Private payers profit by delaying medical claims

Editor's Note

Private payers initially deny reimbursement on 15% of claims, only to later approve more than half of those initial denials, according to a national survey of healthcare institutions published March 21 by Premiere, Inc. Additionally, the denied claims on average tend to be more prevalent for higher-cost treatments ($14,000 or more). The findings prompted Premier and 118 member organizations to send a letter to the Centers for Medicare & Medicaid Services (CMS) recommending steps to address payment denials and delays in Medicare Advantage (MA).

The data also show that on average, of 3.2 percent of all denied claims were pre-approved via the prior authorization process. Ultimately, more than 54% of rejected claims were ultimately paid, but only after multiple provider appeals that cost an average of $43.84 per claim—a figure that amounts to an annual cost of $19.7 billion, based on health insurers processing about 3 billion claims each year. Survey respondents report conducting an average of three rounds of reviews before receiving payment, resulting in significant delays in remittance, provider difficulties in recouping costs, and less cash on-hand for hospitals already concerned with financial viability.

Bills unpaid by insurers also can make patients liable for care costs and lead them to rate care satisfaction lower. “An average of 3.2 percent of all claims denied included those that were pre-approved via the prior authorization process,” the report notes.

In addition to urging CMS to provide more stringent monitoring of expenditures on direct patient care (particularly in the MA program), Premier recommends CMS return to the practice of weighting patient experience and access more heavily in the MA Star Ratings methodology and to enforce action against MA plans that do not abide by Medicare coverage rules. The organization is also encouraging policymakers to ensure claims approved under electronic prior authorization may not be artificially delayed or denied.