Change Healthcare Analysis: An Estimated $262 Billion in Healthcare Claims Initially Denied in 2016

Of an estimated $3 trillion in claims submitted by hospitals in 2016, an estimated 9% of charges were initially denied, with appeals costing providers $8.6 billion to rework, an average of $118 per claim

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Change Healthcare Healthy Hospital Revenue Cycle Index

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ORLANDO, Fla.--()--HFMA ANI 2017, Booth 1321 & 1521—A new analysis by Change Healthcare revealed that out of an estimated $3 trillion in medical claims submitted by hospitals in the United States last year, an estimated 9% of charges, representing $262 billion, were initially denied. For the typical health system, as much as 3.3% of net patient revenue, an average of $4.9 million per hospital, was put at risk due to denials. While an estimated 63% of these claims were recoverable on average, reworking each denial costs providers roughly $118 per claim, or as much as $8.6 billion in appeals-related administrative costs.

Those are just some of the takeaways included in the Change Healthcare Healthy Hospital Revenue Cycle Index published today by Change Healthcare at the HFMA ANI 2017 conference. The insights reinforce the tremendous opportunity hospitals have to accelerate cash flow and reduce administrative costs by using advanced analytics to better manage the revenue cycle. The Index, available at MyHealthyHospital.com, also breaks down denial trends by geographic region and causes, and provides revenue cycle executives the ability to quickly benchmark their organization’s revenue cycle health against peers nationwide.

“Eye-opening insights like these are only possible with advanced analytics and revenue cycle tools that let you identify the root causes of denials, and implement and automate practices that prevent them,” said Marcy Tatsch, Senior Vice President and General Manager, Reimbursement and Analytics Solutions, Change Healthcare. “You can’t fix what you can’t see. But by reinventing the revenue cycle with analytics, a hospital can improve its success rate in appealing denied claims and increase how much revenue is recovered—not to mention reducing the number of denials in the first place.”

Achieving a high level of revenue cycle performance is difficult without contemporary revenue cycle analytics that help pinpoint the process gaps that fuel denials, and financial clearance and claims management tools that help ensure claims have accurate, complete data for revenue cycle functions, from patient access to billing and follow up.

The Change Healthcare Healthy Hospital Revenue Cycle Index data was culled from a sample of more than 3.3 billion hospital transactions valued at $1.8 trillion and is based on primary institutional inpatient and outpatient claims processed by Change Healthcare in 2016, and the average charged amount and first denied amount for 724 hospitals in the claims sample. The total claimed charges and denied amounts for the nation’s 5,683 hospitals was then extrapolated from this sample data. An appeal success rate of 63% for hospital customers and average reimbursement rate of 29% were used to calculate the amount denied. For more details on the methodology, please review the Index, which is available at MyHealthyHospital.com.

About Change Healthcare

Change Healthcare is inspiring a better healthcare system. Working alongside our customers and partners, we leverage our software and analytics, network solutions and technology-enabled services to enable better patient care, choice, and outcomes at scale. As a key catalyst of a value-based healthcare system, we are accelerating the journey toward improved lives and healthier communities. Learn more at www.changehealthcare.com.

Contacts

Change Healthcare
John Hallock, 617-615-7712
External Communications & Media Relations
john.hallock@changehealthcare.com

Release Summary

Analysis by Change Healthcare reveals that out of an estimated $3 trillion in medical claims submitted in 2016, an estimated 9% were initially denied.

Contacts

Change Healthcare
John Hallock, 617-615-7712
External Communications & Media Relations
john.hallock@changehealthcare.com