What you need to know
Receiving accurate, timely reimbursement and reducing unnecessary administrative cost imposed by payers requires a proactive strategy from providers. This includes fortifying and enforcing payer contracts, investing in denial prevention and using technology to challenge delays and denials at scale.
Rising claim denials and payment delays are straining the already-fraught relationship between providers and payers.
Providers spent nearly $20 billion in 2022 pursuing delayed payments and denials, more than half of which were eventually overturned. Some health systems have seen denials double in the last year alone, with more than half of that activity coming from MA plans. Ensemble data shows MA plans issuing five times more first-pass denials than from traditional Medicare.
Across the industry, payers control the rules for how denials are determined, and they’re using advanced AI technology to enforce those guidelines by any means necessary. Providers must take a proactive approach against payer tactics that are hindering cost-effective care delivery.
Here are three efforts we’ve found effective in pushing back against increasing payment delays and denials:
1. Fortify and enforce payer contracts.
Many managed care contracts come with an evergreen clause, enabling them to renew automatically without any intervention from the provider or payer. These agreements might include an annual rate hike of a few percentage points, or they might not account for any increase at all. As more provider revenue moves from traditional Medicare to managed plans, including Medicare Advantage, the need for contract scrutiny and renegotiations becomes more critical.
Develop a payer scorecard to inform negotiations and help hold payers accountable
Leveraging accurate data and analytics during negotiations can significantly enhance a provider’s bargaining power. Evaluate performance across your commercial payers and pinpoint trends that should be addressed in your next negotiation. Concentrate on key metrics, including:
- Clean claim rate
- Payment as a percentage of charges
- Speed to pay
- Denial rates and reasons
- Underpayments
- Appeal volumes and success rates
- Other year-over-year net reimbursement changes
Showing the total revenue impact of a payer’s behavior and comparing trends with other payers can help influence negotiations and accelerate issue resolution.
Close contract loopholes
Don’t accept standard boilerplate terms or unclear language that provides loopholes for payers to delay payment or increase administrative burden. Instead, revise contracts to include language that clearly defines dispute resolution requirements, penalties for non-compliance and mechanisms for enforcement. For example:
- Require claim payment, denial or dispute within 30 days or payment remittance with interest on day 31
- Set limits for requests for information, audit volume and appeal response timelines
- Restrict bundling of charges and limit “lesser of” language
Even consider proposing a change in payment methodology to remove the payer’s incentive to downgrade claims, like a blended case rate for ER visits regardless of the E/M level.
Related: How to Successfully Negotiate Your Next Payer Contract >>>
Prepare an out-of-network strategy
If fair and equitable rate increases aren’t agreed upon, consider going out of network with the payer or specific plan. Many of these efforts have been successful in compelling payers to increase provider reimbursement to retain in-network status with their patients.
Prepare a strategy for your organization at least one year ahead of contract renegotiations to ensure your leadership, clinical staff, front-office staff and patients are well educated on the impact of being out of network and can access necessary resources to answer questions throughout the process.
Related: Tips for Providers Thinking of Going Out of Network >>>
2. Invest in denial prevention.
Establish a strong denial prevention program that is data-based and process-minded.
True root cause resolution not only requires an understanding of the actual source of denials, but also an ability to connect the right dots across the revenue cycle, clinical departments and various stakeholder groups to resolve the identified issues.
Make denial prevention a team sport
Form a denials prevention committee capable of analyzing denial trends, sharing results with various stakeholders and holding parties accountable for upstream issue resolution. Train front-end teams on common errors that result in denials downstream as well as the financial impact denials and claims resubmissions have on the organization, so they understand the implications and importance of their roles. Ensure all teams involved understand the amount of rework their efforts will decrease by preventing denials from occurring in the first place.
Strengthen documentation and audits to avoid errors
Reduce the likelihood of denials and expedite the review process by capturing thorough documentation to support patient status, procedures and diagnoses. Consider adding prompts to the EHR to document clinical decision-making, like ‘Will this patient be admitted? If not, will the patient’s length of stay exceed two midnights? If so, why?’ Leverage a combination of technology and experts across coding, charge capture and CDI to ensure all claims are reviewed before they’re billed. This helps confirm all coding and charging is accurate and fully supported by documentation.
Find ways to streamline data exchange with payers
Granting access to your electronic medical record offers clear benefits for payers — including accurate risk adjustment and access to real-time records for utilization management — but can also help streamline claim adjudication, automate the authorization request process, reduce requests for information and ultimately accelerate payments for providers if implemented correctly.
One example is the electronic medical prior authorization (eMPA) capability available in Epic’s Payer Platform, which one healthcare organization used to eliminate manual intervention for nearly 90% of authorizations from a particular payer and decrease decision turnaround time from an average of three days to one hour.
Related: Payers Are Pushing for Direct EMR Access. Providers Must Push Back. >>>
3. Use technology to challenge payment delays and denials at scale.
The increasing administrative burden of appealing denials and escalating issues with payers is so resource-intensive that many providers opt out of the process altogether, accepting reimbursement far below what they deserve for the care provided. With the right technology-enabled strategy, providers can do more to liquidate outstanding AR and overturn denials.
Streamline the dispute process
Implement a robust mechanism to review payments, flag issues and automate the dispute process. Setting up a system to issue demand letters either in batches or individually can help compel payers to resolve disputes while also documenting your organization’s proactive efforts, should litigation become necessary. Leverage detailed claim statusing and collection notes to facilitate side-by-side claim analysis that will enable you to review account details and resolve outstanding AR.
Automate appeals
Reduce the time staff spend on initial denial reviews and appeal creation by leveraging generative AI to draft preliminary appeal letters based on templates tailored to different denial reasons. More sophisticated solutions can integrate with the EHR and leverage external data — like coverage criteria and payer policies — to automate complex clinical appeals so high-value resources can focus on validation rather than manually drafting arguments.
The bottom line
Eliminating friction between payers and providers requires extensive work by both sides, but there are strategies healthcare organizations can implement in the near-term to help improve the timeliness and accuracy of payments. Taking a proactive approach to payer delays and denials not only enhances financial performance but also supports the delivery of high-quality, cost-effective care.
Don’t go it alone
A proven end-to-end partner can get your payer strategy in place quickly to help secure your organization’s financial future.