Payer policies are meant to prevent waste. Instead, they stop providers from getting paid.

Utilization management requirements like prior authorizations are positioned as tactics to help prevent fraud and unnecessary high-cost procedures or treatments.??

In reality, these tactics cause significant delays in payments to providers or enable payers to avoid payment entirely. Meanwhile, payers’ increasing use of AI to make faster, more rigid payment decisions moves the process even further from clinical consensus, exacerbating the problem.??

Providers can’t tackle these inequities alone — and they shouldn’t have to. Effectively addressing these issues will take collaboration by payers, industry-wide standardization and strong revenue cycle partnership support. At Ensemble, we’ve helped clients successfully reduce friction with numerous payers with these 8 successful strategies.?

Here are three of the most egregious tactics we see providers facing today:?

1. Excessive requests for clinical documentation

The #1 reason payers deny payment across our clients is to request more clinical information or documentation. In some cases, this is even written into payer policies. Starting May 1, 2025, for example, Anthem Ohio and Virginia will require a patient’s full medical record to be submitted with every inpatient claim exceeding $100,000. These requests for additional information require providers to submit more evidence to support their clinical decisions. The practice assumes care is unnecessary until proven otherwise.??

Payment delays and denials don’t just impact cash flow, they divert resources that could be better used for patient care or reinvested into improving operational efficiency. In some cases, this additional financial strain can lead to service cuts and other cost containment measures.??

Payers claim additional information will prevent unnecessary treatment. The numbers in 2024 told a different story.??

• Payers withheld or tried to recoup nearly $10 billion in gross charges from our clients until additional clinical information or documentation was provided.??

• 94% of the claims were ultimately paid as billed, just several months late, and after many unnecessary steps. This process costs millions that hospitals shouldn’t have to spend.? ?

?? OUR TAKEAWAY: These tactics are effectively allowing payers to take no-interest loans from providers. And, as payers increase adoption of AI, meeting the imposed burden of proof increasingly demands more information — and effort — from providers.??

Payers should be required to follow industry-accepted clinical standards instead of being allowed to interpret care decisions based on their own proprietary criteria. By leaning on payer scorecards and denial trend analytics, providers can identify these issues early, push back effectively and reduce the burden of these unnecessary delays.?

2. Lack of medical necessity

Another primary reason payers use for denials is lack of authorization or medical necessity. When insurance companies override clinical decisions, they leave providers with little recourse and impossible choices:?

1. spend resources on costly appeals on lengthy arbitration
2. settle for a fraction of the reimbursement they're owed; or
3. forgo payment altogether

The real question is who gets to decide what treatment is necessary — clinicians or insurance companies? Right now, the system is allowing payers to essentially practice medicine.??

At hospitals every day, denials based on medical necessity question providers’ expertise and significantly burden providers — both financially and psychologically — when their focus should be on providing the best care for patients.?

In one example, a 75-year-old patient with a history of hypertension, hyperlipidemia and diabetes presented at the hospital with left-side weakness and trouble speaking. An MRI confirmed a frontal lobe stroke, and he was hospitalized for five days for treatment. Despite being a textbook case requiring inpatient care — meeting the InterQual and Milliman Clinical Guidelines recognized by CMS — the payer denied inpatient status. They didn’t agree the patient required specialized care and would only pay for minor outpatient treatment.???

The provider tried to make their case with the payer’s physician advisor during a peer-to-peer review session, but the payer still refused. The provider had no choice but to submit the bill, wait for a denial and go through an unnecessary administrative battle to appeal the decision.??

This happens too often. In 2024 alone:??

• Payers denied more than $3 billion in gross charges for providers working with Ensemble, by questioning if the care was medically necessary or properly authorized.??

• Ensemble successfully overturned nearly 60% of those denials, but many are still in process.? ?

?? OUR TAKEAWAY: For hospitals to be proactive, it takes advanced data analytics to spot these trends and anticipate the problematic tactics payers are using early. We’re helping providers push back in a smarter, more strategic way.??

