Survey Finds: Denials A Costly Problem For Physicians, Insurance Companies At Fault

Claim denials are cited as a major problem for 90.2 percent of providers who responded to the "Managed Care Leadership Survey on Managed Care Claims Payments" survey.

The survey, conducted by the Managed Care Information Center, found on average 13 percent of respondent’s claims are denied.

"This is a sensitive subject for most providers because they basically want to be paid for the services rendered in full and on time," said the regional director of an MCO.

The director of a contracted care organization found denied claims are costly "especially when unfounded because they are a very, very expensive proposition. Each is labor intensive and often the stakes are very high for the provider."

The senior vice president of business development for a consultancy company agreed and said denied claims cause office productivity hits due to re-working claims.

Of those who indicated claim denials to be a major problem, 39 percent said physicians experience more difficulty with denial-associated problems, 7.3 percent noted hospitals and 43.9 percent believe both are subjected to the negative aspects of a denial.

"Most physicians do not have the staff needed to field the issues of denied claims. There is usually noclear way of doing reviews by a good number of managed care denials. They often involve loads of extra paperwork in locating the problem or informing the insurance company that the claims should not have been denied. There are a lot of cases where denied claims are incorrectly denied at the insurance level and then the physician has to wait 30 days or more to fix the issue," said a billing manager.

"Managed care companies are linking denials to both the physician bills and hospital bills. For example, if a hospital claim is billed without an authorization, the physician bill will also be denied for lack of hospital authorization," said a denials analyst from St. Joseph’s Hospital of Atlanta, Ga.

"However, I have also found that a hospital may not require an authorization for an emergency department visit and associated radiology services, but the physician billing for reading the radiology scan may get a denial for no authorization," the denials analyst continued.

One director of contracted care for an integrated health system suspects claim denials to be less of a problem for hospitals due to their heavier clout than physicians.

"For hospitals, generally denials come most often in response to high dollar claims. Consequently, we can and do challenge each and every one making the cost to us and the payor increase. For example, in physician practices the claims are quite regular and seem to be a measure of wills. If the practice challenges the denials regularly, the payor reduces the frequency of denials because of the costs and low return," the director said.

The majority of respondents pointed the finger of blame to the insurance companies, citing their efforts to be complicated, unruly, inconsistent and lacking important communication.

"Payors keep changing the rules, once we fix the problem with last month’s denials they start denying something else," said the director of Central Business Offices, a physician organization.

One of the modern stipulations for reimbursement is medical necessity.

"The payors are applying medical necessity standards that are not communicated in written or verbal form to providers. In the past the issue was authorization. Today you can have a valid authorization and still not get paid," said the administrator for a physician organization.

The denials analyst from St. Joseph’s Hospital said "due to complicated managed care contracts, ambiguity and technicalities, claims are processed incorrectly and MCO customer service quality and training is poor," causing problems in trying to prevent or correct denied claims.

Another respondent believes the claims are being denied because of electronic submission.

There is "too much reliance on computer software and codes. No human actually looks at claims that are denied. It is easier to deny them and then have the provider do the research as to why they should be paid," the president of an independent medical management company said.

"The main problem is that there is no moral incentive anymore in the insurance industry. It is only the economic incentive that drives the insurance business," a clinical professor at a medical university said.

The professor suggested "getting rid of the profit incentive in health insurance so that the only decision that needs to be made is if the reimbursement is appropriate,"

Outside of insurance companies at fault, it is the provider’s team seemingly road-blocking correct reimbursement.

"From a provider perspective, I would like to blame it on the MCOs. However, I believe the physicians and problems with coding are the primary cause. Then, when claims are denied they aren’t appealed and the initial cause isn’t fixed," said Jeff Milburn, a consultant for MGMA Health Care Consulting Group.

A concern among a few respondents was the lack of staff to handle denied claims and appealing them.

A claims manager from an MCO cites not having a fully trained staff to "analyze internal reports of denials by providers in our network with sizable volume of denials to assist and educate concerning claims filing issues."

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