Study shows providers burdened by increasing rate of denials in 2022

Wednesday, February 1, 2023

Denial rates are continuing to rise, according to a November 2022 Crowe report on revenue and expense issues in healthcare. Crowe determined that the initial denial rate increased from 10.2% in 2021 to 11% in 2022, which translates into 110,000 unpaid claims for an average size healthcare system.

“Any increase in denial rates will increase the burden on the provider to resolve the denial and receive payment,” said the report.

Inpatient prior authorization denials were a key driver behind the dollar value of denials rising to 2.5% of gross revenue in August 2022 from 1.5% in January 2021, according to the report.

In addition to denial rates, the report measured burden associated with six-month lagged cash to net revenue. The report said that hospitals collected 97% of their expected cash within six months in the summer of 2021, but they collected 3% less during the same period in 2022.

“[This] decrease in cash coupled with a more than 9% increase in expenses creates a minimum of a 12% negative impact on a health system’s finances,” according to the report. Crowe said this data indicates that recent negative revenue cycle performance can be attributed to changes in payer behaviors.

Other areas of administrative burden detailed in the report include open accounts receivable and takebacks. Overall, Crowe said that healthcare providers faced “expenses greater than the rate of inflation, less cash for the services performed, and higher administrative burdens to receive payment” in 2022.

Crowe listed the following strategies to mitigate the challenges identified in the report:

  • Create more data-driven payer conversations to monitor shared key performance indicators and set goals in alignment with established partnerships
  • Implement proven automation solutions to reduce administrative burden
  • Engage the patient to aid in resolving denied claims

Revenue integrity professionals should consider these strategies to address any revenue or expense issues that are currently impacting their organization. Conduct routine internal audits to prevent a high number of denials at your organization.

Editor's note: Find more NAHRI resources on denials here.