ORLANDO, Fla.—Hospitals across the country lose approximately $262 billion per year on denied claims from insurers, sparking huge cash-flow issues and recovery costs, according to new data.
Payers initially deny about 9% of hospital claims, putting about $5 million in payments per hospital at risk, said Jason Williams, vice president of analytics for Change Healthcare, which collected the data.
Although hospitals ultimately will secure payment for 63% of initially denied claims, it costs $118 per claim on average to recoup the money, not to mention the cost to hospitals of foregoing the payments while they claw back the funds, Williams said.
"Even if they're ultimately paid for 63% of the claims, that's not great," said Williams, speaking on the sidelines of the national educational forum held each year by the Healthcare Financial Management Association.
Change Healthcare merged with McKesson's healthcare information technology business in March. The company analyzed about $3 trillion in claims in 2016 as part of its Healthy Hospital program.
Hospital claims denials happen for a host of reasons, ranging from providers not obtaining authorization for procedures to faulty input of codes, Williams said.
If hospitals cannot secure a denied claim, they're left eating the cost or billing the patient for the services, which can alienate that patient and ding satisfaction scores on the unlikely bet that the hospital can collect the funds, according to Williams.
Hospitals can try to avoid claim denials by automating their revenue-cycle workflow and collecting data that flag where claims are being denied, Williams said.
"The key is avoiding the denial in the first place," he said.