'Forced to jump through hoops': Commercial insurers are making life harder for physicians
A new report detailing reimbursement timelines of commercial insurers could cause some healthcare providers to second guess favoring those payors over Medicare.
Although commercial payors do offer better reimbursement rates, their timeliness in doing so is negatively impacting many hospitals’ financial performances. According to the new Crowe report, “Time for a Commercial Break,” it took commercial payors three months or longer to pay 31% of inpatient claims submitted in the first quarter of 2023; this was the case for just 12% of claims submitted to Medicare.
Crowe—a public accounting, consulting and technology firm—derived its data from financial transactions at 1,800 hospitals and 200,000 physicians across the United States. It indicates that approximately 45% of hospitals’ patients utilize commercial insurance.
In the past, commercial payors not only offered better reimbursement rates than traditional Medicare, but they also paid their claims in a timelier manner. However, today that is not the case in many instances, suggests Colleen Hall, managing principal of the healthcare group at Crowe.
“Historically, commercial payors paid claims faster than government plans because there was less red tape, but it is becoming increasingly more difficult for providers to receive payment from these insurers,” Hall said in a statement. “How can we expect hospitals to financially recover when the payors that account for almost half of their business are holding onto a third of their claims payments for more than 90 days?”
Through the first quarter of 2023, Medicare was also more favorable in terms of prior authorizations and initial and request for information denial rates. The initial prior authorization denial rate for inpatient claims submitted to commercial payors was 3.2% during this time but recorded at just .2% for Medicare. And just over 15% of inpatient and outpatient claims were denied by commercial payors, compared to 3.9% for Medicare.
Additionally, due to bad debt, denials and takebacks, providers lose approximately eight cents of every dollar they bill commercial insurers, according to the report’s data.
All combined, Hall says that providers are being made to “jump through hoops” to collect payments from commercial insurers—something that providers should not be made to stress over in today’s healthcare environment, she suggests.
“During a time when labor shortages persist and expenses continue to rise, hospitals’ believe that their time and resources should be spent directly on patient care rather than managing increasingly bureaucratic reimbursement issues with insurers,” Hall said.
The detailed report can be viewed here.
In addition to her background in journalism, Hannah also has patient-facing experience in clinical settings, having spent more than 12 years working as a registered rad tech. She joined Innovate Healthcare in 2021 and has since put her unique expertise to use in her editorial role with Health Imaging.