Premier Inc.: Claims Adjudication Costs Soaring for Providers
A new national survey of patient care organizations conducted by the Charlotte-based Premier Inc. is finding that the costs that providers are sustaining from the claims adjudication process are soaring. The survey of leaders from 280 hospitals nationwide, whose results were reported on Premier’s website on Feb. 24, has found that the claims adjudication process cost healthcare providers more than $25.7 billion in 2023—a 23-percent increase from the previous year. Meanwhile, 70 percent of denials were ultimately overturned and the claims paid, but often after multiple, costly rounds of review.
The press release on the survey noted that “Claims adjudication costs healthcare providers more than $25.7 billion, according to a new national survey of hospitals, health systems and post-acute care providers conducted by Premier, Inc. This figure represents a 23 percent increase over the $19.7 billion in costs reported in the previous year. Claims move into the adjudication process after payers issue an initial denial on the submission. While denial rates remained consistent at nearly 15 percent, according to survey data, they ranged as high as 49 percent in certain instances. In addition, the administrative costs associated with fighting them increased dramatically – from $43.84 per claim in 2022 to $57.23 in 2023. Additional costs primarily resulted from added labor, responsible for 90 percent of claims processing expenses incurred by providers.”
The survey also found that the type of insurance involved was significant in terms of the percentage of initial claims denied in 2023: Medicaid claims were denied at the high rate of 28.5 percent; managed Medicaid claims at 16.2 percent; commercial claims at a rate of 13.2 percent; managed Medicare at a 15.0-percent rate; and traditional Medicare at 7.3 percent.
What’s more, prior authorization was an additionally significant factor, with 30.5 percent of Medicare Advantage claims being forced through prior authorization in 2023, followed by 25.6 percent of commercial claims and 24.3 percent of managed Medicaid being forced through prior authorization. Only 9.4 percent of traditional Medicaid claims, and only 4.7 percent of traditional Medicare claims, were forced through prior authorization in 2023.
The authors of the report—Premier president and CEO Michael J. Alkire, senior vice president of government affairs Soumi Saha, PharmD, J.D., and Mason Ingram, director of payer policy—wrote further that “Healthcare lacks a unified system for claims submissions, making the process of filing for reimbursement notoriously complicated. Each claim requires multiple data elements to comply, which frequently change. At the same time, each payer has its own unique rules regarding covered services, coding requirements and necessary documentation, making it difficult for providers to navigate. These inconsistencies create room for error, requiring providers to allocate more time to compliance tasks – particularly in a world where patient volumes (and the number of claims) are on the rise.”
Further, they noted, “Claims submission also remains a largely manual process. This further exacerbates the problem, particularly as providers grapple with widespread staffing shortages. In fact, in a recent survey of 200 providers, every respondent indicated that staffing shortages are having a significant, negative impact on their ability to submit accurate claims for payment. Furthermore, 83 percent said staff shortages impede their ability to follow up on late payments or offer assistance to patients struggling to get services covered by insurance. The lengthy process to adjudicate claims adds insult to injury. Even a small error can flag a claim for denial. Premier survey respondents reported that once denied, they went through an average of three rounds of reviews with insurers, with each review cycle taking between 45 and 60 days,” they added.
The full summary can be found here.
