Popular Searches

How Shifting Payer Landscape Impacts Healthcare Denials


The healthcare industry is constantly changing, with significant modifications in policies for payers, like insurance companies, Medicare, and Medicaid. Healthcare payers and providers are significantly impacted by these industry shifts, particularly in claim denials, which are critical to financial stability.

The medical billing industry in the U.S. frequently faces significant obstacles, as evidenced by the increasing demand for denial management services. This sector is predicted to grow from $3.57 billion in 2021 to $5.94 billion by 2027, highlighting the severity of insurance claim denials.

These denials have become a considerable financial burden, going beyond procedural problems. Between 2016 and 2020, the denial rate rose by roughly 23%, a situation further complicated by the coronavirus pandemic that magnified existing medical billing challenges. Understanding these dynamics is crucial for sustaining the financial health of healthcare providers.

Pay Policies and the Economic Impact of Rising Denials

In 2021, the U.S. medical billing denial management market was valued at $3.57 billion, highlighting the severity of an issue seen by many healthcare providers. Healthcare claims denials are mainly caused by strict authorizations, coding inaccuracies, and the emerging trend of telehealth that requires different coding structures. Staff shortages and the constantly changing landscape at government and payer levels worsen these challenges.

This rise in denials has led to a significant economic burden, with the average denial rate climbing from 9% in 2016 to 11.1% by the third quarter of 2020. Increasing rates of denials have contributed to the growing problem of uncompensated care, estimated at $43 billion annually. Nearly a third of healthcare entities lose 10-15% of their revenue to denied claims, placing undue pressure on their cash flow and revenue cycles.

The No Surprises Act and Its Impact on Denials Management

The No Surprises Act (NSA) of 2021 marked a significant shift in healthcare billing practices, particularly in managing surprise medical bills. This legislation aimed to protect patients from unexpected bills arising from out-of-network services, a common occurrence during emergencies or when patients unknowingly receive care from out-of-network providers at in-network facilities.

Implementing the NSA required substantial changes in how healthcare providers and payers handle billing and reimbursement processes. For instance, payers needed to make extensive technical updates to their claims processing systems to correctly identify NSA-related claims, which initially required manual adjudication but has since been automated by some payers. These modifications have implications for denials management, requiring a more nuanced understanding of billing regulations and more accurate claims processing.

For payer organizations, the NSA’s impact is multi-faceted:

  • Reimbursing Out-of-Network Claims: Payers are now obliged to treat most services as in-network for patient cost-sharing and deductibles, altering how out-of-network claims are processed and reimbursed.
  • New Payment Processes: Payers must decide on a claim within 30 days, either through an initial payment based on a qualifying amount or a denial, leading to a potential 30-day negotiation period and possible arbitration.
  • Advanced Explanation of Benefits (EOB) Requirements: Payers must provide an Advanced EOB for pre-scheduled services (or upon member request) containing detailed information on network status and cost estimates.

To address these issues, payer organizations can take several steps:

  • Review Revenue Cycle Management Processes: Ensure error-free billing and clean processing, particularly during registration and claims handling.
  • Review Contractual Terms: Balance rate structures in in-network and out-of-network contracts to facilitate smoother negotiations and avoid arbitration.
  • Operational Performance Reviews: Identifying cost reduction and efficiency enhancement opportunities is especially important due to potential revenue impacts from out-of-network billing.
  • Out-of-Network Mitigation Strategies: Developing approaches to reduce out-of-network instances, including contract renegotiations and enhanced member education.
  • Maintain Accurate Provider Directories: Keep provider directories current to verify network status, thereby avoiding penalties and ensuring compliance.

Challenges and Financial Implications of Claims Denial Management in Healthcare

The introduction of the NSA is a positive step towards patient protection. However, it also brings new challenges for healthcare organizations handling claims denials. These challenges are further complicated by intricacies in payer practices, coding errors, incomplete information, and problems with prior authorization.

Denied claims result in delayed revenue and elevated administrative costs as staff investigate and resubmit claims, diverting resources from other critical revenue cycle activities. Healthcare organizations are combatting these challenges by embracing technological solutions like automation, machine learning, and offshore medical billing to improve operational efficiency and reduce denial rates. Automated payer alerts and enhanced communication of prior authorization requirements, as mandated by the NSA, are essential in ensuring compliance and reducing denial risks, thereby playing a crucial role in maintaining the financial well-being of healthcare organizations.

Embracing Change with GeBBS Healthcare Solutions

The statistics and trends surrounding health insurance claim denials paint a clear picture: there is an urgent need to improve how healthcare organizations manage and respond to denied claims. The rise in denials, driven by factors such as government legislature, inadequate data analytics, and a lack of automation in the claims process, has made it crucial for healthcare providers to reevaluate their strategies.

One of the largest RCM companies, GeBBS Healthcare Solutions positions itself as a reliable and knowledgeable partner to healthcare payers and providers, offering innovative and proactive solutions that simplify healthcare billing, guarantee compliance, and reduce denials. These comprehensive denial management solutions are designed to help healthcare revenue cycles withstand the complexities of the modern healthcare environment, guarantee compliance, and minimize the occurrence of denials.

GeBBS Healthcare Solutions takes the pain out of denials management by offering:

  • Revenue Cycle Management: iAR integrates with billing systems for automated AR management, improving collections and providing insights into payer trends.
  • Medical Coding: iCode Assurance ensures compliance and coding accuracy with an interactive dashboard and detailed reporting.
  • Risk Adjustment and Quality Initiatives: The iCode Risk Adjustment platform streamlines workflow and improves productivity with real-time reporting, intuitive chart retrieval, and review features for risk adjustment HEDIS initiatives.

As your offshore medical billing ally, GeBBS Healthcare Solutions is a vital partner in the healthcare industry by providing innovative and efficient revenue cycle management, medical coding, and risk adjustment critical to healthcare providers’ financial and operational health.

Protect your revenue cycle and reduce denials with GeBBS’ denial management solutions. Visit gebbs.com to learn more.

Related articles


GeBBS Healthcare Solutions Acquires MRA

Acquiring MRA expands GeBBS’ end-to-end Onshore RCM solution...Read More

GeBBS Makes An Entry in A Prestigious Top 10 Positions on Modern Healthcare’s 2023 List

GeBBS Healthcare Solutions, Inc.(ChrysCapital portfolio company), a...Read More

Insights into Healthcare Finance: GeBBS Healthcare Solutions & AI in RCM

At this year's HFMA Annual Conference, our CEO, Milind...Read More

You may also like

Get in touch with GeBBS and enhance your financial outcome

Download Infographic

Enter the details to get access to the infographic