Nashville, Tenn.-based HCA Healthcare has reported a modest reduction in prior authorization denials for accounts with two midnights or more, but still has "way too many denials," with large Medicare Advantage payers driving a significant portion of these denials, CEO Sam Hazen said during the company's third-quarter earnings call on Oct. 25.
The 187-hospital, for-profit system has doubled down on denial mitigation strategies through its revenue cycle in recent years, but noted that commercial payers have ramped up the intensity of their denial activities.
"However, given our focus and investment in these areas, we've been able to moderate the rate of growth in denial write-offs this year compared to the prior year," Mr. Hazen said. "We are now starting to get some of our first-quarter denials through the entire adjudication process … and are pursuing these cases through dispute resolution. Dispute resolution can take one to two years to fully complete, so we will need to continue with this strategy going forward."
MA now represents 58% of HCA's total Medicare volume, and the ratio of observation-to-inpatient stays is still significantly higher for MA than for traditional Medicare, even nine months past the two-midnight rule implementation, according to HCA.
CMS' expansion of the two-midnight rule requires patients to be admitted as an inpatient if the treating clinician determines they require hospital care that extends beyond two midnights — rather than being held under observation status as an outpatient.
However, a recent analysis of hospital claims data by Kodiak Solutions found that payers are "continuing to apply their own criteria for inpatient admission and dismissing the two-midnight rule for Medicare beneficiaries."
HCA reported that the MA case-mix index adjusted length-of-stay ratio is about 10% higher than traditional Medicare, which executives said is driven by payer-influenced discharge delays.
"These delays drive cost burdens for providers. In working with our Medicare Advantage payers, we are focused on addressing two primary issues: the denial burden and the cost burden," Mr. Hazen said.
Since the expansion of the two-midnight rule, HCA's same-facility total Medicare admissions increased by 5.3% year over year in the third quarter, primarily due to the expansion of the two-midnight rule. Traditional Medicare admissions were essentially flat, while MA admissions grew by 11%
"We attribute approximately 2% of that 11% growth in Medicare Advantage admissions to the two-midnight rule impact," Mr. Hazen said. "This equates to approximately 50 basis points of our overall growth in admissions and has remained consistent over the year."