Fewer denials as volume increases for hospitals

Report shows positive changes, but plenty of room for improvement to reduce the number of denials

A report from MDaudit revealed some positive trends for the first quarter of 2022, with hospitals and health systems seeing an overall decrease in denials and improved revenue capture. The study authors said this was an important shift from the predicted fallout of 2021, where hospital losses were projected to be between $53 billion to $122 billion.

The report looked at findings from the Healthcare Auditing and Revenue Integrity: 2021 Benchmarking and Trends Report with 2022 insights from the same base of MDaudit users. The sample includes more than 50,000 providers and more than 900 facilities providing data to MDaudit to be used for auditing, charge, and denial analysis.

The positive first quarter trends included:

  • 10% decrease in the volume of total initial denials
  • 8% decrease in the value of total initial denials
  • 33% decrease in the value of COVID-19 related denials
  • 37% decrease in the value of COVID-19 related hospital inpatient denials
  • 21% decrease in the value of telehealth related denials

According to the report, the decrease in telehealth-related denials was anticipated as hospitals and health systems are now fully open, and utilization of these services has declined. Similarly, inpatient volumes are flat in comparison to 2021, and as such, denials have decreased.

Most of these trends are positive for hospitals, as with the current inflation rate and the increasing focus on profitability, the decrease in denials and inpatient volumes bodes well. COVID-19 cases are increasingly more seen on the outpatient side as well which has pushed down the denial value related to COVID-19 relative to 2021.

There were two areas that need improvement. While overall and inpatient COVID-19 denial trends revealed a positive turn, the scenario for outpatient and professional claims was different:

  • 10% increase in the value of COVID-19 related hospital outpatient denials
  • 13% increase in the value of COVID-19 related professional denials

According to the report, pent-up demand for elective surgery and other services is driving an increase in claims and, therefore, overall denials in this area. The study authors state they are observing that external audits are ramping up exponentially in the areas of specialty drugs, DME including implants and complex COVID-19 related cases billed last year. Modifiers are under scrutiny for professional office visits.

“This trend of increased denials is especially troubling for healthcare organizations hoping to protect margins, as outpatient claims–with lower costs than inpatient stays–are among their most profitable services,” the report states in part.

The analysis also found a 9.4% increase in lag days between initial claim submission and adjudication. A new approach to claims reviews and an increase in payer use of machine learning technologies may be contributing to this number. Whereas payers once paid first and then audited, plans can now screen large volumes of claims, which has resulted in a higher level of scrutiny before paying any claim that may be considered an anomaly.