Commercial insurers saying ‘no’ to hospitals more often

Hospitals are looking for a little love from commercial health plans but they’re not getting it, according to a survey by the Advisory Board Company.

Denials of commercial insurer claims as a percentage of total denials increased between 2013 and 2015 even as the volume of commercially insured patients has stayed constant in both inpatient and outpatient settings, according to the consulting company.

The company noted that the uptick in commercial payer denials may mean trouble for hospitals that have traditionally depended on commercial insurers to offset lower payments from public payers. The Advisory Board says anecdotal reports suggest that commercial payers have more complex requirements, which means more work and expense for “denial follow-up teams.”

The consulting company released results of its 34-question survey of 170 senior hospital and health system executives in October. The executives came from about 70 hospitals and health systems. Almost all were from not-for-profit organizations.

The survey identified a shift in the reasons for denials from 2013, the last time the company asked these questions. The proportion of claims denied for medical necessity decreased from 22% to 12%, while the proportion denied for demographic and technical errors jumped from 36% to 61%.

Denials by payer

Denials by reason

Source: Advisory Board Company, “Benchmarking Revenue Cycle Performance: Results From the 2015 Survey of Hospital Revenue Cycle Operations and Performance,” Oct. 28, 2015

The report noted that demographic and technical errors are the types of mistakes that a hospital can prevent.

Rebecca Gerr, the survey’s designer, tells Managed Care that the results indicate that “payers are scrutinizing claims more closely as a means of protecting their own revenue against improper charges.”