Denied claims increasingly saddle hospitals with cashflow lags

Hospital receivables that languish unpaid for more than 90 days usually trace to claims initially declined by payers.

What’s more, the higher the initially declined bill, the more likely it will wait longer than 90 days before getting resolved.

These are among the findings discussed in a new report from Kodiak Solutions, whose revenue cycle analytics software monitors patient financial transactions for more than 1,800 hospitals and 200,000 physicians.

The report, a quarterly benchmarking analysis, shows that, from 2020 through the present quarter, the value of claims waiting longer than 90 days for payment has risen by 33% for commercial insurers.

For slow claims billed to Medicare Advantage, the value has spiked by more than 40%.

Further, the initial claim denial rate as a percentage of claim value rose some 18%—from 10% to 12%—from 2020 through the third quarter of 2023.

Other key findings from the report:

• Through the third quarter of 2023, commercially insured patients are responsible for about 23% of their medical bills, including both inpatient and outpatient care.
• Aged accounts receivable greater than 90 days as a percentage of claim value for patients with commercial insurance reached 36% for 2023 through the end of the third quarter. This is up from 27% in 2020.
• The percentage for Medicare Advantage-insured patients rose to 27% through the end of the third quarter of 2023 compared with 19% in 2020.
• Through the third quarter of 2023, self-pay after insurance collection rate for commercially insured patients as a percentage of claim value was 36.1%.

Kodiak’s senior VP and revenue cycle leader, Colleen Hall, points out that chasing down denied claims eats up time, resources and mental bandwidth in revenue cycle departments.

“The initial denials cause delays sending bills to patients, and the longer patient billing is delayed after a procedure or hospital stay, the lower the collection rate for providers,” Hall says in a news release. “This amplifies the financial impact on provider organizations at a time when they are already under tremendous financial pressure.”

She suggests providers can lower their odds of dealing with long-delayed claims by “enhancing their communication with patients from the date of service to the billing date.”

“When patients receive clear and prompt updates from providers, it reduces the possibility of overlooked medical bills and can increase the likelihood of on-time payment,” Hall says.

Kodiak Solutions was formerly part of the Crowe healthcare consultancy.

The December report is available in full for free.