Ever Increasing Denials
Medical practices are fighting for financial sustainability due to increased operational costs, wage inflation, lagging patient and service volume, and COVID-19 pandemic-driven uncertainty. Payers continuously changed their reimbursement policies during pandemic. Practices witnessed a steep increase in claim denials in the past couple of years.
According to a Medical Group Management Association (MGMA) Stat poll revelated an average 17 percent increase in claim denials in the year 2021 alone. Another crucial fact from that poll was out of all denied claims only 40 percent of claims were resubmitted by practices. That states the key role denial management plays in medical billing for any healthcare practice.
In this article, we discussed how you can set up a denial management process to reduce claim denials.
Root Cause Analysis
Root cause analysis is the first step of denial management in medical billing. To avoid financial losses due to denied claims, the best way is to prevent them from happening in the first place. Some of the common denial reasons for the healthcare practice of any medical specialty includes:
Missing or incorrect information:
This can be anything from a blank field (e.g., Social Security number or demographic information) or incorrect plan code, to coding errors like a missing modifier.
Duplicate claims:
Claims submitted for a single encounter on the same day by the same provider for the same patient for the same service item.
Provider out of network:
The payer may deny all or part of the claim if the services are performed by an out-of-network provider.
Prior authorization:
In the event that prior authorization is not taken prior to the service being performed, a claim may be denied. Payer keeps on updating services that will require prior authorization.
Coordination of benefits:
Claims for patients covered by more than one health plan can result in delays and even denials until the patient’s coordination of benefits is updated.
Medical necessity requirements not met:
A medically unnecessary healthcare service is not covered by the policy, and the payer disagrees with the physician about what services you need for your condition.
The procedure not covered by payer:
This is generally easy to avoid by simply reviewing a patient’s plan or calling their insurer before the claim is submitted.
Exceeded timely filing limit:
This happens when claims are filed outside the payer’s required days of service; this should be factored into the time it takes to rework rejected claims.
Efficient Denial Management
Once you know the common denial reasons, you can modify your billing activities to ensure these denials are not repeated again. For comprehensive denial management in medical billing, you will require a team of experts in billing, coding, and accounts receivable, who are working in coordination with providers. Everyone in your revenue cycle team should be aware of the importance of denial management.
Your RCM team should give priority to denial management tasks in their work schedule to make it more efficient. It’s normal to receive claim denials as payers keep on changing their policies and guidelines but efficient denial management will ensure that these denied claims are as minimum as possible.
To make denial management efficient you can follow some of the best industry practices like:
Establish a team:
As discussed above, identify the available resources from all departments and leverage their expertise to put in place solutions and to track and report developments, which will, in turn, set up benchmarks, reduce backlogs, and help identify root causes.
Organize process:
Losing track of denied claims will reduce the practice’s revenue, and climbing denial rates will lead to some serious administrative problems. Thus, implement an organized denial management process.
Identify trends:
Quantify and categorize denials by tracking, evaluating, and recording the trends. Focus on data and reach out to payers for assistance for newly emerged denials.
Act quickly:
Follow a validated process to get denials corrected, preferably within a week, a goal that is possible when an established workflow is in place to track claims as they enter and leave the system.
Collaborate with payers:
Payers also benefit from resolving denial issues, so a payer-provider collaboration can help in addressing them more efficiently, which will also help achieve system efficiency more rapidly.
Quality over quantity:
The best way to maximize limited resources and time is to follow up with the claims that are already addressed, which will help facilitate more quality claims rather than a higher number of lower-quality claims that do not yield anything.
Track progress:
Monitoring progress will help differentiate between areas that are doing well and those that aren’t while allowing for analysis and improving system efficiency. This helps your organization know which areas are doing well and which need improvement. Consider automating denial management processes, which also frees more time to rework the rejections.
Conduct performance audits:
These should include audits of remittance advice reviews, write-off adjustments, zero payment claims, registration, and insurance verification quality. Efficient denial management in medical billing ensures the financial sustainability of any healthcare practice. Practices can consider supplementing their internal medical billing and coding operations with outsourced services.
Through outsourced services, organizations can quickly gain access to a team of highly trained and skilled professionals who dedicate their time to interacting with insurance companies and understanding the reasons behind rejections and denials. Investing in the support of outsourced services can also allow internal teams more time to concentrate on other aspects of maintenance and patient experience.
Medical Billers and Coders (MBC) is a leading revenue cycle company providing complete medical billing services. Our medical specialty-wise RCM experts ensure all the denied claims are addressed properly to receive accurate insurance collections.
We follow all payer and industry-specific policies and guidelines, to ensure minimum claim denials. To know more about our overall medical billing and coding services, email us at: info@medicalbillersandcoders.com or call us: 888-357-3226.
FAQs
1. What is denial management in medical billing?
Denial management in medical billing refers to the process of identifying, analyzing, and resolving claim denials from insurance companies to ensure accurate reimbursement for healthcare services provided.
2. Why do medical claims get denied?
Medical claims can get denied for various reasons, including incomplete or incorrect patient information, coding errors, lack of pre-authorization, exceeding coverage limits, and non-covered services.
3. How does denial management help improve revenue?
Denial management helps improve revenue by reducing the number of denied claims and increasing the rate of successful claim reimbursement. By identifying and resolving denial issues promptly, healthcare providers can ensure they receive proper reimbursement for services rendered.
4. What are common reasons for claim denials?
Common reasons for claim denials include coding errors, missing or invalid patient information, lack of pre-authorization, duplicate billing, timely filing limits exceeded, and non-covered services.
5. How can a denial management system streamline the billing process?
A denial management system can streamline the billing process by automating claim tracking, identifying denial trends, providing real-time analytics, generating appeals, and facilitating communication with payers. This helps healthcare providers address denial issues efficiently and maximize revenue.