Payment denials for Medicare Advantage jumped by 56% in the last few years – putting both providers and payers under unprecedented financial pressure. From cashflow issues to wasted claims processing spend, reimbursement issues restrict patient care, compromise hospital operations, and produce billions of dollars of waste.
This article explores the root of these problems – and how many of them can be resolved with the right technology.
Recent surveys reveal the extent of reimbursement issues within healthcare. 38% of providers say at least 1 in 10 claims are denied, with many citing much higher volumes of denials. Worse still, 67% of providers say it’s taking longer to get paid – and claims processing now accounts for $265 billion wasted healthcare spend.
However, most of these issues stem from five core challenges:
Providers routinely submit incorrect or outdated CPT, ICD-10, or HCPCS codes. This leads to two reimbursement issues:
Worse still, up to 50% of claims that are denied due to coding errors never get resubmitted.
All HCC coding must be supported by clear documentation of the condition and treatment. But the OIG estimates that 69% of HCC codes submitted for Medicare Advantage cannot be supported by documentation – either due to missing information or discrepancies in patient records.
This can lead to claims being disputed or outright denied; it also creates disruptions to patient care, as physicians struggle to accurately view patient histories and therefore optimize care plans.
Reimbursement rates are heavily shaped by health plan policies – which are often adjusted or revised. Regulators can also influence payments, with recent changes set to decrease Medicare reimbursements by 2.9% in 2025.
Insurance claims rely on the safe and reliable sharing of data – from risk adjustment information to treatment documentation. But provider-payer collaboration is often limited by poor interoperability which creates delays in submission and claim processing.
Staffing shortages and the growing administrative burden make processing billing and payments harder to manage. There are multiple factors that exacerbated this issue, such as:
But these are not simply inconveniences; they lead to serious problems for providers and payers alike.
Many reimbursement issues are eventually corrected, but they cause delays and frustration that can have several serious impacts:
Cashflow problems are a serious threat to providers. Organizations may be forced to take on unnecessary debt or compromise operations due to a lack of sufficient funds, while the lack of reserve capital creates a clear vulnerability to sudden shocks such as legal issues or patient attrition. But US hospital cash reserves have decreased 28% in recent years – putting them under heavy strain.
Reimbursement challenges have the potential to exacerbate this issue and lead to serious operational problems. A recent study found that 50% of hospitals and health systems have more than $100 million in unpaid claims at least six months old. Poor documentation or undercoding in risk adjustment submissions can therefore lead to further financial troubles.
Future budgeting is also heavily affected by reimbursement issues and uncertainty about future insurance claims. Denials cost hospitals $5 million per year while changes to RADV audits could lead payers to lose billions in extra reclaimed funds from CMS. Reliable, accurate, and optimized reimbursements are therefore essential to allow providers and payers to manage their longer-term budgets and stay solvent.
Fortunately, providers and payers can combat these problems with the right technology.
HCC Assistant is an innovative software solution that leverages natural-language processing (NLP) to create automated HCC coding recommendations with 97% accuracy – and free providers to focus on patient care.
This helps reduce reimbursement issues in multiple ways:
Users have seen their RAF scores increase by 35% on average – leading to higher and more reliable reimbursements.
Want to explore how it could help combat your reimbursement issues?
