There are always administrative costs associated with running a hospital, but the majority of a hospital’s resources should be dedicated to doing what hospitals do best: providing safe, accessible, and excellent patient care to all who need it.
That may seem self-evident, but as a new AHA report released this month documents, that mission is increasingly under pressure from rising administrative costs and onerous private insurer practices that often delay or deny treatment to patients.
For example, many private insurers now require prior authorization for an ever-increasing number of services, as well as the use of step therapy and “fail-fast policies” that delay patients from receiving the most appropriate treatment. From 2022 to 2023, treatment denials increased an average of 20.2% on private insurer claims and 55.7% on Medicare Advantage claims, according to the report.
These burdensome private insurer practices force hospitals and health systems to spend valuable staff and clinical resources appealing and overturning unjustified denials, costing them billions of dollars each year. In fact, recent data from Strata Decision Technology shows that administrative costs currently total $1.2 billion. It accounts for more than 40% of the total costs hospitals incur to provide care to patients.
Speaking for many in the field, one health system stated in our report that “the increase in prior authorization requirements, claims audits, denials, level of care downgrades, and payer policies is staggering and impacting health systems’ ability to reinvest in infrastructure, service lines, and physician retention and recruitment.”
The goal of hospitals and healthcare teams is to treat patients and restore health without excessive regulations and insurance company requirements that get in the way of their critical work.
The AHA leads the fight against intrusive and often inappropriate insurance tactics that strain already overstretched medical professionals and reduce patients’ access to care.
We have made private insurer accountability a top priority, working with Congress and federal agencies to increase oversight of Medicare Advantage plans and crack down on fraudulent practices that undermine their effectiveness for patients. And we are making some progress. For example, earlier this year we worked closely with the Centers for Medicare & Medicaid Services to develop a final rule requiring MA, Medicaid, the Children’s Health Insurance Program, and federally sponsored Marketplace plans to streamline the prior authorization process to help patients receive care in a timely manner and reduce the administrative burden on providers.
At the same time, the Coalition to Strengthen American Health Care, of which the AHA is a founding member, launched a multi-platform media offensive in September with a new ad titled “ “Every second counts.”
The ad, which has aired on national cable networks including Fox, CNN and MSNBC, highlights the difference between hospitals and health systems that provide 24/7 care to patients and corporate health insurers that often delay needed care while increasing their profits.
We continue to insist that clinicians and care teams in consultation with patients should make important care decisions, not insurance companies, regulators or bureaucrats.
Healthcare workers will never give up on their mission to provide high-quality, safe care to patients, and we will continue to work with our partners across government and beyond to address and remove any barriers that impede hospitals’ ability to do what they do best: treat patients, save lives, and improve the health of all people.
