Medical claim denials are a costly and time consuming issue for healthcare organizations. It is essential for your practice to have a process in place to manage these denials and improve your billing methods to prevent unpaid claims in the future.
In this article, we’ll talk about strategies you can implement to identify the causes of claim denials and lower your denial rates overall.
The Impact Of Claim Denials On Cash Flow
Claim denials can greatly impact a medical practice’s cash flow. Even if claims are eventually paid, initial claim denials result in delayed revenue that can impact an organization’s overall profitability. Claims that are left unpaid will eventually result in denial write-offs.
Denial management systems, or in house denial management processes, can reduce the number of denial claims and improve the accuracy of your billing overall. A healthy cash flow depends on timely revenue collections, accurate healthcare claims, and consistent payment patterns across all payers.
7 Strategies For Claim Denial Management
1. Identify The Root Causes Of Your Denials
Entrust an experienced medical biller or medical billing company to take charge of tracking your medical denials. Have this individual create a spreadsheet for denials and identify if there are trends with certain payers or CPT codes.
From there, you can determine if there is a particular issue with one insurance company or the way you are currently billing out your services. Often a small shift in the way you bill can result in a dramatic change in your number of denials.
2. Verify Patient Information At Every Visit
One of the most common reasons for an insurance denial is incorrect patient information. This could be a typo in the subscriber ID, an incorrect or previous last name, or the lack of primary or secondary payer information.
Missing information is an easily preventable denial reason that happens often in the healthcare industry. Ensure your front desk is trained on how to gather the correct information, and is consistent at every appointment.
3. Train And Educate Staff
Any effective denial management process begins with a well-trained staff. This may just mean in-house billers and receptionists or it could be a dedicated team that is assigned to managing denials. Anyone who manages your clinical denials needs to be trustworthy and well-trained.
Front desk and other support staff should also be well-trained when it comes to capturing and verifying patient information. Perform random audits on patient demographics to ensure this information is being captured fully at every appointment.
4. Perform Denial Follow-Ups In A Timely Manner
For many insurance companies, you have 90 days to submit a corrected claim from the date of the initial claim. This is not a lot of time when you consider how long it can take for an insurance company to return a claim after it has been billed.
Claim rejections should be prioritized as the clock is already ticking on these medical claims. Physician practices will often assign one biller to manage these rejections, while larger organizations assign a denial management team to quickly rework any medical billing denials.
5. Train Providers On Appropriate Documentation
Many rejected claims are sent back for lack of medical necessity. When these denials occur, payers are looking for additional information that clearly outlines the medical necessity of a service or procedure that needs to be performed.
Patient satisfaction can be greatly impacted by these types of denials because they can often lead to a delay in the services needed. Stay up to date on requirements of the insurance companies, and complete a prior authorization if it is necessary for a service or procedure.
6. Stay Updated On Payer Policies
Insurance companies are not always the easiest vendor to work with in healthcare (ok, that was an understatement!). However, they are a necessary partner. Many of the larger payers will offer webinars or monthly newsletters that talk about changes in documentation requirements, modifiers, and billing policies.
Your in house billers or medical billing services must stay up to date on all payer policies to ensure they are billing according to what the insurance provider is looking for. Look for local resources such as biller round-table meetings or training opportunities offered by local medical management groups.
7. Bill As Accurately As Possible
This is perhaps the most important step in rejection management. If you are billing accurately in the first place, you will not need to manage denials on the back end.
Incorrect medical codes and incomplete documentation result in unpaid services and increase insurance denials. Accurate billing is essential to your bottom line as it reduces denials and maximizes your amount of collectible revenue.
The Financial Importance Of Denial Management
Medical claim denials can have a significant impact on a medical practice’s finances. Here are some ways in which claim denials can affect the financial health of a medical practice:
Reduced Revenue
When claims are denied, the medical practice does not receive payment for the services rendered. This directly impacts the practice’s revenue stream, leading to a decrease in cash flow.
Increased Administrative Costs
Dealing with claim denials requires significant administrative effort. Medical staff must spend time investigating the reasons for denial, gathering additional documentation, and resubmitting claims. This increases administrative costs and diverts resources from other essential tasks.
Delayed Reimbursement
Resolving claim denials takes time, leading to delays in receiving reimbursements. The longer it takes to rectify the denials, the longer the medical practice has to wait for payment, affecting its cash flow and ability to meet financial obligations.
Increased Operational Costs
In order to prevent claim denials in the future, medical practices may need to invest in additional resources, such as improved billing systems, training for staff, or hiring specialized personnel. These additional costs can impact the overall profitability of the practice.
Strained Provider-Payer Relationships
Frequent claim denials can strain the relationship between medical practices and insurance payers. This can lead to communication breakdowns, delayed responses, and disputes, making it more challenging to resolve denials and negotiate favorable terms with payers.
Patient Dissatisfaction
Claim denials can result in increased out-of-pocket costs for patients if they are responsible for the denied portion of the claim. This can lead to dissatisfaction among patients, impacting their perception of the medical practice and potentially leading to patient attrition.
Compliance And Regulatory Risks
Consistent claim denials may raise compliance concerns and increase the risk of audits or investigations by regulatory bodies. This can lead to fines, penalties, and further financial burdens on the medical practice.
How To Improve Your Medical Billing Process
Revenue cycle management is directly impacted by any healthcare organization’s medical billing processes. The medical billing department is an essential part of the overall financial health of any practice, and it is vital to invest in this department. If you have in-house billers, invest in the right tools and consistent training for your team.
If you do not have an in-house team, it may be work looking into outsourcing some or all of your billing needs. Medical billing companies have made a business out of staying up to date on payer trends and denial management.
If you already have medical billers and just need assistance in claim denials, there are denial management services that can help assist with just that portion of your billing processes.
Increase Overall Cash Flow
Managing denial trends and identifying the source of the denials are important steps in increasing your overall cash flow. Denial management experts, both in-house and external, can greatly improve your cash flow trends and decrease future denials. This is an essential step in your billing process that cannot be overlooked. It is worth investing in the right people and tools to ensure the job is done effectively.
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