There is a direct relationship between medical practices and healthcare insurance companies that has become one of the most problematic issues for today’s physicians. Under the guise of keeping healthcare costs under control, are payors’ rules and regulations helping or hurting patients and practices?
Problems, Policies, and Politics
Although there is nothing new about healthcare insurers enacting increasingly convoluted policies to avoid paying medical claims, the US Healthcare System is not making progress as an industry that was purportedly designed to care for public health. In fact, the payor hurdles that physicians must overcome to provide necessary patient care is worsening.
Healthcare organizations and patients continue to be adversely affected by increasing claims denial rates and rules. The ever-moving target of prior authorizations has adversely affected healthcare practice’s cash flow and patient care. From 2022 to 2023, both private healthcare insurers and Medicare Advantage plan medical claims for treatment have been consistently denied at the rate of nearly 60%.
The growing use of AI tech by payors contributes to the problem. When AI generated tools are not utilized effectively, an automatic denial of necessary claims can be made without consideration of a patient’s individual clinical circumstances. Although there are many opportunities for efficiency with AI, choosing a reliable RCM solution, and the addition of Value Based Care are proving to be the way forward.
The payor side of healthcare utilizes any tool available to automatically slow and deny claims. Insurers realize that clinicians do not have the employee hours to resubmit these automatic erroneous denials. Physicians who request treatment for patients are often met with an “expert” on the insurer side who are not experts in the specialty of the requested services.
More than 60% of denied claims are not reworked by the practitioner and are never paid. As a result, patients are not receiving prescribed care, and physicians lose revenue. Furthermore, physicians and supportive staff are tasked with endless hours to fight for payment to provide coverage for a patient’s potential lifesaving medical claims.
Medicare Advantage Plans – Not an Advantage?
Along with America’s aging population, Medicare Advantage enrollment is skyrocketing. Medicare beneficiaries enrolled in a Medicare Advantage plan rose from 20% in 2007 to nearly 60% in 2024. This trend means that hospitals are dealing with a significantly higher percentage of Medicare Advantage patients, this trend has continuously added to increased denial of necessary medical claims.
Payors are Concerned with Profits – Not Patient Outcomes
It has never been easy for hospitals to work with insurers. This causes major RCM issues for hospitals and compromises patient safety. Insurance companies are increasingly imposing burdensome and shifting policies on healthcare organizations, this results in cash flow problems and compromises patient safety. Regulators must enact policies that require payors to establish appropriate timelines and provide transparent reasons for denials.
It has been well documented that rising costs for labor, drugs, and supplies affect the healthcare industry. This issue needs more attention and improvement of efforts from the healthcare industry to curb payors’ burdensome policies.
Increasingly, payors require prior authorization for standardized services. Denial rates are increasing, and multi-step approvals are becoming more common. During this approval process, the insurer often requires multiple steps before paying for the insured’s healthcare. This can include the requirement that a patient must first try an insurer-preferred medication or therapy and prove that it has failed before their health plan will cover their doctor’s preferred medication, which is unsurprisingly, more expensive.
Forced to follow these unnecessary and wasteful steps to get paid for the correct care means that staff and clinical resources spend many hours appealing inappropriate denials, many hospitals factor invoices and take out short-term loans or lines of credit to cover operational expenses whilst waiting for these delayed payments. Hospital executives are pleading with federal regulators to enact stricter policies that require payors to adhere to tighter approval timelines and provide more transparency into their rationale for denying claims. Experts estimate that this “denial dance” costs U.S. healthcare organizations to spend close to $50 billion dollars annually on billing and collection processes.
Many hospitals are choosing to upgrade (RCM) revenue cycle management software to keep up with the changing payor rules and simplify practice collections and finances.
Policies Leave Insured Patients Without Care
Patients who are newly diagnosed should not be faced with the added anxiety of wondering when and if their health plan will finally approve their care. To avoid insurance quagmires that slow a patient’s care, working with a solutions partner can reduce the time, stress, and delay in care.
Over the past decades, the average time from diagnosis to treatment averaged two weeks. Today that time has more than doubled — just to receive initial treatments. No healthcare provider can afford to make a move without an insurance approval. Physicians deliver a vast expanse of services during any complex treatment. Today, each medical move toward healthcare requires prior authorization, and the hospital must wait valuable care days for approval. Delays often result in emergency department visits and hospitalizations that could have been avoided. This creates stress costs for patients and the healthcare system. The harm to patients is all for profit, not for the assurance of the delivery of quality of evidence-based medicine.
The Denial Defense
Everyone deserves access to safe, high-quality, affordable healthcare. A huge portion of care delivered in the United States is unnecessary. Prior authorizations are a proven tool to ensure that patients get safe, effective, evidence-based care — and avoid unnecessary tests and treatments that drive up patient costs.
There are many instances in which a patient’s care journey suffered because of denials, Physicians dedicated to fighting to get patients approval for a multitude of care treatments has become continuous – and costly.
Next Steps for Healthcare Providers
Instating policies through the AHA that do a better job of streamlining the prior authorization processes is key. Escalated oversight from the Centers for Medicare and Medicaid Services is centric.
Recently, a prior authorization reform rule seeking to make the approval process more efficient applies to Medicare Advantage plans. Medicaid and the Children’s Health Insurance Program (CHIP) fee-for-service programs, Medicaid managed care plans, CHIP managed care entities, and issuers of qualified health plans offered on federally facilitated exchanges are due for reform.
Current legislation is set to ensure that as of 2026 payers must be required to send prior authorization decisions within 72 hours for urgent care requests, and one week for non-urgent requests. Health plans will be required to state the reason and proof of reasoning for denied prior authorization requests.
CMS can establish regulations that require insurers take their role in value-based care more seriously. CMS should advocate value-based care. Treatment must be regarded as a collaboration between provider and payor.
When an insurer makes a patient wait for care. The result is a degradation of the quality of care and ultimately less optimal patient health outcomes.
Combat Claims Denials
We offer medical software solutions powered by Advanced MD, CureMD and CareCloud. Together, with premier services, Virtual Office Healthcare Solutions can provide your practice with a comprehensive, reliable, all-in-one practice management solution that mitigates the pre-authorization quagmire. To learn how to avoid and manage constant claims denials, and effectively streamline your practice, reduce employee burden, and increase patient outcomes, call us today. Our experienced expert team is waiting so, contact us.
