A recent survey of members by healthcare improvement organization Premier found that nearly 15 percent of all claims submitted to private payers for reimbursement are initially denied, including many that are pre-approved through a prior authorization process.
Premier and 118 of its member organizations sent a letter to the Centers for Medicare & Medicaid Services (CMS) highlighting the results of the survey of hospitals, health systems and post-acute care providers that they say reveal the scope of payment delays and denials by private payers.
Premier noted that survey respondents reported serious concerns with payment delays and denials, which they say adversely impact patients’ timely access to medically necessary care and impose unnecessary administrative and financial burdens on providers.
Premier conducted a voluntary, national survey of member hospitals and health systems from October 10-December 31, 2023. Respondents represented 516 hospitals across 36 states, accounting for 52,123 acute care beds. Medicare Advantage (MA) and Medicaid health plans denied initial claims submissions at higher-than-average rates of 15.7 percent and 16.7 percent, respectively. Denials tended to be more prevalent for higher-cost treatments, with the average denials across payer types pegged to charges of $14,000 or greater.
Despite significant rates of denials on initial claims submissions, the survey found that 52.7 percent of MA claims denials were eventually overturned, and the claims paid. However, hospital and health system survey respondents that fought the denials did so at an average administrative cost of $47.77 per claim for MA claims and $43.84 per claim on average across private insurance types. This figure does not include the costs associated with added clinical labor, which the American Medical Association estimates adds $13.29 to the adjudication cost per claim for a general inpatient stay and $51.20 to the cost of inpatient surgery.
The letter provides recommendations on policy changes to advance the needs of patients enrolled in the Medicare Advantage (MA) program and the providers who care for them.
Specifically, the organizations urge CMS to:
• Collect data on payment denials and delays by MA plans;
• Return to its past policy of weighting patient experience and access measures more heavily in the MA Star Ratings methodology, empowering beneficiaries to hold their health plans financially accountable;
• Take enforcement action against MA plans that fail to abide by the coverage rules of Medicare;
• Work expeditiously to enforce its recent regulatory changes to streamline prior authorization requirements in the MA program; and
• Require coverage determination reviews to be conducted by physicians of the same specialty for the service being reviewed – not a cost-containment algorithm.
The letter also calls on policymakers to stipulate that claims approved under an electronic prior authorization may not be artificially delayed or denied and for Congress to ensure CMS has the statutory authority needed to enforce its regulations, including by holding oversight hearings to combat bad actors in this space.
