Denials top reason for eroding provider-payer relationship

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A new report by the Healthcare Financial Management Association shows a deteriorating relationship between providers and payers.

Nearly 60% of health system CFOs surveyed said their relationships with health plans has changed for the worse over the past three years.

Eighty-percent cited an "intentional or systematic effort" by payers to increase denials, according to the report, "Bridging the Payer-Provider Divide."

Denials have led 75% of respondents to add financial services staff in the past three years to manage the process.

Also undermining the relationship between providers and payers is frustration with fee schedules that have remained flat despite increases in costs since the pandemic, said HFMA report author Jeni Williams.

In contrast, health plan executives interviewed said payer-provider relations remain strong, particularly when it comes to value-based arrangements.

"Hospitals and health plans engaged in value-based payment initiatives have had some success in developing collaborative working relationships," said HFMA SVP for content and professional practice Richard L. Gundling. "But on the fee-for-service side, the tenor of these relationships has deteriorated as providers' frustration levels with payers' administrative requirements and expectations have increased."

WHY THIS MATTERS

Increased payer transparency around payment rules and behaviors was cited by three quarters of respondents as the primary change that could strengthen their organization's payer relationships.

Perhaps surprisingly, most provider executives surveyed are not looking to technology or AI as a solution to end delays and unnecessary denials. About 64% of CFOs surveyed believe it's too early to tell what impact artificial intelligence will have on their relationships with payers. 

An additional 29% expect AI to make matters worse. CFOs cited AI-driven denials on the part of payers.

Claims and prior authorization denials are adding to provider burnout and impact care, according to the report. About 87% of CFOs surveyed said the current state of working relationships with health plans impacts their organization's ability to provide optimal care to patients.

"Having to call a patient to say, 'I'm so sorry, but we don't have your authorization here from your insurance company, so we have to reschedule your procedure, and I apologize that you've already taken PTO and arranged transportation,' that becomes a patient dissatisfier. They're not upset with their payer when that happens. They're upset with the provider," said Shannon King, a longtime revenue cycle executive and a board member for HFMA's Arizona Chapter.

THE LARGER TREND

The HFMA survey included responses from 102 hospital and health system CFOs. It did not include health plan executives. Only those few featured in the report were interviewed.

Sixty-one percent of executives surveyed said there were more challenges in contract negotiations than in previous years.

Numerous providers reportedly no longer take Medicare Advantage plans for insurance due to high denial rates, even though half of seniors who have Medicare for coverage have an MA plan.

Earlier this year, HFMA released a survey of 135 health system CFOs, which found that 16% of systems are planning to stop accepting one or more MA plans in the next two years. Another 45% said they are considering the same but have not made a final decision. The report also found that 62% of CFOs believe collecting from MA is "significantly more difficult" than it was two years ago, according to TheStreet.

In the latest HFMA report, Tamie Young, vice president, revenue cycle for Stillwater Medical Center in Stillwater, Okla., said she was startled to discover that the Medicare Advantage plans the organization contracted with were a financial drain on the system.

"We found that we were making far less than regular Medicare rates and, in some cases, less than Medicaid rates on our Medicare Advantage plans," Young said.

Email the writer: SMorse@himss.org