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Hospital claim denials are on the rise, especially those related to prior authorization issues

On December 8, 2020, RevCycleIntelligence covered the rise of hospital claim denials, which all seem to have one thing in common: prior authorization issues.

According to RevCycle Intelligence, a new survey of 200 hospitals conducted by the American Hospital Association (AHA)—and supplemented by interviews and group discussions with several hundred additional hospital and health system executives—found that 86% of respondents have experienced significant increases in denials by health insurers in the past three years. While denials come in many shapes and sizes (think post-payment audit denials, partial or line-item denials, and even denials triggered by a payor down coding a claim), the majority seem to stem from one source—prior authorization requirements. It’s not that there’s anything inherently unreasonable about the practice of prior authorization, it’s that there appears to be an utter lack of consistency in these requirements. The rules are hard to follow, and they require providers to plow through mountains of paperwork in their efforts to get paid with no guarantee of success. As Rick Pollack, AHA president and CEO, stated, prior authorization requirements are taking providers’ attention from “where it is needed most: caring for patients and saving lives.” To put this into further perspective, some of the physicians surveyed by AHA said it takes their offices roughly two days a week—yes, you read that right—to work through prior authorization requests from payors. That is almost half a week that could be spent on patient care that is instead spent on fighting for patients to get the care they need. While that is valuable time under normal circumstances, it’s even more so during the COVID-19 pandemic, as providers are facing severe staffing shortages. And while the time and effort providers put toward prior authorizations are a major drain on resources, the related delays in reimbursement and the extremely high number of claims that continue to be denied despite the paperwork submitted are even bigger problems. The situation is serious enough that AHA is doing more than putting pen to paper—the association is actively urging policymakers to mandate industry-wide standardized and faster prior authorization processes. If AHA is successful, this could be a game-changer for providers, allowing them to shift their focus back to what really matters: providing their patients with the care they need.

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