In the United States, healthcare providers face serious money problems because of the claims adjudication process. This process means checking and approving medical claims sent to insurance companies for payment. It has become more expensive and takes more time. This affects the money health clinics, hospitals, and health systems have. A national survey by Premier Inc. showed that the cost to process claims reached $25.7 billion in 2023. This was 23% more than the year before. This article looks at why costs are rising, why claims get denied, and how this affects healthcare providers and patients. It also talks about how artificial intelligence (AI) and automation may help make claims processing better and easier.
Claims adjudication is very important but also hard work for healthcare providers. Medical claims need to be sent correctly to insurers to get paid. But mistakes, rules that change by payer, and more paperwork make claims more likely to be denied or delayed. The 2023 survey by Premier Inc. found that about 15% of all medical claims are denied on the first try. This stops quick payment.
It costs a lot for healthcare providers to handle denied claims. In 2023, it cost an average of $57.23 to process and appeal each denied claim. This was up from $43.84 in 2022. That is a 30% increase. Most of the cost comes from paying workers like clinical staff and office teams who handle checking, fixing, and following up on claims. The appeals for denied claims take a long time and often happen several times. On average, each denied claim goes through three rounds of review by insurers. Each round takes 45 to 60 days. This delays payments and makes more work.
These higher costs affect the financial health of healthcare providers. Hospitals and health systems now have only about 196.8 days of cash available. This is the lowest amount in ten years. With less cash, providers cannot spend more on patient care, new technology, or hiring staff. This might hurt the quality and availability of care.
One big cause of the extra work is the many different rules that insurance companies have for claims submissions. Each insurer wants different clinical papers, codes, and data formats. Because the U.S. has no single system for claims, mistakes happen often. Small errors like wrong entries, missing information, or wrong codes cause denied claims, even if the needed approval was given first.
More claims need prior approval now. In 2023, over 20% of all claims required prior authorization. This was up from 17% in 2022. For Medicare Advantage plans, prior approval is now needed for 30.5% of claims, up from 25% the year before. Even with prior approval, more claims are being denied. In 2023, 10.4% of claims with prior approval were denied. That was much higher than 3.2% in 2022. Providers say the main reasons for denial after approval are small mistakes like missing data that could have been fixed before sending the claim.
Many denied claims are later approved, which is frustrating. About 70% of denied claims are won on appeal but only after several long and costly reviews. Premier’s survey says this delays or wastes nearly $18 billion that providers should have earned. This problem could often be avoided.
Lack of enough staff makes the claims process harder. Over 83% of providers said they do not have enough workers to handle claims well. This limits their ability to fix errors fast or talk with insurers about late payments and denials. When claims are slow, healthcare groups get less money on time. This causes money problems and makes running their services harder.
Much of the work is still done by hand. Many providers use paper or partly automated systems that need people to check everything many times. This causes repeated errors. Also, insurance rules change often. Staff find it hard to keep up, which leads to more denied claims.
The high cost of claims processing affects how patients get care. Less money means hospitals and clinics might cut budgets. They could reduce staff or wait to buy new tools and technology. Staff time spent fixing denied claims is less time spent on direct patient care and improving quality.
The prior approval and claim disputes can also delay or block patients from getting tests, medicines, or procedures on time. Premier Inc. said these delays hurt patient access to care. The hard work and long processes also cause stress for providers and their staff. This adds to burnout and people leaving their jobs.
The growing problems and costs of claims processing show a need for new technology. AI and workflow automation can help reduce manual work and improve accuracy.
Premier Inc. supports using AI for prior authorization and claims processing. These systems use clinical rules and patient data to approve claims faster. This cuts down the number of manual reviews and errors. Automating simple tasks helps staff by lowering their workload and reducing mistakes.
AI also helps providers deal with different insurance rules by making data formats standard and pointing out missing or wrong information before claims are sent. This increases the number of clean claims, which are claims that are correct and complete the first time. Studies show clean claims get paid faster and cost less to process.
Besides being more accurate, AI speeds up prior authorization. Usual authorization processes can take days or weeks. Automated systems speed up decisions by using insurance policies and clinical guides during submission. This helps patients get care sooner.
Premier works with policy makers like the Centers for Medicare & Medicaid Services (CMS) to support new technology and simpler claims rules. They want clearer policies, unified documentation needs, and fewer duplicate prior authorizations. Using better technology and policy can help providers work better and lose less money from denied or late claims.
Medical practice administrators and IT managers deal with claims adjudication every day. Knowing how these challenges affect money and how AI can help is important for planning.
Administrators should remember that high denial rates and delays show bigger system problems. These cause higher costs and less money for their organizations. Important steps include:
For IT managers, the tech side means choosing AI tools that work well with healthcare workflows, follow data security laws, and connect with practice systems to cut down manual data entry. They should pick automation platforms that can keep up with changes in insurance rules.
The money problems caused by claims adjudication for U.S. healthcare providers are growing. Rising costs, more prior approvals, and frequent denials put pressure on provider resources. This limits money for patient care. Still, new AI and automation tools give chances to make claims processing easier, more accurate, less work, and faster payments.
Medical administrators, IT managers, and healthcare leaders need to carefully study and use AI claims solutions that fit their needs. Doing this helps them handle tricky insurance rules, keep money steady, and support fast, good care for patients. Premier Inc.’s data and efforts remind us of the need to fix claims adjudication problems and use technology to improve healthcare.
Claims adjudication costs healthcare providers over $25.7 billion in 2023, a 23% increase from the previous year. 70% of denials are overturned and paid after costly review cycles, affecting providers’ financial viability and investment in patient care.
In 2023, over 20% of claims required prior authorization, an increase from 17% in 2022. Notably, denials for claims with prior approval rose to 10.4%, significantly complicating the reimbursement process.
Healthcare lacks a unified claims submission system, leading to complex, error-prone submissions. Staffing shortages further hinder providers’ ability to submit accurate claims and follow up on late payments.
Minor clerical errors and missing data often lead to denials, including misspellings and incomplete information. Such errors are particularly frustrating for providers since they are largely avoidable.
The cost of fighting denials rose to $57.23 per claim in 2023. This rising administrative burden contributes to financial strain on providers, reducing cash on hand and impacting healthcare services.
Automation streamlines the prior authorization and claims submission processes, reducing staff burden and errors. It enhances operational efficiency, increasing the rate of clean claims and speeding up reimbursements.
Each payer has unique rules regarding coding and documentation, complicating the claims process. These inconsistencies create errors, requiring providers to spend excessive time on compliance.
Premier advocates for policy changes and utilizes innovative technologies to streamline workflows, enhance transparency, and reduce unnecessary denials, ultimately improving patient access to care.
Payer administrative costs average $40 to $50 per submission. This contributes to a 7% increase in net administrative costs across the insurance sector, paralleling premium increases.
Premier plans to collaborate with CMS on policy solutions like improving documentation processes and eliminating redundant prior authorization requirements, facilitating better patient access and reducing administrative burdens.
Simbo is using AI agents to automate all phone related workflows. Connect now to know more.
Schedule AI Agents Demo Now© Since 2019, Simbo AI.
