Hospitals have seen significant growth in administrative costs due to inappropriate practices by certain commercial health insurers, including Medicare Advantage (MA) and Medicaid managed care plans.
In addition to increasing premiums, which grew twice as fast as hospital prices in 2023, commercial health insurers have overburdened hospitals with time-consuming and labor-intensive practices like automatic claims denials and onerous prior authorization requirements.

A 2021 study by McKinsey estimated that hospitals spent $10 billion annually on dealing with insurer prior authorizations. Additionally, a 2023 study by Premier found that hospitals are spending just under $20 billion annually in appealing denials — more than half which was wasted on claims that should have been paid out at the time of submission.
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