospital audits.”

For professional audits, the top audit failure reasons included “diagnosis documented but not billed,” “evaluation and management (E/M) service over-coded by one level,” “E/M service under-coded by one level,” “diagnosis billed but not document,” and “incorrect E/M category.”

“With the pandemic driving projected losses over $100 billion this year, hospitals and healthcare organizations are under intense pressure to optimize revenue flow and reduce compliance risk,” Peter Butler, CEO of Hayes, said in a press release.

“Gaining control over denials by focusing on both auditing and training providers and coders to improve documentation is a logical first step – particularly given that 43 [percent] of rendering providers and 27 [percent] of hospital coders fail internal audits and auditors have ‘disagree’ findings about 33 [percent] of the time. Left unaddressed, this is a huge revenue and compliance risk for organizations,” Butler continued.

In general, a little over a third (34 percent) of hospital charges were initially denied so far in 2021, according to the analysis. Those charges quickly added up, with the average initial denial amount being $5,300 for inpatient claims and $585 for outpatient claims.

For professional billing, about 15 percent of charged were initially denied, on average. The average initial denial amount was $283.

Bundling continues to be the top reason for hospital charges being denied, authors of the analysis stated. It was the number one category for both inpatient and outpatient claim denials. For inpatient claims, eligibility/registration was the category with the second most claim denials, followed by more information needed, duplication, and authorization, referral, and pre-authorization errors.

Top outpatient denial categories after bundling errors included more information needed, authorization, referral, and pre-authorization errors, duplication, and non-covered services.

The primary reasons for hospital claim denials were “benefit is included in other service/procedure that has already been adjudicated,” “charges are covered under a capitation agreement,” “missing documentation,” “claim submission/billing error,” “duplicate claim,” and “benefit maximum overreached.”

For professional billing, the top reasons for claim denials were “claim submission/billing errors,” “lack of documentation,” “duplicate claims,” “bundling,” “non-covered services,” and “precertification/authorization.”

More specifically, the analysis found that the top professional codes denied by amount were 99214, 99213, 99204, 99215, and 99203.

The findings point to a need for greater revenue integrity, especially around coronavirus-related claims and telehealth, which has exploded in the wake of the pandemic.

“Healthcare organizations should look to address both revenue risk and compliance risk through a unified revenue integrity-based approach,” the analysis concluded. “Our research has shown that both areas experience similar challenges and an integrated strategy offers an opportunity to use denial insights to help focus auditing efforts while also incorporating prospective audits to reduce denials.”

“Together auditing, coding and denial management teams should use their collective insights to build a cohesive corrective action plan rather than having each team duplicating efforts by separately educating and training providers and coders.”