Health systems should collaborate with experienced partners to help streamline and standardize claim submission and appeal processes. By aligning with industry-recognized clinical guidelines and improving communication with payers, these partnerships can reduce administrative burdens, improve reimbursement timelines and create a more efficient system that benefits both providers and patients.?

For example, we worked with a major payer in Virginia to reduce future friction with providers and expedite accurate payment. By establishing strong lines of communication and a side-by-side claim review, we successfully addressed issues preventing prompt payment for providers. This is the type of collaboration we need from all major payers.?

3. Hiding criteria for ER payments??

The American College of Emergency Physicians (ACEP) established and maintains standards of care for patient treatment in the ER. These standards are so widely accepted that Epic incorporates them into its leveling tool.??

But instead of being required to use this industry-accepted leveling methodology, payers are free to create their own proprietary criteria. They aren’t required to disclose what their criteria are or how they were developed, but they can use this unique methodology to force providers into pre-payment reviews when their leveling determinations aren’t aligned or down-code their claims and accept lower reimbursement.?

Pre-payment reviews require providers to adjust routine workflows and submit extensive documentation before claims are paid. This is time-consuming and resource-intensive, and it unilaterally imposes significant administrative costs on the facility or provider — not the payer.?

In 2024:?

• ER leveling issues contributed to 8.5% of denials that occurred in the ER for our clients, impacting $35 million in gross charges.??

• For one of our smaller clients, pre-payment reviews for ER leveling were causing a $3.7 million shortfall, which was significant for their three-hospital system. We helped recoup those rightful payments by issuing demand letters to payers asking them to provide criteria for leveling decisions and facilitating a historical trend analysis to prove that there was no reason to believe that the provider was miscoding their services. The payer agreed and the pre-payment reviews were removed.????

?? OUR TAKEAWAY: Allowing payers to play by their own rules without sharing the rule book isn’t improving the quality of care for patients. It’s just adding unnecessary administrative expense to a system that’s already struggling. Currently, it’s the providers’ responsibility to find and track nearly 180 daily payer updates as they’re issued across various websites and policy manuals. Providers need to be able to trust that the information they are given is up to date and accurate, enabling hospitals to more proactively address issues before they escalate.??

Payers should be responsible for providing clear, readily available policies so providers can equip their systems with the right rules to ensure payments aren’t being denied based on technicalities.?

Regulatory Updates?

• The Trump administration issued an executive order on healthcare price transparency, which does not establish new rules. Providers should audit their current transparency data to ensure compliance with the existing requirements. Learn more.?

• Starting April 1, 2025, for Medicare telehealth coverage, the patient must be in an office or medical facility located in a rural area (in the U.S.) for most telehealth services. However, certain Medicare telehealth services are covered without being in a rural health care setting. Learn more.?

• The OIG recommended that CMS work with the MACs to determine whether claims billed for opioid use disorder complied with Medicare requirements in follow-up to a 2023 report which found that for opioid use disorder, up to $17.8 million in potential overpayments may have occurred for Medicare related to weekly bundled payments paid in a previous episode of care, take-home supplies, and intake activities. Learn more.??

• CMS and the Agency for Healthcare Research and Quality (AHRQ) will conduct an audit to determine if hospitals are reporting patient harm events as required by CMS and State requirements. This review is supplemental to the ongoing study examining hospital identification of patient harm events which was added to their work plan in May 2023. Expected issue date: FY 2025. Learn more.?

• The DOJ announced that settlements and judgments under the False Claims Act exceeded $2.9 billion in the fiscal year ending Sept. 30, 2024, and whistleblowers filed 979 qui tam lawsuits, the highest number in a single year. Of the more than $2.9 billion in False Claims Act settlements and judgments, over $1.67 billion related to matters that involved the health care industry. Learn more.?

Industry News?

• Modern Healthcare: Exchange plans denied nearly 1 in 5 in-network claims in 2023?

• Becker’s Hospital Review: Senator launches probe into UnitedHealth's Medicare Advantage billing practices?

• KFF: Medicare Advantage Insurers made nearly 50 million prior authorization determinations in 2023?