WhiteSpace Health Blogs

Private Payers Increase Profits by Refusing or Delaying Legitimate Claims

by Carrie Bauman 

Introduction

Private payers have found ways to increase their profits by refusing or delaying legitimate medical claims. As a healthcare organization, you may have noticed how these strategies affect your cash flow, disrupt patient care, and escalate administrative burdens. In this blog, we’ll explore how insurance claim delays, denied medical claims and insurance reimbursement delays are common tactics used by private insurers to boost their profits. Additionally, we’ll dive into how effective claims management in healthcare can help mitigate these denials, and the powerful role the WhiteSpace Health platform plays in fighting back against these tactics.

The Payer Profit Strategy: Delay and Deny

Private insurers often deploy medical claim adjudication processes that are intentionally slow or unnecessarily complex. By delaying payments or outright denying claims, insurers benefit from holding onto money longer, while healthcare organizations like yours are left struggling to maintain a consistent revenue stream.

Here are some common tactics used by private insurers.

Delaying legitimate claims that should be approved immediately.
Denying claims for procedural errors, even when these errors are minor or immaterial.
Using insurance reimbursement delays to wear down healthcare providers who are then forced to absorb the costs.

These practices lead to cash flow disruptions and increase operational costs, making it difficult for your healthcare facility to deliver high-quality care. What’s worse, studies show that even pre-authorized claims are often denied, particularly for high-cost treatments where the average denial exceeds $14,000. This constant tug-of-war forces your team to engage in costly appeals, burning through time and resources that could be better spent caring for patients.

The Hidden Costs of Denied Medical Claims

While it’s frustrating enough to have legitimate claims delayed, the costs associated with appealing these denials add insult to injury. According to data, the average cost for a provider to appeal a denied claim is $43.84 . Multiply this by the millions of claims submitted annually, and you start to see the staggering financial burden this places on healthcare organizations like yours.

15% of all medical claims submitted to private payers are initially denied.
54.3% of denied claims are eventually paid, but only after multiple costly appeals.
The annual cost to healthcare organizations for managing insurance claim appeals is estimated at $19.7 billion.

These figures are significant, highlighting how private insurers benefit from their delay-and-deny tactics while healthcare providers are forced to spend billions just to receive the payments they are rightfully owed.

Denials and Delays Impact Patient Care and Hospital Financial Health

It’s not just your organization’s bottom line that’s affected by these delays and denials. Patients, too, suffer from delayed care, increased costs, and greater health risks.

According to surveys, nearly 14% of all claims were past due for remittance, meaning providers often waited up to six months after delivering services before receiving payment. These delays compromise patient care, as hospitals are forced to keep patients longer than necessary due to insurance companies delaying discharges to post-acute care settings. This can lead to higher rates of secondary infections and other complications.

When you’re left waiting on payments for months, your financial stability is jeopardized. Hospitals with fewer days of cash on hand are unable to reinvest in patient care or meet other obligations. In contrast, major insurers like United Health Group and Cigna have seen their cash on hand increase significantly in recent years. While you struggle with insurance claim delays, insurers are profiting off these tactics, which undermines the entire healthcare ecosystem.

The Role of Effective Claims Management in Healthcare

So, how can you combat these aggressive payer tactics? The key is to take a proactive approach to claims management in healthcare, starting with real-time monitoring of your claims and denials.

Using the WhiteSpace Health Analytics Platform, you can better manage and mitigate denied claims by leveraging advanced AI and analytics. Here’s how:

Find, Resolve, and Monitor Denials

WhiteSpace Health’s platform provides full visibility into denied claims and their financial impact on your organization. By utilizing KPI Smart Cards, you can immediately see which claims need attention, prioritize them, and act fast.

AI-Powered Appeals

The platform’s AI algorithms identify common denial reasons and provide guidance on how to appeal and recover denied claims. This saves your team significant time by streamlining the insurance claim appeals process.

Top Performers

The highest-performing healthcare organizations consistently recover their most expensive denials first. With WhiteSpace Health, your team can sort claims by value and focus on high-priority denials that can still be overturned.

Benchmarking and Performance Comparisons

WhiteSpace Health also allows you to benchmark your denials performance against industry peers, providing insights into how you can improve your processes and become a top performer in claims management in healthcare.

By using data-driven insights and AI automation, the platform enables your staff to efficiently manage denials, overturn more of them, and recover payments faster. This leads to better financial health and operational efficiency for your organization.

Tremendous Costs of Denials

Denials have a far-reaching impact on healthcare organizations, both in terms of direct costs and the hidden costs that often go unnoticed. Here are some key statistics that highlight the financial burden denials place on your practice:

On average, denied claims delay revenue collection by 20-30 days (Healthcare Financial Management Association).
The total cost of denials in the U.S. exceeded $262 billion in 2021 (The Advisory Board).
It costs $25-$50 to appeal a denied claim (American Medical Association).
Between 5% and 10% of all claims are denied (American Academy of Family Physicians).
Up to 60% of denied claims are eventually recovered (Healthcare Financial Management Association).

These staggering figures emphasize the need for better tools and processes to manage denials. By using the WhiteSpace Health platform, you can stay ahead of these denials, reduce the costs associated with appeals, and increase your revenue.

Improving Denial Management with WhiteSpace Health

You might wonder, what separates the top 25% of healthcare organizations from the rest when it comes to denial management? It comes down to a few key practices, all of which are supported by the WhiteSpace Health platform.

High Documentation and Coding Accuracy

Ensuring that claims are accurately coded is critical to avoiding denials. The WhiteSpace Health platform uses AI to flag coding errors and missing documentation before claims are submitted.

Efficient Claims Management Process

Top organizations resolve their denials quickly. By grouping similar denial types and using smart analytics, WhiteSpace Health streamlines the entire medical claim adjudication process.

Comparative Performance

Top healthcare providers consistently benchmark their performance against industry peers. With WhiteSpace Health, you can overlay your data with industry benchmarks, allowing you to continuously refine and improve your claims process.

AI-Powered Denials Management

Denials management is an ongoing battle, but with the right tools, you can level the playing field. WhiteSpace Health’s AI algorithms analyze historical data to provide clear, actionable steps for your team. Even new employees can quickly learn how to handle denials, recover lost revenue, and ensure that insurance reimbursement delays are minimized.

By implementing the WhiteSpace Health platform, you empower your team with the tools they need to turn denied claims into revenue, reduce administrative costs, and improve your financial stability.

Combat Delays and Denials with WhiteSpace Health

Insurance claim delays and denied medical claims will continue to be a significant challenge for healthcare organizations like yours, but they don’t have to cripple your revenue cycle. By leveraging AI, real-time analytics, and benchmarking tools through the WhiteSpace Health platform, you can stay ahead of the game. Recover more payments, reduce costly appeals, and manage your claims management in healthcare more effectively.

WhiteSpace Health equips your organization to become a top performer, helping you overcome the challenges of insurance claim appeals and avoid insurance reimbursement delays. Get paid what you’re owed faster, improve patient care, and maintain your organization’s financial health by using a denial management system that works for you.

About Carrie Bauman

A 30-year veteran in healthcare IT, Carrie Bauman is responsible for marketing, communications and business development strategies that drive brand awareness, growth and value for clients, partners, and investors.  

carrie.bauman@whitespacehealth.com