Claim denials in healthcare are very similar to the check engine light in vehicles. You can ignore it for a while, but if you let it linger too long, it can lead to serious problems for your organization. The formal definition of a medical billing denial is, “the refusal of an insurance company or carrier to honor a request by an individual (or his or her provider) to pay for healthcare services obtained from a healthcare professional,” as stated by Lachney. Although they are quite common in healthcare, denials can be detrimental to your organization and create headaches for your staff. Luckily, there are plenty of ways to manage you denial claims.
Approximately 90% of claim denials are preventable, according to a recent study; all it takes is a little bit of denial management strategy. The first step is identifying the reason why your claims are being denied in the first place. Maybe there was incomplete or missing information in the submitted claim documents, your health insurance does not cover what you are claiming, or you may have exceeded the coverage limits. Regardless of the scenario, there are multiple solutions for each.
Providers must be proactive and check patient claims before service. Determining patient coverage and ensuring clean patient data are imperative components of denials prevention.
“The culture has always been, ‘They’ll fix it on the back-end.’ Those days are gone. It’s imperative we start at the time of the first patient encounter, which is pre-registration, to ensure the patient information is correct and valid. You can’t be effective on the back-end without technology to ensure data quality on the front-end.” – Daren Bush, Director of Patient Financial Services at Knox Community Hospital.
When front office staff have accurate patient financial information upfront, the organization experiences fewer rejected claims and returned statements.
Providers must also be well-educated on their patients, their insurance policies, and any other third-party criteria. Other advice we have include physician training to familiarize them with the process, creating an appeals team to take some of the workload off administrative staff, and reporting and tracking denials so that when your organization is faced with another claim, staff can go back and refer to steps they took on a previous claim to prevent another denial.
One you understand the reason for the denial, the next step is the recovery. This component of denials management focuses on receiving reimbursement. Yet, the high, nation-wide rate of medical claim denials, which, according to The Kaiser Family Foundation, is around 18%. This complicates things and slows down the rate of appeals. A 2017 analysis conducted by Change Healthcare showed that $3 trillion in medical claims were submitted by hospitals in the United States in 2016 and $262 billion of those charges were initially denied. That is serious money, and could have an impact on your bottom line.
Despite taking every preventive measure available, denials will still occur. However, advanced analytics can help organizations recover from these. Data can stem insights that are crucial to the success of the revenue cycle, like information on payer behavior, for example.
Artificial intelligence (AI) and predictive analytics tools create a clearer picture of claim denial challenges. By helping identify and categorize denials into high value, mid-range value, and low value, organizations can accelerate resolutions.
The manual labor and complexities around submitting a claim can be exhausting, which is why organizations should also implement a Revenue Cycle Management software that will automatically update codes and requirements. Manual processes slow productivity, while automated ones can cut down on research time and allow your billing team to spend more time reviewing claims to make sure they meet every single requirement. Automation tools can also identify errors before claims are submitted for payment.
How RCM can Reduce Denials
Revenue Cycle Management (RCM), is necessary to help your organization reduce denials. Like stated previously, handling your claims manually can cause grievances for your internal staff. A solid system, like Optimum RCM, can increase your clean claims up to 99%, minimizing denials and optimizing your payer reimbursements.
Here are three aspects Revenue Cycle Management can help with:
Revenue cycle analytics give practice administrators the ability to discover the root causes of denials and determine ways to address gaps in performance through a data-driven approach. Analytics also can provide key insight into claims monitoring activities, progress toward key performance indicators (KPIs) and how the practice’s RCM performance compares with other physician practices.
Undercoding, failure to update old codes, and inexperience with current coding methods are all challenges medical practices face that could heavily damage their business and reputation. RCM staff can correct codes for physicians before they are submitted, minimizing the chance that the claim is denied. Support from RCM staff helps ensure that all payments will be made on time.
- Scrubbing and Tracking
Your RCM vendor should scrub through each one of your claims and ensure each one is filed correctly. Once your claim is filed, your vendor should also follow it all the way through to reimbursement. That way, if a claim gets denied, your vendor will notice immediately, correct any errors, and resubmit it.
Optimum RCM by Cantata Health offers a smarter way for your hospital to serve patients with better workflow automation and financial results. It offers the ability to exchange data intelligently and securely, stays on top of the ever-changing government regulations, and of course, offers predictive denials management. Optimum RCM has also been named 2019’s “Highest Client Satisfaction” by Black Book for Revenue Cycle Management and Enterprise Resource Planning Software.
Even when everything goes perfectly, your organization will still experience claim denials. However, if you take the necessary steps and have the proper tools in your arsenal, you will notice more claims being approved as well as an accelerated workflow, improved productivity, increase of revenue, and overall a better working environment for all medical and administrative staff.