The Impact of Location on Claims Reimbursement Speed and Denial Rate

Claims Reimbursement Speed and Denial Rate

A recent examination has revealed a significant link between the operational location of healthcare providers and the speed and accuracy of claims reimbursement by insurers. If your practice encounters delays in claims reimbursement, this may be attributed to the geographical area in which your practice is situated, according to a recent scrutiny of financial transactions.

The recently released market research report, titled “10 Best and Worst States for Provider Claims Payment,” establishes a clear correlation between the promptness and precision of payer reimbursements to providers and the state in which the hospital or practice is located. This comprehensive analysis is based on patient financial transaction data collected from over 1,800 hospitals and 200,000 physicians nationwide.

In summary, healthcare providers in Louisiana, Oregon, and New Mexico experience swifter and more precise claims reimbursement compared to their counterparts in other states. This assessment is based on two crucial performance indicators: the initial denial rate and accounts receivable (A/R) exceeding 90 days. Meanwhile, Pennsylvania, Indiana, Wisconsin, Iowa, Arizona, Illinois, and Ohio stand out as the top ten states with the most efficient claims-paying performance by payors to providers.

Conversely, the analysis identifies the bottom ten states, starting from the least effective, as South Carolina, Mississippi, Arkansas, North Carolina, Missouri, Kansas, Georgia, Kentucky, New Jersey, and Idaho.

In general, the aged accounts receivable (A/R) in the lowest five states is double the amount observed in the top-performing states. Furthermore, the analysis uncovers that healthcare claims in the least performing states are over five times more likely to remain unpaid for final denials.

The managing principal of the healthcare group at Healthcare Industry highlighted, “Final denial rates have been on the rise nationwide. This data enables us to pinpoint the states where payors consistently decline claims, particularly in the first half of 2023. This persistent issue is burdening the industry, placing significant strain on health systems’ revenue. The financial well-being of providers is closely linked to the quality of care they can offer, which directly impacts patients as well.”

Healthcare providers along the continuum of care have faced substantial financial hurdles since the onset of the 2020 pandemic. According to the most recent hospital financial performance report from Healthcare Management Consulting, this challenging financial landscape seems to be here to stay. The report reveals that financial performance declined for hospitals in July 2023, despite some marginal improvements compared to the prior year. The median year-to-date operating margin index, as calculated by the healthcare firm, stood at 1.3 percent for that month. Outpatient volumes continued to decrease, while expenses remained elevated.

Furthermore, instances of bad debt and charity care saw a month-over-month increase, as providers grappled with Medicaid eligibility reevaluations – an issue that affected providers in specific states more acutely than others.

The authors of the Healthcare industry analysis recognize that providers cannot readily relocate their hospitals and practices to achieve better financial performance. Nevertheless, this data equips them to engage in meaningful dialogues with payers, aiming to rectify systemic issues, as emphasized in the report. “Identifying aberrant behaviors and substantiating them with reliable statistics can go a long way in rectifying persistent systemic issues,” the authors concluded.

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