On June 10, 2021, one of the biggest U.S. health insurers announced a new policy that would deny as many as 1 in 10 emergency room claims. The policy was an attempt to curb healthcare costs and was met with resistance from hospitals, healthcare institutions, and medical societies, causing the insurer to delay it.
The policy was not the first of its kind. In 2018, a series of ER policies impacted the reimbursement of low- and high-acuity cases. In recent years, there have been increases in the number of denied Evaluation and Management (E/M) coding-related claims and frustrations among providers who are overburdened with documentation requirements. And while stringent policies have played their part in it, they are not the sole reason for the increase in denied claims.
Claim Denial Causes
Claim denials due to coding errors represent a major portion of lost revenue for hospitals and healthcare systems. According to The Change Healthcare 2020 Revenue Cycle Denials Index, the average denials rate is up 23% since 2016, topping 11.1% of claims denied upon initial submission through Q3 2020.
Each year, claims denied because of coding errors result in the loss of about $20 billion in the U.S. Lost or delayed reimbursements are just part of the claim denial problem. The cost to rework a denied claim is the other. Healthcare providers spend an average of $118 for each reworked claim, which does not include profitability and productivity losses due to duplication of administrative efforts.
