Claim denials the biggest threat to revenue cycle: Survey

Claim denials are the single biggest threat to the revenue cycle, surpassing even declining reimbursement rates, labor shortages and prior authorizations, according to a recent survey of revenue cycle leaders.

The survey of nearly 150 revenue cycle leaders was conducted by Knowtion Health in partnership with the Healthcare Financial Management Association (HFMA). Almost half of the survey respondents (48%) said denials volume from private payers was the most significant threat to their organizations' revenue cycle.

Rounding out the top three greatest threats were falling reimbursement rates (22%) and prior authorization issues (14%).

About 4% of respondents cited insufficient analytics and labor shortages as the greatest threats to the revenue cycle, respectively.

Claim denials are on the rise across public and private payers, but provider organizations are having trouble keeping up. The survey showed that revenue cycle leaders have the most trouble improving revenue recovery from denials and underpayments because they cannot adequately prioritize denials to work on.

About 38% of respondents said their organizations have "difficulty prioritizing which denials are worked and when based on revenue benefit."

Another 26% said their organizations have technological gaps in identifying documentation and coding errors, leading to revenue recovery troubles. Fewer respondents said there is not enough clinical support (18%), insufficient training and education (13%) and not enough insight into eligibility problems (6%).

But even when provider organizations tackle claim denials, recouping revenue is taking longer than ever. Nearly half of respondents (47%) reported much slower appeal times among private payers compared to three years ago, with this group specifically saying appeals are taking more than twice as long.

Notably, only 2% of respondents said appeals have gone faster, with the rest of the respondents reporting the same amount of time or slightly slower process times.

Improving payer processing times would take enhanced communications, the survey suggested. Three-quarters of respondents said difficulties communicating with payers was their greatest barrier to improving the appeals process.

Meanwhile, high denial volumes also make it hard for revenue cycle leaders to prioritize appeals optimally, as cited by 56% of respondents. Many revenue cycle leaders (46%) also lack appeal tracking and analytics.

Healthcare organizations are also unlikely to get the resources they need to address their denial management problems. The survey found that the roles most difficult to staff include denial appeal writing, denials analysis and clinical documentation improvement, with over 50% of respondents reporting trouble staffing these roles, respectively.

The survey's findings indicate a need to transform denial management to "keep pace with payers."

New strategies include investing in technology to automate denial management, particularly with artificial intelligence, leveraging analytics to gain insight into claim denial trends and collaborating more closely with payers.

"Denials are no longer just a back-office issue -- they are a front-line threat to financial stability," Jayson Yardley, CEO of Knowtion Health, said in a press release. "This research confirms what many hospital leaders are feeling: The old ways of managing denials simply aren't sustainable anymore."

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.