American Hospital Association: Medicare Advantage denials jump 56%

Medicare Advantage and commercial claims denials have spiked across the country, leaving hospitals increasingly financially strapped, according to research published Nov. 17 by the American Hospital Association and Syntellis. 

The report analyzed data from a national sample of 1,300 hospitals and health systems. From January 2022 to July 2023, revenue reductions related to Medicare Advantage denials increased 55.7% for the median hospital. During the same period, denial-related revenue reductions rose 20.2% for commercial plans. For denials relative to net patient service revenue for the median hospital, Medicare Advantage plans saw an increase of 63.3% and commercial plans rose 20%.

"[Hospitals] must take larger revenue reductions to account for those lost reimbursements from commercial payers and Medicare Advantage plans, which cover more than 31 million Americans and make up about half of all Medicare beneficiaries," the report said. "The challenges will only worsen as Medicare Advantage enrollment continues to grow."

In November 2022, an AHA survey found that half of hospitals and health systems reported having more than $100 million in unpaid claims that were more than 6 months old. As of June 2023, health systems had a median of 124 days cash on hand, down from 173 days in January 2022. 

The new data coincides with recent reporting from Becker's about hospitals across the country that have ended some or all Medicare Advantage contracts. The reasons behind contract terminations vary by system and by payer offering the plan. Some systems have cited steep losses amid excessive prior authorization denial rates and slow payments from insurers. Others have noted that most MA carriers have faced allegations of billing fraud from the federal government and are being probed by lawmakers over their high denial rates.

"It's become a game of delay, deny and not pay,'' Chris Van Gorder, president and CEO of San Diego-based Scripps Health, told Becker's in September.

According to data shared with Becker's by FTI Consulting, among the 64 contract disputes reported in the media this year through Sept. 30, 37 involved Medicare Advantage plans, and 10 disputes exclusively involved MA plans. In the third quarter alone, 15 disputes involved MA plans, compared to seven in the third quarter of 2022, a 115% increase year over year.

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