“Physicians faced up to $54 billion in challenged claim revenue in 2015, with Medicaid fee-for-service driving the bulk of medical billing complexity, a new study revealed.”  Oy. This from the findings in a new article published by Health Affairs as reported in RevCycle Intelligence.  We all know how delayed payments drive up hospital costs in the revenue cycle.

Reviewing the same data, Fierce Healthcare is reporting that, “Based on data from the IQVIA Real-World Data Adjudicated Claims, which detailed interactions between 68,000 physicians and the insurers they billed, the researchers examined information on 37.2 million physician visits in 2015, for which 44.5 million claims were submitted. The data allowed the researchers to observe physicians’ requests for payment, insurers’ responses to those requests, any resubmissions needed and the ultimate settlement of claims.”  The study comes from Health Affairs and is available here.   Study conclusions include:

  • Fee-for-service Medicaid is the most challenging type of insurer to bill, with a claim denial rate that is 17.8 percentage points higher than that for fee-for-service Medicare.
  • The denial rate for Medicaid managed care was 6 percentage points higher than that for fee-for-service Medicare, while the rate for private insurance appeared similar to that of Medicare Advantage.

Reviewing the same study for RevCycle Intelligence, reporter Jaqueline Belliveau focused on the complexity of Medicare claims.  “Medical billing for Medicaid fee-for-service claims proved to be the most complex across all insurers. The public payer had a claims denial rate 17.8 percentage points greater than the rate for Medicare fee-for-service claims,” writes Belliveau.  Specifically:

  • Medicaid managed care had the second most complex medical billing process, researchers added. The claims denial rate was 6.1 percentage points above the rate for Medicare fee-for-service.
  • Medicare fee-for-service and private payers scored similarly on complexity measures, researchers added.  Private payers were just 1.3 percentage points more likely to deny a claim compared to Medicare fee-for-service. But they paid claims 4.1 days faster.

Below is a chart from the study that shows two measures of complexity by insurer type:

Claim denials and Delayed Payments Add up to Billions

We researched share challenged definition and found an article at the Incidental Economist:

“One set of measures pertains to how much of each claim was never paid: amount challenged and share challenged. Amount challenged was defined as the difference between what was actually paid for services and the full negotiated price. Share challenged was defined as the fraction of the negotiated price that was never paid.”

In a study that supports these findings, data gathered by the Crowe Revenue Cycle Analytics (Crowe RCA) software revealed significant differences in the time it takes to reimburse hospitals for services rendered by traditional Medicare versus commercial payers (insurance companies). Differences in days-to-pay among individual commercial payers also take time to resolve and increase healthcare providers’ “cost to collect”.

According to a press release from Crowe RCA, the report takes a deep look at denials, when payers request more information before determining if the claim will be paid.

  • Final denials, when payment is never made, represent a two percent decrease in an average hospital’s annual net revenue.
  • Payment delays on denied services, when a payment is made after the denial is resolved, also profoundly influence cash flow, requiring an average of 16.4 more days to pay than claims that have not been denied.
  • The expense and cash flow implications of payments secured 16 days later than usual are equivalent to at least one percent of a provider’s cost structure, illustrating the impact that denial-related delays have on the bottom line.

What can be done about delayed payments in the hospital revenue cycle?  RevCycle Intelligence has also published a recent article about how “breaking down the silo between professional and facility coding increased coding productivity 74 percent and boosted clean claim rates at UC San Diego Health.” Noting that “hospitals and health systems tend to keep the departments separate,” the article quotes Cassi Birnbaum, system’s Director of Revenue Integrity and Health Information Management, recommending a “single-path coding” workflow system to reduce duplication.  Birnbaum also noted that there were very archaic tools in play and recommends an update to the latest systems (see SSI Clinical Data Services).

We found another article about reducing complexity in billing leading to less delayed payments for emergency departments at Becker’s Hospital Review.  This article focuses on accuracy in coding. Becker’s quotes Ed Gaines, JD, chief compliance officer at Zotec Partners, recommending that “healthcare providers educate auditors on ED coding, pay attention to the TPE [CMS’ Targeted Probe and Educate program]  timelines, absorb the education from CMS and change their policies if applicable.”

We will continue to keep you posted on the latest tactics and strategies to deal with claims management and reduction of delayed payments for a stronger, healthier revenue cycle.