AUGUST 30, 2024
Originally published by our sister publication Specialty Pharmacy Continuum
A survey of more than 500 hospitals and health systems concluded that private payors often refuse, or delay, care to patients who are making legitimate medical claims (bit.ly/4dk524j). Denied claims tend to be for higher-cost treatments, revealing a strategy that lets companies hold onto profits at providers’ and patients’ expense, according to the report.
“Without a doubt, the most
Originally published by our sister publication Specialty Pharmacy Continuum
A survey of more than 500 hospitals and health systems concluded that private payors often refuse, or delay, care to patients who are making legitimate medical claims (bit.ly/4dk524j). Denied claims tend to be for higher-cost treatments, revealing a strategy that lets companies hold onto profits at providers’ and patients’ expense, according to the report.
“Without a doubt, the most challenging part of these denials is how they impede the practice of medicine and pharmacy and remove the clinical decision making from the clinician,” said Soumi Saha, PharmD, JD, the senior vice president of government affairs at Premier Inc., a healthcare analytics, consulting and advocacy firm based in Charlotte, N.C. The firm commissioned the national survey to help shed light on the problem.
Nearly 15% of claims for reimbursement submitted to private payors by survey participants were initially denied, including many that had been preapproved through a prior authorization (PA) process. More than half (54.3%) of denials by private payors were overturned and the claims paid out—but only after multiple costly rounds of provider appeals. These appeals, on average, cost providers $43.84 to adjudicate per claim. In total, providers spend $19.7 billion annually to settle claims with payors.
These denials do not just affect providers, Dr. Saha explained. “The net result of these denials for patients is longer-than-expected hospital stays, which adds expense and risk, as patients with longer stays have greater rates of secondary infections, falls and exposure to other contagious diseases.”
Premier collected data from hospitals and health systems from Oct. 10 to Dec. 31, 2023. More than 500 hospitals across 36 states, accounting for 52,123 acute care beds, were included in the survey, Dr. Saha said, demonstrating the extent of the problem.
Despite the large sample size in the report, Robert Traynham, PhD, the executive vice president of public affairs at AHIP (a trade association of health insurance companies), noted that “the Premier report essentially treated all denials the same, whether appropriate or not, giving a misleading picture.” He noted, for example, that denials may be issued because requests do not include supporting clinical documentation needed to justify the request for authorization in a timely manner.
Dr. Traynham added that many providers have not fully integrated electronic PA (ePA), based on an RTI International analysis of an AHIP ePA initiative. The analysis found that providers who had implemented ePA processes saw dramatically improved turnaround times and greater clarity on PA requirements (bit.ly/3wgLugC).
Next Steps
In response to the toll PAs take on providers and patients, Premier and 118 member organizations sent a letter to the Centers for Medicare & Medicaid Services (CMS) advocating for solutions to address payment denials and delays for Medicare Advantage (MA) patients (bit.ly/4bfLI6g). The letter calls for CMS to:
“The most critical action CMS could take to combat these practices is to leverage the existing statutory authority it has to hold payors accountable for ensuring patients have access to timely and quality care,” Dr. Saha said. “The first step is collecting data from health plans on their rates of payment denials and delays. CMS can then determine whether these patterns are a threat to network adequacy and beneficiary access.”
In response to this letter, a CMS spokesperson told Specialty Pharmacy Continuum that the organization is “conducting oversight to ensure MA organizations are complying with the new requirements outlined in the 2024 MA and Part D Final Rule, and has a number of tools it can use to correct non-compliance with the new requirements, including issuing compliance and enforcement actions,” including civil and monetary penalties as well as enrollment and marketing sanctions.
Furthermore, by January 2025, there will be new rules released for MA and Part D plans that will require MA plans to include an expert in health equity on their utilization management committees (bit.ly/4aZJqJ0), the agency noted. The rules will further give MA enrollees the right to appeal the termination of services and require the MA organization to provide a detailed explanation why services are either no longer reasonable and necessary or no longer covered.
CMS announced that it also solicited public comments on its request for information on how best to enhance MA data capabilities and increase public transparency that was announced in January. Comments on the proposed rules were due by May 29, 2024 and can be viewed at www.regulations.gov.
The sources reported no relevant financial disclosures.
