What is your denials management process costing you?
Between 2022 and 2023, the cost per management of a denial went up from $43.84 per denial (totaling $19.7 billion in 2022) to $57.23 per denial (totaling $25.7 billion in 2023). And while the data isn’t available yet, 2024 is shaping up to show a denial rate increase and cost increase, with 3 out of 4 healthcare staff reporting denials were on the rise.
Up to 90% of denial management costs are labor costs, including direct economic costs and the opportunity costs of staff members not doing other value-added work. Additionally, the revenue cycle management (RCM) workforce is shrinking, which impedes organizations’ ability to manage denials and to follow up on late payments efficiently.
During a May Becker’s Hospital Review webinar sponsored by Med-Metrix, three Med-Metrix leaders discussed how hospitals and health systems can improve their ability to successfully combat denials by leveraging advanced technology. Panelists were Gaurav Gupta, senior vice president, product strategy and performance management; Garett Kreitz, co-president and Christina Milone, CEO, denials and eligibility services.
Main themes from the discussion are summarized below.
Denials are getting more complex and coming at a faster rate than the RCM workforce can manage
The surge in costs per denial is largely due to the increasing complexity of denial appeals. Payers are asking for more information and medical necessity justifications, which is taking more time for providers — including RCM teams but also coding partners and clinicians — to supply.
In addition to that rising complexity, the unrelenting increase in the sheer volume of denials is straining the capacity of the RCM workforce to manage the workload. “Denials are coming at a rate that’s faster than an FTE group could accommodate,” Ms. Milone said.
“It’s a very labor-intensive endeavor to battle denials,” Mr. Kreitz confirmed.
Providers need advanced technology because payers are using such technology themselves
Solving the multifaceted problem of denial management will not come from throwing additional people at the challenges, but from replacing manual workflows with advanced tech, Mr. Kreitz said. “If you don’t have advanced technology, there’s a huge disadvantage when dealing with payers that are finding different ways to prolong adjudication timeframes and reduce the amount they pay to providers.”
“Payers are banking on the fact that you’re not going to assign [additional] FTEs to fight denials,” Ms. Milone noted, recounting how the Med-Metrix software solution was born. “They have algorithms that are denying claims, and we’re saying, ‘We’re going to throw it right back at you.’ Because ultimately, if the hospital performed a service, the doctors determined at the time that it should be performed and the data was submitted, it should be paid for.”
Med-Metrix provides an AI-powered technology solution that keeps pace with the payers’ increasing reliance on AI for claim denials. It automatically prioritizes denials based on appeal deadlines and other criteria, rates them on likelihood to pay upon appeal (with 90-94% accuracy), checks that an appeal satisfies all potential objection criteria and files appeals directly to portals. The turnaround time on a denial appeal when using Med-Metrix’s technology can be as short as eight days.
Health systems need an AI plan to counterbalance payers’ denial tactics
Beyond the technological capabilities of an automated denials solution such as Med-Metrix’s, there is a psychological element to providers using it in what is often a tense relationship with payers.
“To us, the best defense is a strong offense — that’s why we’ve pushed toward automated appeal technology,” Mr. Gupta said. “If we’re creating enough administrative burden in return for the administrative burden that payers are passing on to providers [by denying an inordinate number of claims], denial rates start to drop when they see that we’re going to appeal nearly 100% of denials.”
One example of that psychological effect is what happens when organizations use Med-Metrix to appeal denials with low probability of approval. Typically, legacy appeals systems would decide against appealing such denials because of the disproportionate use of resources given the odds of an overturn. But with Med-Metrix’s automated appeals process, including for low-probability appeals, “about 10% to 15% of those appeals get overturned just because you said something,” Mr. Gupta noted.
More broadly, provider organizations should look for these features in an AI denial solution:
- Automated, comprehensive and accurate appeal letter-writing, including capabilities to map clinical data to payers’ specific medical necessity criteria and provide concrete pieces of information that address those criteria rather than entire medical records.
- Advanced segmentation and optimization, including machine learning scoring of probability of appeal overturn, root cause analysis of denials and learning from past successes to optimize the process.
“In our tools, we’ve built out the adjudication pathways for different types of denials,” Mr. Gupta concluded. “This is the way you go about successfully disputing denials with insurance companies.”
Want to learn more about the Denials AI solution from Med-Metrix? Visit Med-Metrix.com.
