Healthcare Parasites: “Denial Managers”

Nyceve has exhaustively chronicled the denial of claims by private, for-profit insurance companies.  She has illustrated again and again the human cost of these denials.

The Wall Street Journal of February 14, 2007 (subscription) reports on yet another "industry" that feeds on and prospers from the absurdities that characterize what we in the US are pleased to call our healthcare "system".  All direct providers of healthcare services risk receiving no payment for their services and must increasingly rely on highly profitable and parasitic companies to help them collect.  They are parasites because they can only exist in a system built on the denial of payments.

Increasingly, and at a cost of 3-5% of the amount recovered, physicians, hospitals and other providers are calling upon enterprises dedicated solely to the recovery of money billed by providers and denied by the insurance companies. These companies use specialized software to detect minor changes in insurance company documentation requirements and use the information to negotiate recoveries of payments previously denied or to warn providers of changes that would cause denials in the future.

The Journal provides examples.  Four years ago an eight physician practice struggled to recoup more than $500,000 in claims denied or unpaid by insurance companies.  Two of doctors quit; three others borrowed $100,000 to allow the practice to continue.  Some moonlighted in emergency rooms to make ends meet.  The practice hired one of the largest companies in the business of helping providers recover payments from insurance companies.  Athenahealth’s software corrected the complex codes that represent procedures and services to the insurance companies and made them fit the companies’ extremely complex rules.  Today the practice is on sound financial footing, having repaid its loan and experiencing only $179,000 in arrears.

About 30% of physician claims and a portion of hospital claims are denied on first submission.  As a consequence an entire industry, called "denial management," has emerged.  Physician billing and practice management technology sales grew to $7.5 billion in 2006.  It promises only to grow and is so attractive that such enormous companies as General Electric are entering the business.

The next time you suffer when paying another enormous health insurance premium or wonder how you can possibly pay a medical bill, remember that groups you never imagined existed are enriching themselves at your expense.