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How much Do Medical Practices Pay to Manage the Average Denial?

May 21, 2014

Denied claims can be quite exasperating for billers as well as providers. Not only valuable time gets consumed in claim re-submission but it also costs money to manage an average denial. This means, a significant amount for rendered services is already lost even if the billing department manages to collect payment through re-submission.

If your denial rate is more than 5%, it means you are not paying attention to your revenue cycle. It can result in major erosion of revenues, forcing you to close down or merge your practice with a hospital.

Industry Facts :

According to the Medical Group Management Association, approximately $25 to $30 gets spent on managing an average denial
Nearly 30% from the total filed claims gets denied due to minor errors in coding and technical aspects
As per the research done by American Medical Association (AMA), there was a sharp increase in claim denial rates in 2012; however, in 2013, claim denial rates reduced by 47%
Medicare happens to have the high denial rate at 4.92% while lowest denial rate is of Cigna at 54%
As per an estimate by the CMS, there are chances of claim denial rates increasing by 100% to 200% in the early stages of ICD-10 coding

What causes claim denials?

There are various reasons due to which payers reject medical claims:

  • Lack of accuracy in registration, wherein a wrong payer is mentioned, patient's insurance is not verified or it becomes difficult to decipher the identity of a patient
  • Charge entry is done with unacceptable diagnosis codes or procedure codes
  • Inadequate information about a patient
  • No substantial proof to prove medical necessity of a procedure
  • Lack of pre-authorizations and referrals
  • Errors in clinical documentation
  • Lack of credentialing
  • Submission of claims with duplicate codes for same procedures
  • Bundling non-allowable items or applying modifiers where they aren't applicable

How to reduce occurrence of denied claims?

  • Identifying the type of denial because denials can be clinical as well as technical
  • Training staff on how to submit error-free claims, edit claims and prepare appeals
  • Formation of a strong billing team with certified, experienced coders and billers
  • Monitoring the progress made by in-house or billing company's team on a regular basis

Most medical practices are overloaded with work due to which they have very little time to fulfill the above-mentioned requirements. Since denial management is a daunting task, they prefer outsourcing billing and coding services to a billing company that has proven capabilities of providing effective denial management.

Tackling claim denial with MBC:

MBC has the largest consortium of certified coders and billers, helping practices maximize revenue and minimize claim denials. The team at MBC is well-trained in error-free claim submission, follow-ups with insurance companies and effective denial management. MBC also specializes in:

  • Analysis of financial impact of denials
  • Finding causes for accumulation of denied claims
  • Providing feedback through financial impact analysis of denials and root-cause analysis

MBC helps practices maximize and accelerate their cash flow through:

Charge entry analysis + Tracking payer denials + Tracking claim status

Category : Accounts Receivables / Claims Denials