Denial management in healthcare is an essential component of the medical revenue cycle. Claim denials occur frequently, yet many healthcare organizations fail to appeal to them, negatively impacting their denial rates. Despite a universal goal to keep denial rates below 5%, the average statistic lies somewhere between 5% and 10%. A strategic denials management process is crucial to a healthy cash flow. Yet thousands of physicians neglect it—why?
Why Don’t Doctors Appeal Denied Claims?
Most healthcare providers mistakenly believe that the return on appeals won’t justify administrative expenses and time away from their practice. Nonetheless, the AMA has recently cited an instance where a Chicago practice failed to recoup $91,000 for a single procedure that its insurer denied incorrectly. The solution would’ve been a simple audit and appeal.
Insurance companies and providers have a shared purpose relative to claims payments and the electronic exchange of information. Typically, both parties have a firm grasp on billing and diagnostic codes, modifiers, and basic demographics. However, when an insurer denies a claim, a billing specialist may not be familiar with such regulations. The solution—an efficient denials management process.
Investigating Causes, Uncovering Trends
The denials management process exists to investigate unpaid claims, uncover trends committed by one or several insurance carriers, and appeal the rejection according to the provider contract’s appeals process. In most cases, rejection codes and the actual reasons for refusal are entirely unrelated. Instead, the denials management process seeks to uncover root and coded causes for denial.
In California, health insurers reject one out of five claims. The information stems from a seven-year audit submitted to regulators by insurance companies, an instance investigated by the California Nurses Association.
Common Causes of Denied Claims
While frequent claims denial due to late filing may indicate a problem within the medical billings department, issues with the registration desk are just as likely. At the beginning of the revenue cycle, registrars might fail to verify insurance, receive referral, acquire prior authorization or other errors. As such, firms must investigate every instance in which there is no pay or lower-than-expected pay.
Alternatively, an organization can choose to outsource billing functions with a reliable provider. Overall, a denials management system aims to lessen the occurrence of denials altogether.
Best Practices in Denial Management
Start at Registration. Offices can verify benefits beforehand by sending patients pre-registration packets with a return envelope before their appointment, or better yet, provide a secure phone app or website to secure the necessary information prior to the appointment. Should the patient fail to return the information, insist they reschedule their appointment. If the patient is unable to present a referral, reschedule the appointment if approval is impossible in the meantime.
Ensure the correct demographics upon registration, along with a photo ID. Present an acknowledgment form that states a patient’s responsibility to pay if their insurance does not go through.
Within the billings department, track denial reasons or underpaid reimbursements. Take note of the procedure, insurance carrier, provider, and biller. If the department uncovers a trend, manage denials with proper follow-up. Distribute denied claims to staff, noting any changes in billing or reimbursement policies from various payers.
As a rule of thumb, always follow an insurance carrier’s requirements for appeals to avoid duplicate claims. If there are instances of incorrect medical coding, make sure to educate billing staff on the appropriate denial codes.
Manage Your Claims
Receiving a denial is a challenge in itself, but tackling the problem is entirely doable with the right process and informed staff. Without a denials management strategy, your organization could be skimping on more healthcare revenue than you’d anticipate.
With unique healthcare solutions from Credence Global Solutions, your medical institution can incorporate the denial management tools it needs. By letting us help you manage your revenue cycle, you can allow your team to focus on what they do best—patient care. Contact us today.