Healthcare claim denial statistics: State of Claims Report 2024

Claim denials are a well-documented challenge for healthcare organizations. Denied claims take much longer to pay out than first-time claims, if they get paid at all. Each one means additional hours of rework and follow-up, pulling in extra resources as staff review payer policies and figure out what went wrong. It’s time-consuming and costly. Beyond dollars and paperwork, denials affect patient care as uncertainty about payments leads to delays in treatment or unexpected out-of-pocket costs.

But how do healthcare leaders feel about the state of claims management today? How are they tackling the administrative burden? Is there any light at the end of the denials tunnel? Experian Health surveyed 210 healthcare revenue cycle leaders to find out.

The 2024 State of Claims report breaks down the survey findings, including insights into how automated claims technology is being used (or not!) to optimize the claims process and bring in more revenue.

What is the current denial rate for healthcare claims?

38% of survey respondents said that at least one in ten claims is denied. Some organizations see claims denied more than 15% of the time. That’s a lot of rework and lost revenue that providers were counting on.

In 2009, claims processing accounted for around $210 billion in “wasted” healthcare dollars in the US. A decade later, the bill had climbed to $265 billion. Industry reports—including Experian Health’s State of Claims series—repeatedly observed a rise in denial rates.

Today, 73% of providers agree that claim denials are increasing, while 67% feel it’s taking longer to get paid. Providers constantly worry about who will pay – and when.

What are the most common reasons for healthcare claim denials?

According to the State of Claim survey respondents, the top three reasons for denials are missing or inaccurate data, authorizations, inaccurate or incomplete patient info. In short? The problem is bad data.

Given how much information has to be processed and organized to fill out a single claim, this isn’t surprising. From patient information to changing payer rules, the sheer volume of data points to be collated creates too many opportunities for errors and omissions. On top of that, the rules are always changing. More than three-quarters of providers say payer policy changes are occurring more frequently than in previous years, making it increasingly difficult to keep up.

Other challenges, such as coding errors, staff shortages, missing coverage and late submissions still play a role, but it’s clear that solving the data problem could make a meaningful dent in the denials problem.

Read the blog: How data and analytics in healthcare can maximize revenue

Could automation improve claim denial statistics?

To help end the cycle of denials, more healthcare providers are turning to claims management software to resolve or prevent the snags that interfere with claims processing and billing workflows and boost claim success rates.

That said, around half of providers still review claims manually. Despite the proven benefits of integrated workflows and automation, the drive to implement new technology during the pandemic seems to have lost momentum: the number of providers currently using some form of automation and/or artificial intelligence (AI) has dropped from 62% in 2022 to 31% in 2024.

Could this be down to a lack of comfort with how new technologies work? Only 28% feel confident in their understanding of automation, machine learning and AI, compared to 68% in 2022.

For those who are curious but cautious, here are a few ways claims automation can help improve claim denial statistics:

• Connect the entire claims process end-to-end: Using an automated, scalable claims management system like ClaimSource® helps providers manage the entire claims cycle in a single application. From importing claims files for faster processing to automatically formatting and submitting claims to payers, it simplifies the claims editing and submission process to boost productivity.
• Submit more accurate claims: 65% of survey respondents say submitting clean claims is more challenging now than before the pandemic. There’s a strong case, then, for using an automated claim scrubbing tool to reduce errors. Claim Scrubber reviews pre-billed claims line by line so errors are caught and corrected before being submitted to the payer, resulting in fewer undercharges and denials and better use of staff time.
• Improve cash flow: Automating claim status monitoring is one way to accelerate claims processing and time to payment. Enhanced Claim Status eliminates manual follow-up so staff can process pended, returned-to-provider, denied, or zero-pay transactions as quickly as possible.
• Eliminate manual processes: While there are some tasks that genuinely need a human touch, too much staff time is wasted on repetitive, process-driven activities that would be better handled through automation. Denials Workflow Manager automates the denial process to eliminate the need for manual reviews. It helps staff identify denied claims that can be resubmitted and tracks the root causes of denials to identify trends and improve performance. It also integrates with ClaimSource, Enhanced Claim Status and Contract Manager, so staff can view claim and denial information on a single screen.

Improving claim denial statistics with AI

While automation speeds up the denials workflow by taking care of data entry, AI can look at that data and recommend next steps. Current ClaimSource users can now level up their entire claims management system with AI Advantage^TM, which interprets historical claims data and payer behavior to predict and prevent denials. The video below gives a handy walk-through of how AI Advantage’s two offerings, Predict Denials and Denial Triage, can help providers respond to the growing challenge of denials: