The majority of healthcare providers and healthcare institutes lose a lot of revenue due to claim denials. As per Recycle Intelligence survey conducted in 2017, out of $3 trillion in medical claims submitted by hospitals in the United States, $262 billion of those charges were initially denied. It's really crucial that you submit claims correctly the first time i.e., submitting a clean claim. As per stats, 90% of denials are recoverable but it comes with a cost. The same survey shows that 63% of those denied claims were recoverable, but it came with a cost of $118 per claim, or as much as $8.6 billion in appeals-related administrative costs. In this article, we discussed lowering claim denials rates in three steps. These steps include identifying denials early, tracking them, and enabling your team member to become subject experts.
Before Covid-19 pandemic, technical and demographic errors was major reason for claim denials. In 2019, medical necessity was a major reason (53%) for claim denials, followed by technical/ demographic errors (24%), prior authorizations (19%) and eligibility (4%). Carrying the burden of these denials and associated expenses, providers and healthcare institutes are potentially writing off millions of dollars each year. This means employing a preventive denials management strategy, to reduce claim denials and increase clean claims, is immediately beneficial to practices and healthcare institutes.
The earlier you identify denials, the greater chance you will have to resolve the issue. However, most practices will struggle to identify denials early enough to be effective. This could be due to a lack of expert resources, or not being familiar payer guidelines. As a solution, develop a clear understanding of types of denials, such as technical and medical necessity, and categorize them in a way that is easy to rework. This ensures that claims don’t stay in accounts receivable too long, in order to adhere to a timely appeals process. Letting accounts age in receivables too long, as new denials continue to come in, creates a snowball effect that buries your ability and right to appeal the denial. Try to move denied claims out of accounts receivables within 30 days before the right to appeal is lost. To identify denials in a timely manner, healthcare providers should dedicate specialized resources to the task.
Keep an eye on each denial appeal and track to see if it is successful, repeat the same process for similar denials. One of the core mistakes in denial management is, providers, approach denied claims in a fragmented, disconnected environment. Instead, providers should keep track of which payers they are having success with, which appeal strategies were successful with those payers and identify the accounts that are denying that payer with the same issue. Classify denied claims accurately and use data to identify trends across similar accounts. For example, appealing denied claims for medical necessity requires having the full knowledge of local and national coverage and payer policies.
In most practices, in-house billing staff handles multiple job responsibilities like eligibility verification, demographics entry, and accounts receivables. Instead, give some of them only the responsibility of handling denials, allow them to become a subject matter expert in that area, and enable your team to build a knowledge base from what they’ve learned. Have a system in place to record collective knowledge and make it easily accessible. Ensures that the knowledge gained stays within the organization in the event any team member resigns, takes a vacation, or falls sick. Dedicate staff members to focus primarily on dealing with appeals and establishing processes that streamline complex denials.
Tracking denials and managing them becomes tough as your practices grow. The increasing volume and complexity of denials cause an increased number of accounts receivable days. As your practice grows, you may not able to give dedicated time to medical billing functions as you are busy with inpatient care and other administrative work. When you engage a specialized RCM partner like MedicalBillersandCoders (MBC), you benefit from the team that has expertise in eligibility verification, demographic entry, clean claim submission, denial handling, and resolution, and accounts receivables. Because denials are so specialized in nature, having specialized resources dedicated to investigating and advocating on behalf of your practice is a key to the success of your denials management and prevention strategies. To know more about our denial management and appeal services contact us at info@ medicalbillersandcoders.com/ 888-357-3226