Revenue cycle leaders always had access to anecdotal evidence to suggest hospitals are seeing a surge in denied claims. Now, there are data to prove it.

Researchers from the Henry J. Kaiser Family Foundation examined nearly 230 million claims submitted to 130 insurers in 2017. They found marketplace insurers denied 19% of claims submitted for in-network services that year.1 Some other key findings:

Consumers appealed only a tiny percentage (0.5%) of denied claims. On average, appeals resulted in a reversal of the initial denial 14% of the time. However, insurer reversal rates varied widely, ranging from 1% to 88%.

Average denial rates vary widely across insurers, varying from 1% to 45%. Even individual insurers in the same state show wide variation. For example, denial rates among six Florida insurers ranged from 2% to 32%. An overly complex authorization process often leads to denials.

“Authorization requirements vary across payers. They are subject to interpretation or update,” says Christina Harney, vice president of access management at Indiana University (IU) Health. Unfortunately for patient access, keeping up with ever-changing requirements remains a largely manual process. Harney outlines some other issues leading to claims denials at IU Health:

Payers are getting specific as to the type of locations they will authorize. Some payers are specifying that services need to be obtained at free-standing sites and will not authorize facility-based care.

Medical necessity denials keep cropping up. This is happening even for claims that did not require authorization in the first place, Harney notes.

Updates and replacements of claims processing systems used by payers are causing problems. Multiple different systems are now involved in processing claims. Not all systems talk to one another.

This lack of integration is especially problematic when authorization requirements are updated (which, for most payers, is fairly often). “The systems and resulting authorization decisions are not always in sync,” Harney explains.

Many additional procedures now require authorization, including many that can be performed in a physician’s office. “The physician’s office may not even be aware that certain procedures require authorization,” Harney says.

Payers are using third parties to process claims. “In some cases, discrepancies occur between the payer and the third-party administrators acting on the payer’s behalf,” Harney notes.

In some cases, authorization was obtained for a particular service. When the claim is processed, the authorization is not visible to the payer; thus, the claim is denied.

“A number of these denials are avoidable and create a significant amount of rework to resolve,” Harney adds.

Combatting a flood of costly denials requires the combined strength of patient access and physician offices. Delivering the right clinical information (the documentation that aligns with medical necessity requirements) to payers is key. “This drives down peer-to-peer requests,” Harney says.

The financial clearance team identifies the providers who generate a high volume of requests for additional clinical information from payers. This is an indication that the provider in question does not understand the medical necessity requirements. “Experienced revenue cycle medical directors play a key role in driving action to mitigate these denials,” Harney notes.

Before claims are submitted, they are scrutinized to ensure all required elements, including authorizations, are in place.

“We are currently working on automated registration quality assurance process and batch eligibility to increase throughput and accuracy,” Harney reports.

With this new process, for each registration, authorizations will be validated automatically. The financial clearance team is busy tackling another issue.

“When prior authorization is not required, we will confirm whether a medical necessity review will be required post-service,” Harney says.

Revenue cycle leaders have bolstered internal relationships with provider’s offices. They also have built relationships with payer reps. “This helps us more easily resolve what we believe to be erroneous denials or claims processing issues,” Harney offers.

The financial clearance team has a great deal of expertise to identify what is happening and why. If denials happen, a root cause analysis “prevents pervasive problems,” Harney says.

Recently, there was an uptick in denials related to devices. The solution: Start on authorizations earlier, with providers fully on board with this approach.

Another batch of denials stemmed from procedures that were preauthorized. The problem was that the care plan suddenly changed right at the time of the procedure. The financial clearance team found a way to pay most claims.

“We perform a validation and update of authorization within the prescribed window, resulting in a reduction in this type of denial,” Harney says.


  1. Pollitz K, Cox C, Fehr R. Claims denials and appeals in ACA marketplace plans. Henry J. Kaiser Family Foundation, Feb. 25, 2019. Available at: Accessed April 5, 2019.