Medical Claim Denial Rates Rising, Highest in Initial COVID-19 Hotspots

Findings of the Change Healthcare 2020 Revenue Cycle Denials Index indicate that since the onset of the coronavirus disease 2019 (COVID-19) pandemic, medical claim denials have risen 11% nationwide, with the most denial rates found in regions with the highest first wave of outbreaks.

Since the onset of the coronavirus disease 2019 (COVID-19) pandemic, medical claim denials have risen 11% nationwide, with the most denial rates found in the Pacific Coast (13.1%) and the Northeast (12.9%), 2 regions with the highest first wave of COVID-19 outbreaks.

Results published in the Change Healthcare 2020 Revenue Cycle Denials Index are based on internal data from the Change Healthcare data network. For this analysis, 102 million hospital transactions totaling to $407 billion in charges were processed from July 2019 through June 2020. The 2019–2020 data was then compared and trended against 2016 data reported in the Change Healthcare 2017 Denials Index report.

Compared with 2016, the third quarter of 2020 shows a 23% increase in total medical claim denials, marking a 11.1% increase in the national rate of claims denied upon initial submission.

Nicholas Raup, associate vice president of Product Management and Revenue Cycle at Change Healthcare, notes that 1 in 4 denials (27%) are due to issues with patient registration and eligibility for the medical claim.

"It’s time to take a hard look at the dollars and time these denials represent and focus on denial prevention in this area,” said Raup.

In fact, Raup highlights that registration and eligibility issues served as the top denials cause in the 2017 report. More troubling, 86% of denials were cited as potentially avoidable and 34% as unequivocally avoidable, of which almost half (48%) now cannot be recovered.

Notably, for every denials cause besides medical documentation requested, the percentage of potentially avoidable denials nearly matches the percentage of each denial category. In other words, most factors contributing to medical claim denials can be avoided.

So, why are medical claim denials on the rise?

Researchers referenced several contributing factors, including a lack of denials resources, such as expertise to support appeals and data for root cause analysis, as well as staff attrition and training, growing denials backlog, and legacy technology. Taken together, Raup says that providers need to implement a denials-prevention strategy for front-end processes that includes staff education and training and the use of advanced technology.

“This approach can help cut denials dramatically, and in turn, the time and expense associated with appeals, and the risk of lost revenue,” notes Raup.

In reducing rates of avoidable medical claim denials, authors provided 5 tips:

  • Determine where denials are originating and their root causes
  • Prioritize remediation based on where and what actions will have the greatest impact
  • Consolidate revenue cycle technology with a single “end to end” vendor
  • Benefit from advanced analytics and artificial intelligence
  • Choose the right partner

In concluding, Raup emphasized the importance of a denials-prevention strategy and cited analytics as the key to understanding issues contributing to medical claim denials. "Lastly, make sure you identify those denials that are non-recoverable early, so your teams don’t waste time working them.”