1/3 of Hospitals Nearing ‘Danger Zone’ Denial Rate, Survey Finds

A third of hospital finance executives are reporting average denial rates of more than 10 percent over the last year, according to a new survey from consulting firm Harmony Healthcare.

The survey highlights the current state of the denials market, with responses from more than 130 hospital reimbursement executives that were generated via LinkedIn this spring.

Leaders at Harmony say they recognize the urgency created within healthcare to address the 20+% increase in denials rates over the last five years. The pandemic saw those rates increase even more rapidly, contributing to the need for stronger denials prevention and recovery solutions, they noted.

Across the U.S., the average denials rate is between 6 percent and 13 percent, and over one-third of hospital reimbursement executives surveyed responded that their organizations are nearing the denials “danger zone” of 10 percent. Key findings from the report include:

• 33 percent of hospital executives reported average denial rates of more than 10 percent
• 31 percent of hospital executives reported average denial rates of less than 5 percent
• 20 percent of hospital executives reported average denial rates of 5 to 7 percent
• 16 percent of hospital executives reported average denial rates of 8 to 10 percent

“The public health emergency understandably diverted attention away from addressing this critical business issue,” Randy Verdino, CEO of Harmony Healthcare, said in a statement. “While the crisis is not fully behind us, we feel that many of the hospitals and healthcare systems we support are ready to pick back up the torch to lower denials and increase recovery to more acceptable levels of performance.”

What’s more, Harmony leaders noted, research shows that approximately 85 percent of denials are preventable, but successfully preventing them requires strengthened leadership and improved skills of hospitals’ prevention and recovery teams. Hospital reimbursement leaders reported a variety of high dollar concerns when it comes to denials and their strategies in preventing them. Key findings in this area include:

• 32 percent of respondents reported their top concern as coding
• 30 percent of respondents reported their top concern as medical necessity acute IP
• 20 percent of respondents reported their top concern as front end
• 18 percent of respondents reported their top concern as clinical validation denials

“Payers continue to deny claims, so facilities and the revenue cycle team must focus on finding and correcting systemic issues,” said Lisa Knowles, Harmony’s senior director, client solutions. “No denial should be hidden, and every win should be celebrated through continuous improvement,” she added.