How to reduce hospital claim denial rates in 2021?

The recent COVID-19 pandemic has accelerated claim denials from payers. According to a recent analysis, the average rate of claim denial is increasing by 23 percent in 2020 compared to four years ago.

Faults related to missing or invalid claim data, which included unspecified billing issues, missing or invalid explanation of benefits, and service not covered; contribute to a large portion of claim denials.

The internal analysis of about 102 million hospital claim remits showed that claims denied upon initial submission also grew from 9 percent in 2016 and 10 percent at the start of 2020.

However, most of these claim denials are potentially avoidable because most denials are originating in registration and eligibility.

Hospitals must reduce claim denial rates as these Claim denials are impacting revenue performance for hospitals as well as quality and accessibility of patient care.

How to reduce hospital claim denial rate?

Prevention-focused denials management strategy can significantly reduce the number of times billing staff is faced with unpaid claims. Additionally, the hospital can prevent common claim denial rates by moving away from a reactive healthcare billing process.

Let’s look at the most common claim denial reasons:

  • Missing information, including absent or incorrect patient demographic information and technical errors
  • Duplicate claim submission
  • Service previously adjudicated
  • Services not covered by the payer
  • The time limit for claim submission expired

The above reasons can easily be avoided else claim denials could lead to significant healthcare revenue declines.

The denial management process is costly which has spurred some providers to focus on preventing denials.

Providers should implement automated processes, identify and analyze claim denial reasons, improve front-end revenue cycle management procedures, and work denials promptly to start a prevention-focused claim denials management strategy.

Recently Commercial health plans denied claims in several different ways, including post-payment audit denials, partial or line-item denials, and down coding. Moreover, the most common reason for claim denial from a commercial health plan is the failure to obtain prior authorization.

However, The hospital group urged federal agencies several federal agencies such as CMS and state insurance commissioners to standardize the format for communicating services subject to prior authorizations, the format of prior authorization requests and responses, the timelines for responses (i.e., 72 hours for scheduled, non-urgent care and 24 hours for urgent services), and the appeals process.

These federal agencies need to acquire additional authority for setting thresholds for appropriate levels of prior authorizations and penalizing plans for inappropriate denials.

Role of technology to reduce claim denial rate

Apart from these various technologies such as artificial intelligence, Predictive analytics are also becoming increasingly available to healthcare organizations and have the potential to significantly impact how providers manage claim denials.

For example-Predictive analytics have particularly been helpful for organizations like RCCH Healthcare Partners in Tennessee, which bolstered claim denial management by leveraging technology to identify the value of claim denial and prioritizing where staff should rework claims to maximize recoupment.

Hospitals should consider identifying root causes of denials, prioritizing remediation where it is most needed, and leveraging technology strategies when aiming to reduce claim denial rates.

If you want to reduce your claim denial rate in 2021, we are always here to help you. We are experts in billing and coding services and our expertise helped providers to get their claims reimbursed timely and efficiently.