Where Is My Money? The Interplay between Healthcare Information Technologies and Denied Claims

This study investigates the role of health information technology (HIT) in reducing uncompensated care, which has become a significant burden for healthcare providers in the U.S. Several peculiar aspects in healthcare give rise to provision of care that ends up being unpaid by payers or patients, and such loss of revenues increases the healthcare costs by every stakeholder. We theorize that the use of electronic health records (EHR) by care providers reduces the likelihood of care claims to be denied for payment by improving the accuracy and completeness of information processing. With a large-scale dataset of claim records from the State of Maryland in 2013-2016, we find that the greater use of EHR by the care providers, the less likely a claim is denied. More interestingly, this relationship between EHR and denied claims is moderated by claim characteristics – data specificity and sensitivity to claim processing errors. EHR is more effective in preventing payment declines for claims with higher data specificity (e.g. for patients with frequent hospital visits or chronic conditions) but less effective for those with higher sensitivity to claim processing errors (e.g. claims with more procedures and under ICD 10). This study provides significant theoretical insights for the information systems literature on HIT and enterprise systems by uncovering the multi-faceted roles of EHR in capabilities for information processing and compliance.