An Estimated $262B in Medical Claims Initially Denied in 2016, Analysis Shows | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

An Estimated $262B in Medical Claims Initially Denied in 2016, Analysis Shows

June 26, 2017
by Rajiv Leventhal
| Reprints

A new analysis from Change Healthcare has revealed that out of an estimated $3 trillion in medical claims submitted by hospitals in the U.S. last year, an estimated 9 percent of charges—representing $262 billion—were initially denied.

As the analysis showed, for the typical health system, as much as 3.3 percent of net patient revenue, an average of $4.9 million per hospital, was put at risk due to denials. While an estimated 63 percent of these claims were recoverable on average, reworking each denial costs providers roughly $118 per claim, or as much as $8.6 billion in appeals-related administrative costs, according to the research from Change Healthcare, a Nashville-based vendor.

These takeaways were included in the Change Healthcare Healthy Hospital Revenue Cycle Index, published June 26th at the HFMA ANI 2017 conference. “The insights reinforce the tremendous opportunity hospitals have to accelerate cash flow and reduce administrative costs by using advanced analytics to better manage the revenue cycle,” according to Change Healthcare officials.

The revenue cycle index data was culled from a sample of more than 3.3 billion hospital transactions valued at $1.8 trillion, and is based on primary institutional inpatient and outpatient claims processed by Change Healthcare in 2016, and the average charged amount and first denied amount for 724 hospitals in the claims sample. The total claimed charges and denied amounts for the nation’s 5,683 hospitals was then extrapolated from this sample data. An appeal success rate of 63 percent for hospital customers and average reimbursement rate of 29 percent were used to calculate the amount denied.

“Eye-opening insights like these are only possible with advanced analytics and revenue cycle tools that let you identify the root causes of denials, and implement and automate practices that prevent them,” Marcy Tatsch, senior vice president and general manager, reimbursement and analytics solutions, Change Healthcare, said in a statement. “You can’t fix what you can’t see. But by reinventing the revenue cycle with analytics, a hospital can improve its success rate in appealing denied claims and increase how much revenue is recovered—not to mention reducing the number of denials in the first place.”

Get the latest information on Health IT and attend other valuable sessions at this two-day Summit providing healthcare leaders with educational content, insightful debate and dialogue on the future of healthcare and technology.

Learn More

Topics

News

ONC Roundup: Senior Leadership Changes Spark Questions

The Office of the National Coordinator for Health IT (ONC) has continued to experience changes within its upper leadership, leading some folks to again ponder what the health IT agency’s role will be moving forward.

Media Report: Walmart Hires Former Humana Executive to Run Health Unit

Reigniting speculation that Walmart and insurer Humana are exploring ways to forge a closer partnership, Walmart Inc. has hired a Humana veteran to run its health care business, according to a report from Bloomberg.

Value-Based Care Shift Has Halted, Study Finds

A new study of 451 physicians and health plan executives suggests that progress toward value-based care has stalled. In fact, it may have even taken a step backward over the past year, the research revealed.

Study: EHRs Tied with Lower Hospital Mortality, But Only After Systems Have Matured

Over the past decade, there has been significant national investment in electronic health record (EHR) systems at U.S. hospitals, which was expected to result in improved quality and efficiency of care. However, evidence linking EHR adoption to better care is mixed, according to medical researchers.

Nursing Notes Can Help Predict ICU Survival, Study Finds

Researchers at the University of Waterloo in Ontario have found that sentiments in healthcare providers’ nursing notes can be good indicators of whether intensive care unit (ICU) patients will survive.

Health Catalyst Completes Acquisition of HIE Technology Company Medicity

Salt Lake City-based Health Catalyst, a data analytics company, has completed its acquisition of Medicity, a developer of health information exchange (HIE) technology, and the deal adds data exchange capabilities to Health Catalyst’s data, analytics and decision support solutions.