Patient collection rate falls by over 3 percentage points

Patient collection rates for commercially insured patients recently declined, creating revenue cycle management challenges for cash-strapped providers.

New data from Kodiak Solutions showed the collection rate for providers from commercially insured patients dropping by more than 3 percentage points, from 37.6% in 2024 to 34.4% in 2024. This lower patient collection rate comes as patients take on more financial responsibility for their healthcare under high-deductible health plans and other cost-sharing arrangements.

Providers have offset some impact of falling patient collection rates by improving point-of-service collections and collection on bad debt.

However, providers also faced higher initial claim denial rates. The data revealed an increase from 11.5% in 2023 to 11.8% in 2024. The slight increase marked the fourth consecutive year of increases among initial claim denials.

The rate of final claims denials also remained around 2.8% from 2023 to 2024, according to the data. The final claim rate was also 16.7% higher compared to 2020.

Commercial health plans and Medicare Advantage plans drove the increase in initial claim denials, with both types of payers seeing their initial request for information denials rise from 2023 to 2024. The data also found they were the top payer categories in both initial claim denials and initial RFI denials for both years.

The lower collection rate coupled with higher denial rates created "significant headwinds for hospitals, health systems and medical providers in 2024," researchers at Kodiak said.

These financial headwinds suggest a more creative, data-driven approach to counteract the negative consequences of lower patient collection rates and higher overall claim denial rates, according to Kodiak researchers.

For example, providers are improving patient education and communications around their health plans and plan design. Providers are helping consumers understand what their benefits are and potential patient financial responsibility under the plan if they use certain clinicians, locations or services. This approach also aims to improve the overall patient financial experience at the provider's office.

Technology has also paved the way for providers to improve patient collection rates and the patient financial experience. Online bill payment, payment plans and digital customer service have supported providers seeking to collect what is owed from patients.

Other examples from Kodiak include integrating clinical departments with revenue cycle operations and putting stronger language in payer contracts and service level agreements to limit pre-payment denials.

“While our data suggest that these headwinds continue to gather strength, I am encouraged by the conversations that my colleagues and I are having with revenue cycle leaders across the country,”  Matt Szaflarski, vice president of Revenue Cycle Intelligence for Kodiak said in a statement. “These leaders are using revenue cycle data to pinpoint problem areas and then developing creative solutions that will drive their revenue cycle performance in 2025.”

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.