According to a new quarterly revenue cycle benchmarking report from Kodiak Solutions, health insurers are increasingly using requests for additional information to initially deny claims from hospitals, health systems, and medical practices. This practice is leading to significant delays in payments, amounting to billions of dollars.
According to Kodiak Solutions’ latest Revenue Cycle Analytics report, the denial rate from initial requests for information (RFI) has risen nearly 9% from 2022 to 2024, increasing from 3.51% to 3.82% of total billed charges. This data covers the period from January 1 to May 31, 2024.
These initial denials cause payment delays as provider organizations must gather the requested information. In the first five months of 2024 alone, $6 billion in claims were delayed within Kodiak’s benchmarking community, which includes over 1,900 hospitals and 250,000 practice-based physicians. Annualized, this amounts to $14.4 billion, up from $11 billion in 2022.
Despite the rise in denial rates, insurers are not seeing a higher volume of problematic claims. In 2023, approximately 88% of RFI-denied billed charges were eventually paid by insurers, a significant increase from 65% in 2022.
Colleen Hall, Senior Vice President and Revenue Cycle Leader at Kodiak Solutions, commented, “Our analysis indicates that insurers are using RFI denials to delay payments that they ultimately intend to make, benefiting from slower payments.” She highlighted that provider organizations incur costs for wages and benefits related to the claims before they receive payment, along with the additional burden of handling information requests.
The report also suggests strategies for mitigating the impact of RFI denials, including developing a formal approach to manage these denials, assessing the costs associated with each payor’s RFI practices to guide contract negotiations, and forming data communities with peers to better understand payor behaviors.
The August 2024 Kodiak RCA Benchmarking Analysis offers further insights into initial RFI denials by payor type, care setting, and state.
