The relationship between providers and payers has always been challenging, and the current landscape is marked by heightened tension. With rising denial rates and increasing administrative burdens surrounding payer rule changes, it's clear both sides need to find common ground to streamline processes and drive costs down.
“The industry has been dealing with denials in some fashion for 30 years,” said Jonathan Wiik, Vice President of Health Insights at FinThrive. “What’s new is that there’s explosive friction right now between providers and payers and it’s frankly over prior auth, clinical denials, downgrades and status determinations.”
Denial rates are a major pain point for providers, leading to strained relationships and financial losses. A recent survey found that 78% of hospitals and health systems believe their experience with commercial insurers is worsening. This has led to increased staff time spent on seeking prior authorization approvals and managing denials – 95% of hospitals report an uptick in time spent on these tasks.
Additionally, 62% of prior authorization denials and 50% of initial claim denials appealed are ultimately overturned, indicating significant administrative waste. There is an opportunity to reduce $40 to $60 billion (with a “b”) dollars in administrative costs associated with financial transactions, according to a recent research report.
According to Wiik, denials are on the rise in part due to a more aggressive approach to reviews by insurance payers to improve their own margins.
“Payers only have so many levers they can pull to manage care and support margins,” Wiik said. “The first is they can add more members, but the commercial insured market is shrinking, so they have fewer premium dollars from that source to make their margins.”
“The second way payers can improve margins is through more aggressive utilization review and not pay claims,” he added. “That has manifested in the form of denying large claims in bulk – that is, paying less on the claim inventory that’s there – and that’s absolutely what they’re doing.”
Effective collaboration is essential in the healthcare industry, as it leads to better lower costs and streamlined processes. By fostering strong partnerships between healthcare providers and payers, they can create a more efficient system that benefits everyone involved. The level of trust between provider and payer has been lacking and needs to be reestablished through outcome-based, frequent, data-driven, collaborative discussions.
To enhance collaboration, providers and payers can implement the following strategies:
Providers should always be aware of payers' payment requirements and preauthorization rules and be agile to implement them efficiently. By leveraging technology solutions that provide near real-time updates, providers can ensure that all necessary documentation and requirements are efficiently, consistently and accurately met before billing.
“This comes all down to the claims, contracts, operations and technology,” Wiik says. “When leveraging a prior authorization solution, for example, taking information from past claims, as well as keeping tabs on the latest payer bulletins, should afford a near real-time rules engine so stopgaps for documentation are in place.”
This proactive approach reduces the chances of denials, streamlines the claims process and helps unnecessary interactions with payers.
For true transformation, it’s imperative for payers and providers to perceive their relationships as partnerships. This means investing time to understand each other's missions, goals and challenges.
Leaders who broaden their perspectives to consider the views and needs of all stakeholders across the healthcare economy can unlock new opportunities for collaboration. This holistic approach not only improves outcomes for patients, but also enhances the efficiency and effectiveness of both payers and providers. This is not easy – it takes finding common ground, like lowering the cost of care, or reaching an authorization approval rate, or implementing a gold card program.
Wiik says payers and providers need to start working together rather than against each other. “Let’s talk about why we’re not getting along and how we can make it better by starting to exchange data, looking at the contracts and understanding how we can best collaborate,” he said.
Using robust technology platforms with analytics capabilities allows providers to evaluate the entire lifecycle of a claim. If providers can better understand where problems occurred—be it eligibility, benefits, coding, billing or contract—they can more effectively address the root causes of denials and prevent them in the future.
“There are about 14 touchpoints between when a doctor schedules an appointment to when the bill gets paid, and each one can fail if the claim is missing any or a change occurs in the information,” Wiik said. “Analytics enable providers to understand the root cause of denials and change workflows, and prevent them downstream — all while holding payers accountable to their own contracts."
Improving collaboration between providers and payers is essential for enhancing patient care, reducing administrative burdens and ensuring financial stability.
To take the first step towards improved relationships and streamlined processes, consider exploring advanced denial management solutions from FinThrive. Learn more about how you can bend the denials curve in a hostile payer-provider environment.