News: Commercial payers at the core of denial rate increases and payment delays, report suggests

A new study released by Crowe Revenue Cycle Analytics suggests that commercial payers have increased denial claims over the past three years, according to HealthLeaders. The study, entitled “Time for a commercial break,” analyzed inpatient and outpatient data from over 1,800 hospitals and 200,000 physicians and found that

commercial payors take the longest to pay, require providers to jump through more administrative hoops to get paid, and delay payments to providers via claim denials at a higher frequency than government payors.

Here are some key highlights from the report:

• From 2021 to 2023, the commercial payer percentage of medical necessity inpatient claim denials increased from 2.4 to 3.2%; however, during that same period, the Medicare denial rate remained at 0.2%
• From 2021 to 2023, the commercial payer percentage of inpatient and outpatient claims initially denied for any reason increased from 14.1% to 15.1%, while the Medicare percentages only increased from 3.4% to 3.9%.
• From 2021 to 2023, the RFI denial rate for commercial payers (5.2% to 4.8%) was 12 times greater than the Medicare rate (0.4%).
• Whereas for commercial payers, the percentage of 2023 claims not paid after 90 days for inpatient and outpatient claims was, respectively, 31% and 32%; the Medicare percentages were only 12% and 11%.

Despite these daunting figures, however, the report noted that commercial payers still reimbursed hospitals at a higher rate on a per-case basis compared with Medicare:

• $18,156.50 is paid by commercial payers compared with $14,887.10 paid by Medicare in average net revenue per inpatient case.
• $1,606.86 is paid by commercial payers compared with $707.30 paid by Medicare in average net revenue per outpatient case.

The report concluded by defending providers, arguing that not only are they not to blame for the majority of their business-related issues—and that it is the commercial payer who holds the financial and moral responsibility for the hardships of many hospitals around the country—but, in particular, that providers should be able to fulfill their clinical duties “without the fear of nonpayment, delayed payment, partial payment, or payment takebacks.”

Editor’s note: You can find the HealthLeaders article here and the Crowe report here. To read about denial trends from the CDI perspective, take a look at the 2022 CDI Week Industry Overview Survey report, available for free on the ACDIS website.