How to combat rising commercial claims denials with intelligent RCM analytics

Commercial payers may offer superior reimbursement rates for health insurance claims, but recent data shows collecting from these payers can be more difficult.

That’s the takeaway from a new report that shows nearly a third of claims submitted to commercial insurance companies in Q1 of 2023 weren’t paid for more than three months. On top of that, certain types of commercial claims denials — namely, those for claims deemed to be lacking prior authorization — are steadily climbing.

So how can you prevent lagging reimbursements and increasing denials from wiping out the progress you’ve made to recoup profits post-COVID? RCM analytics offer an effective solution.

The rise of commercial claims denials

To fully understand the commercial reimbursement landscape, let’s take a closer look at the latest data.

In the first quarter of 2023, it took more than three months to collect on 31% of inpatient health insurance claims and 32% of outpatient claims submitted to commercial payers. That’s in stark contrast to Medicare; only 12% of inpatient claims and 11% of outpatient claims took beyond three months to be paid by the federal health insurer.

When it comes to denials, commercial insurers far exceeded Medicare once again, initially denying 15.1% of claims versus Medicare’s 3.9%. For some denial categories, the disparity is even more massive: the medical necessity denial rate was 3.2% for commercial payers versus 0.2% for Medicare, while RFI (request for information) denial rates were 4.8% and 0.4%, respectively.

For providers, the impact is twofold. Not only does it take longer to capture reimbursements for commercial insurance claims, which negatively impacts financial metrics, it also requires additional time, labor, and expense to turn those initial denials into paid claims.

Healthcare organizations must implement new strategies for this shifting landscape, and revenue cycle analytics are a solid place to start.

Leverage RCM analytics to increase first pass yield

First pass yield signifies the portion of claims paid upon initial submission – a very important metric if you want to avoid the additional work required to capture payment after a claim is initially denied.

RCM Intelligence is a clearinghouse agnostic revenue cycle analytics application that empowers providers to monitor and continuously improve first pass yield. It offers real-time insights into claims activity and performance, allowing you to see exactly when claims are being paid (or not) and why.

With this information, financial leaders can make smarter decisions about where to focus efforts to submit cleaner claims and proactively prevent denials.

The average RCM Intelligence customer achieves a first pass yield of 93%.² Imagine the time and money saved when 93% of claims are not only approved, but paid upon first submission.

Prevent denials with comprehensive health insurance claims insights

While it’s fairly easy to find out what portion of your claims are initially being denied (also known as your denial rate), it’s not as simple to uncover the underlying cause of those denials. This is in large part due to the fact that all commercial payers are different.

A claim submitted to Insurer A might be approved and paid immediately, while a similar claim submitted in an identical way to Insurer B might be denied. So, what went wrong with the denied claim? Unlocking this level of detail is key to substantially reducing commercial denials, but it’s nearly impossible to do at scale without automation.

RCM Intelligence brings these deep insights to your fingertips with at-a-glance dashboards that let you analyze denials by claim, biller, payer, and more. With a thorough understanding of why certain payers deny certain claims, you can implement custom business rules and edits to stop those denials from occurring. Additionally, you can make improvements to eligibility and identity verification processes to further reduce your denial rate.

RCM Intelligence users see an average denial reduction of 40% within 60 days.¹

Facilitate stronger payer negotiations with the right supporting data

RCM Intelligence arms providers with a comprehensive view into payer- and financial-class-specific denials, reimbursements, and turnaround times. This data allows you to come to the negotiating table more prepared, have more productive conversations, and achieve fair, balanced contracts while promoting more positive long-term payer relationships.

Combat commercial claims denials with solutions from Inovalon

Gain a foothold against the rising tide of commercial claims denials with Claims Management Pro and RCM Intelligence, a powerful pair of applications for automating claims management and gaining end-to-end revenue cycle visibility.

These user-friendly software solutions simplify claims processing and analysis, making it fast and easy to discern trends, identify areas of revenue leakage, and correct recurring claims errors that are contributing to cash flow slowdowns.

Discover the technology that can improve your cash flow by an average of 15% and reduce GDRO (gross days receivables outstanding) by five days.² Request a demo today.

Sources:

1. Inovalon internal reporting. Average of customer results, April 2023
2. Inovalon internal reporting. Average of customer results, February 2023

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