New Reports Highlight Increase in Prior Authorization Denials

Sarasota, FL (WorkersCompensation.com) – The last couple of years have been somewhat volatile for the healthcare revenue cycle, between attempts to implement new software that doesn’t always work well with existing platforms, and reductions in reimbursement. A recent report from Healthleaders reflecting a 67 percent increase in authorization denials alone may cause providers to take a closer look at their payer mix and operational practices in the coming year in order to stay afloat. 

It’s no secret that commercial insurance CEO’s are making more than the average annual salary per day. Many in healthcare wonder about such extravagant salaries. In fact, Becker’s reported last year that the CEO of Bright Healthcare earned $180.8 million, which equates to just under a half million per day. Then just a couple days later reported the company’s layoffs and insolvency. 

Financial and operational issues can have a downstream effect for providers in the form of denials and delay in payment. Recently Healthleaders highlighted the claims denial results from the Crowe RCE Benchmarking Analysis and an analysis from Experian.

According to the Crowe report, the number of claims denials increased 11 percent overall, equating to 110,000 denied claims per average sized practice. Inpatient authorization denials was the largest category driving the denial total. Authorization denials increase from 1.5 percent of gross revenue in January 2021 to 2.5 percent of gross revenue in August 2022, representing a 67 percent increase. The report also found that the percent of unpaid claims over 90 days increased from 32 percent in January 2021 to 37 percent in August of 2022.

Additionally, the analysts found an increase in the number of recoups or takebacks. Tracking as a percentage of debit AR, from January 2021 through June 2022, the percent of payor takebacks averaged 1.4 percent a month. However, in July and August of 2022, the percent increased to 1.8 percent. The analysts stated that the total equated to $1.6 billion per month for the providers they were tracking. 

Although not mentioned in the Crowe report, takebacks generate more costs for healthcare providers than general denials. In the case of takebacks, providers are basically paying staff to give back money. What makes takebacks more costly is the complex posting of reversal adjustments and payments, which often do not balance and are not clear. Additionally, providers have to track down the true reason for the takeback to verify if it is a valid refund. 

According to the report from Experian, authorization denials were also listed as the top denial reason 48 percent of the time. Provider eligibility ranked second, followed by code inaccuracies, incorrect modifiers, and failure to meet submission deadlines, and patient information inaccuracy. 

One of the common frustrations in healthcare when it comes to commercial payers is the lack of contacts and personal working relationships that allow both parties to work through issues in a more efficient manner. With the increases in denials and the lag in payment from commercial payers, providers may be looking more to workers compensation to fill the revenue gap. In that case, providers may be looking to develop better relationships with adjustors and State workers compensation boards. 

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