It’s evident that there’s been a shift in the dynamics between providers and payers. Physicians and health systems are wrestling with a concerning trend that emerged in the post-pandemic era: an increase in denials and downgrades from insurance payers, particularly within the realm of Medicare Advantage (MA).
Denials and downgrades are becoming more common across the board, resulting in significant financial losses for physicians and hospitals, totaling more than $1.6 billion a month.
Denials aren’t just financial setbacks; they pose obstacles to treatment, with patient care hanging in the balance. A recent study by the Kaiser Family Foundation (KFF) found that insurers rejected 17% of claims in 2021, even when patients sought care from in-network physicians.
Physicians and healthcare systems are also feeling the impact, as denials disrupt cash flow and erode trust between doctors and their patients. Insurers, exercising their post-pandemic power, insert themselves into the patient-provider relationship, complicating the already challenging task of navigating treatment options and reimbursement issues.
And, it’s not just the Medicare Advantage plans; commercial insurers are tightening their grip as well. Prior authorization denials, in particular, have become a key driver behind the rise in unpaid claims. This not only restricts patient access to care but also diverts valuable time away from patient care, with physicians and their staff spending many business hours each week on prior authorizations.
CHS is exploring strategies to counterbalance the impact of denials and new ways to improve communication with health plans. In the fall of 2023, CHS centralized its physician advisor (PA) efforts. PAs communicate directly with health plan medical directors and provide real-time feedback when denials are issued. Our PAs are often able to overturn denials while patients are still in-house. Additionally, the PA program ensures we are exploring all avenues to address denials before the need for written appeal.
The toll on healthcare providers is substantial. Over 80% of doctors report that insurance policies impact their ability to practice medicine, while more than half of nurses experience a significant decrease in job satisfaction due to administrative burdens imposed by insurers. Faced with severe financial challenges, hospitals and health systems are left dealing with delayed payments and outstanding claims.
Amid these challenges, the potential of AI to revolutionize healthcare offers a ray of hope. However, recent allegations of algorithmic denials bypassing human review, exemplified by the class-action lawsuit against Cigna, raise ethical concerns about the role of AI in claims management.
In response to this adversity, healthcare providers are demanding accountability from payers. According to CHS Chief Financial Officer Kevin Hammons, the issue is finally receiving the attention it deserves. “Through lobbying efforts, discussions with legislators, and our affiliations with the American Hospital Association and the Federation of American Hospitals, we’ve been able to shed light on the issue and payer behavior,” said Hammons. “These efforts have led to some action by CMS to provide additional guidance on their expectations regarding the two-midnight rule and prior authorization reforms,” he continued. “And, while we have yet to see significant or measurable change, we remain hopeful that there will be positive progress in 2024.”
Patients deserve timely access to care, clinicians deserve the freedom to focus on patient needs, and insurance should facilitate – not impede – access to necessary healthcare services. The battle against insurance denials is ongoing, but it’s a battle worth fighting.