Increased claims denials, staff shortages worry health system rev cycle heads, survey finds

Health system executives in charge of their organization’s revenue cycle are fretting about their dealings with payers, with many noting elevated denial rates across the board and within Medicare Advantage specifically, according to a new analysis.

Also on their minds are revenue cycle staffing shortages, which they say are weighing down their organizations’ ability to secure payments, as well as plans to prioritize investment in revenue cycle automation technology, per survey responses collected by the Healthcare Financial Management Association (HFMA) analyzed by consultancy firm Guidehouse.

“Roughly 40% of respondents reported struggling with elevated fatal denial rates, with more than half dealing with elevated Medicare Advantage denial rates,” Timothy Kinney, Guidehouse partner and finance and revenue cycle advisory leader, said in a release on the data. “Many payers have increased requirements for prior authorizations, leading to more denials and increased cost to collect due to appeal activities.”

Just over half of the 134 survey respondents said their organization is reaching a net collection yield of 84% or more. Just over a quarter outlined a yield between 90% and 93% (a range considered “average” in the report) while a little over a fifth were 89% or lower.

Though the umbrella category of “payer challenges” led when respondents were asked to name their three highest areas of stress, 52% listed prior authorization, 31% cited workforce shortages, 25% checked off the rising cost to collect and 24% named cybersecurity threats among their chief concerns.

Contributing to their concerns were the elevated fatal denial rates referenced by Kinney.

Fewer than a third of respondents reported a final claim denial rate of 2% or below, and 10% said their final denial rates exceeded 5%. For Medicare Advantage, 22% said their denial rates landed between 6.1% and 9% while a third said theirs were even higher.

“In the face of these pressures, industry leaders are turning to digital solutions and supplemental staffing to better navigate payer processes, maximize reimbursement and boost returns,” Kinney said.

Over three-quarters of respondents said they are either fully or partially outsourcing revenue cycle to help manage tasks, and most said they are satisfied with their vendor relationship.

Meanwhile, more than three-quarters of the executives said they will invest in revenue cycle automation technologies, such as AI or machine learning, within the coming year to help fill the gaps. Only a tenth said they had made any investments in this area to date.

Other top areas for revenue cycle investments cited by the respondents included patient access, revenue integrity and clinical integrity.

HFMA’s survey was conducted in May and included responses from chief financial officers, vice presidents and other health system C-suite executives. Guidehouse, which authored the report analyzing responses and trends, is a vendor of revenue cycle management advisory, digital and managed services.

Other analysis of revenue cycle performance data have outlined an uptick in claims denials, and the hospital industry hasn’t been shy about pointing the finger at payers looking to offset their increased utilization expenses. Over 100 provider organizations wrote to the government earlier this year urging a tougher stance on Medicare Advantage plans’ denial practices.