WhiteSpace Health Blogs

Survey Finds Providers Spent $10.6B Overturning Denied Claims

by Carrie Bauman

Introduction

A recent survey has revealed that healthcare providers across the United States spent an estimated $10.6 billion in 2022 overturning denials in medical billing. These staggering figures highlight the significant financial and administrative burdens placed on healthcare systems by the need to challenge insurance claim disputes, which consume both time and resources. The survey results underscore the importance of efficient claims denial management systems to prevent revenue losses and mitigate these burdens.

The Growing Issue of Denials in Medical Billing

Medical claims denials have long been a headache for healthcare providers, but the scale of the issue continues to grow. The survey, which polled 516 acute care hospitals, found that nearly 15% of all claims submitted to private payers for reimbursement were initially denied. This figure is particularly alarming given that over 54% of these medical claim rejections were eventually overturned. Providers, however, must bear the brunt of the administrative costs associated with contesting these claims, which totaled nearly $20 billion across all payer types in 2022. The cost to healthcare providers extends beyond just the time spent challenging these denials. Delayed payments from insurers often result in financial instability, cash flow disruptions, and an inability to reinvest in patient care. Hospitals reported an average of $43.84 spent per claim just to overturn insurance claim disputes. The higher administrative cost is especially apparent when dealing with private payers, where the cost can reach $63.76 per claim.

Financial Impact on Healthcare Providers

The financial impact of denials in medical billing is profound. According to the survey, providers spent an average of three rounds of reviews with insurers before securing payment. Each review can take between 45 to 60 days, which means providers might wait as long as six months to recover costs after delivering care. This delay has significant repercussions on healthcare organizations’ financial health, as it ties up capital that could be used for critical operations or investments in new technologies.

The cost of overturning medical claim rejections varies depending on the type of payer. For example, Medicare denials are less costly to pursue, with an average administrative cost of $0.79 per claim. In contrast, Managed Medicaid, and Medicare Advantage (MA) claims can cost providers up to $47.77 and $63.76, respectively, per claim to overturn.

Hidden Costs and Delayed Payments

While the financial burden is enormous, delayed payments also come with hidden costs. Hospitals and health systems reported that they often experience reductions in cash on hand due to delayed reimbursements. For example, the average days of cash on hand declined by 44 days over the past year—a 17% year-over-year drop. This financial strain affects not only a healthcare organization’s ability to operate effectively but also its capacity to improve patient care and invest in new initiatives.

Additionally, insurance claim disputes lead to a deterioration of the patient experience. For example, hospital discharges to post-acute care settings, such as skilled nursing facilities, can be delayed because insurers have not approved payment in a timely manner. These delays, especially among MA, Managed Medicaid, and commercial claims, result in extended hospital stays, increased patient risk, and higher hospital-associated costs.

The Role of Claims Denial Management

To tackle these issues, claims denial management must be proactive, well-organized, and use technology to eliminate manual, repetitive tasks. By focusing on identifying and resolving the root causes of medical claim rejections, healthcare organizations can significantly reduce the resources spent on administrative tasks. Effective management can also streamline workflows and improve communication between payers and providers, reducing the likelihood of denials in the first place.

Efficient claims denial management not only reduces financial losses but also expedites payment recovery, improves cash flow, and allows healthcare organizations to focus more on patient care. With an increasing number of claims being denied and healthcare administrative costs rising, more healthcare providers are turning to advanced technologies to ease the burden.

The WhiteSpace Health Platform's AI-Powered Denial Management Capabilities

The WhiteSpace Health Platform offers healthcare providers a revolutionary tool for managing denials in medical billing. By leveraging artificial intelligence (AI), the platform provides visibility into denied claims, helping organizations understand the reasons behind denials and offering specific steps to improve medical claims processing. Machine Learning (ML) unlocks the value in your data by finding patterns in successful claims resolution and translating that information into actionable steps, ensuring staff take the course of action with the highest probability of success.

Key Features of the WhiteSpace Health Platform

AI-Powered Denial Detection: The platform automatically highlights medical claim rejections that need immediate attention. It categorizes them by value, enabling staff to focus on high priority denied claims while they can still be overturned.
Efficient Workflow: Grouping similar denial types together in medical billing allows staff to work more efficiently, appealing multiple claims at once. This ensures that denials are addressed in a timely manner, reducing delays in payment.
Comprehensive Insights: With twenty-six indicators and dozens of filtering options, the platform offers healthcare providers a detailed view of their medical claims processing data. This transparency is crucial for identifying trends, digging into root causes, and finding opportunities for improvement.
Benchmarking and Performance Comparison: The WhiteSpace Health Platform allows organizations to compare their denial rates and recovery performance with industry benchmarks, helping them understand how they compare to their peers.
Guided Steps for Appeals: By analyzing historical claims data, the platform recommends best practices for staff to follow to resolve specific insurance claim disputes, further improving the likelihood of successful appeals.

With the WhiteSpace Health Platform, healthcare organizations can take a proactive approach to claims denial management, ensuring that they recover denied payments faster and reduce the overall administrative costs associated with contesting claims.

Reducing Healthcare Administrative Costs with AI

The use of AI in medical claims processing has proven to be an effective solution for reducing the massive administrative burden placed on healthcare providers. By automating the denial detection and appeal processes, platforms like WhiteSpace Health not only improve operational efficiency but also reduce the significant financial strain caused by denials. With the average cost of pursuing a denied claim reaching as high as $63.76, automating these processes can save healthcare providers millions of dollars annually. Additionally, the platform’s ability to analyze data and suggest guided steps for resolving denials ensures that even less experienced staff can successfully manage insurance claim disputes.

Conclusion

The financial and administrative burden of denials in medical billing continues to grow, with providers spending billions of dollars each year overturning medical claim rejections. These efforts, while necessary, consume significant resources that could otherwise be allocated to patient care or operational improvements. Platforms like WhiteSpace Health, with its AI-powered claims denial management capabilities, offer a solution to this growing problem, enabling healthcare providers to recover denied payments more efficiently and at a lower cost. By adopting advanced technologies to streamline medical claims processing, healthcare organizations can reduce their administrative costs, improve cash flow, and focus more on delivering high-quality patient care.

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