Increased Claims Denials and Staffing Shortages Worry Health System Revenue Cycle Leaders

Welcome to the September edition of the I-conic Solutions Newsletter. This month, we turn our focus to a critical issue affecting health systems nationwide — the growing challenge of increased claims denials and staff shortages. A recent survey conducted by the Healthcare Financial Management Association (HFMA) and analyzed by Guidehouse has shed light on the significant pressures faced by health system executives responsible for revenue cycle management.

The survey findings reveal that health systems are grappling with a surge in claims denials, particularly within Medicare Advantage plans. Less than one-third of survey respondents reported a final claim denial rate of 2% or below, while 10% indicated rates exceeding 5%. For Medicare Advantage, the situation appears even more challenging, with 22% reporting denial rates between 6.1% and 9%, and a third experiencing rates above this threshold.

Timothy Kinney, Guidehouse partner and leader in finance and revenue cycle advisory, notes, “Many payers have increased requirements for prior authorizations, leading to more denials and increased costs due to appeal activities.” These heightened requirements have created substantial financial and operational burdens for healthcare organizations.

Compounding the problem, health systems are facing significant staffing shortages within their revenue cycle departments. This shortage limits their ability to manage denials effectively and secure payments. According to the survey, over half of the 134 respondents reported a net collection yield of 84% or more, but over 20% have reported yields falling below 89%, highlighting the financial stress caused by both denial rates and insufficient staffing.

Among the top concerns for revenue cycle executives are payer challenges, with 52% of respondents citing prior authorization issues as their primary stressor, followed by workforce shortages (31%), rising costs to collect payments (25%), and cybersecurity threats (24%).

In response to these challenges, health systems are increasingly turning to digital solutions and outsourcing. Over three-quarters of respondents plan to invest in automation technologies, including artificial intelligence and machine learning, within the next year to improve efficiency and fill gaps caused by staffing shortages. However, only 10% have already made significant investments in these areas.

Additionally, many organizations are opting for outsourcing to manage their revenue cycle tasks more effectively. Over 75% of survey respondents reported fully or partially outsourcing these tasks, with most expressing satisfaction with their vendor relationships.

As healthcare leaders face growing pressures, strategic investments in automation, patient access, revenue integrity, and clinical integrity are becoming essential. By leveraging these investments, organizations can better navigate payer processes, reduce denial rates, and maximize returns.

At I-conic Solutions, we are committed to helping healthcare organizations enhance their revenue cycle management through innovative technology and expert guidance. Our comprehensive range of services, from digital automation to managed solutions, is designed to support your organization in overcoming these challenges and achieving optimal financial performance.

Thank you for reading this month’s newsletter. We look forward to continuing to provide you with valuable insights and strategies to help you navigate the evolving healthcare landscape. 

For more information on how I-conic Solutions can assist with your revenue cycle management needs, please reach out to us today.