Medicare Advantage plans deny more inpatient level-of-care claims than all other payor types

CHICAGO (Feb. 15, 2023) – Healthcare systems have found themselves in precarious financial standing due to a dramatic increase in the number of inpatient claims being denied by health insurers based on the lack of medical necessity, according to data collected by Crowe LLP. Crowe is a public accounting, consulting and technology firm in the U.S. with offices around the world. A new benchmarking report, “Who’s Picking Up the Check?,” analyzes information pulled by Crowe Revenue Cycle Analytics (RCA) software and reveals the financial implications of these level-of-care reimbursement disputes, which are particularly rising in frequency among the Medicare Advantage (MA) payor group.   

Crowe RCA software monitors every patient financial transaction from more than 1,700 hospitals and 200,000 physicians for the purposes of automating hindsight, providing accounts receivable valuations and analyzing net revenue. Crowe leverages data gathered from clients on the Crowe RCA platform to monitor payor behaviors both within specific markets and nationally. Insights gleaned from this data aim to arm providers with actionable insights to support targeted performance discussions with their payors. 

One of the most straightforward payor categories when it comes to assigning the appropriate level of care is traditional Medicare. MA plans, on the other hand, have adopted more restrictive criteria commonly used by commercial health insurance carriers and, according to the Crowe report, deny more inpatient hospital claims than all other payor types. Through November of 2022, the initial inpatient level-of-care claim denial rate for MA plans was 5.8% compared with 3.7% for all other payor categories. When isolating just the payors within the MA plan population, providers wrote off 8.5% of their inpatient revenue as uncollectible in comparison to 4.7% in 2021.  

“In 2022 alone, clients in our benchmarking database wrote off $535.4 million on account of Medicare Advantage plan denials based on lack of medical necessity,” said Colleen Hall, managing principal of the healthcare group at Crowe. “Given the immense popularity of these plans, healthcare providers will have to adjust their clinical operations and should ensure their revenue cycle and care management teams are in alignment on which denied claims should be prioritized when managing appeals.” 

The Crowe report also revealed: 

• In 2021, providers wrote off 3.6% of their inpatient revenue as uncollectible. Through November 2022, that number jumped to 5.9% – a 64% increase. 
• Through November 2022, the dollar value of initial clinical denials by payors represented 4.2% of billed inpatient dollars. That percentage is 18.5% higher than in 2021. 

“One step that providers can take to try to prevent these reimbursement issues is to implement a physician adviser program to verify patient status and allow for peer-to-peer reviews to be completed when payors offer them,” said Hall. “This could help alleviate the administrative burden placed on them to defend the level of care, so hospitals can allocate more of their resources to caring for their patients.” 

To download a copy of the latest Crowe RCA report, please visit “Who’s Picking Up the Check?” 

About Crowe Revenue Cycle Analytics (Crowe RCA) benchmarking data 
Over 1,700 hospitals and more than 200,000 physicians use the Crowe RCA solution to capture every patient transaction for purposes of automating hindsight, providing accounts receivable valuations and analyzing net revenue. Crowe developed this proprietary benchmarking solution that monitors revenue cycle performance through normalized key performance indicators at healthcare organizations across 47 states and tracks over $800 billion in combined annual gross revenue. 
 
About Crowe 
Crowe LLP is a public accounting, consulting and technology firm with offices around the world. Crowe uses its deep industry expertise to provide audit services to public and private entities. The firm and its subsidiaries also help clients make smart decisions that lead to lasting value with its tax, advisory and consulting services, helping businesses uncover hidden opportunities in the market – no matter what challenges the markets present. Crowe is recognized by many organizations as one of the best places to work in the U.S. As an independent member of Crowe Global, one of the largest global accounting networks in the world, Crowe serves clients worldwide. The network consists of more than 200 independent accounting and advisory services firms in more than 130 countries around the world.