Handling claim denials is a part and parcel of a healthcare practice’s overall revenue management responsibility. It is a taxing process that can eat into profitability and be particularly cumbersome for solo practitioners. This is a major reason why doctors have increasingly started relying on clinical revenue management services to ensure fewer claim rejections.
In a worst case scenario, practices can see claims being denied 30% of the time; those who have a tighter control over denial management report rates below 5%. If you’ve outsourced to a medical billing company, chances are that your denial rates are low. But regardless of whether or not you’re managing billing in-house, you will want to investigate the reasons for denial and keep tabs on the number of denied claims.
Why are your claims getting denied?
This is an important issue to address. Even though reasons can and will differ from one practice to another, some stand out as common.
• Registration details – insurance verification or wrong payer
• Pre-existing conditions
• Duplicate claims, such as the same CPT code, charge or date of service
• Invalid diagnosis codes
• Unsuccessful provider credentialing
• Missing information on a claim form (even leaving a single required field blank can result in a denial)
• Limit for filing expires (most payers stipulate that claims must be submitted within a certain number of days of service)
Sometimes, the problem can also be traced to a lack of complete information from the patient’s side that prompts payer from delaying reimbursement. If this is a recurring issue, construct an appropriate approach to let patients know what they can do to avoid such situations in the future.
After determining the true reasons for denial, the next step would be to implement preventive actions. For instance, you can focus on improving patient data quality at the time of registration. Depending on the severity of the situation (extent of hard claims that cannot be reversed and result in written-off or lost revenue), you will want to analyze and fix the root cause(s).
Put a number on it
A billing practice management system can provide data on claims denials if you’re accepting electronic payments. If not, you will need to manually input denied claims into the system. In either case, the following data should be available to you:
• Total number of claims filed to a payer, including the net charge amount (say X)
• The number and dollar value of denied line items (say Y)
• The percentage of denied claims can be calculated using Y/X
You can calculate the percentage by reason, payer, location and specialty, depending on the nature and size of your practice. Some insights that may be potentially revealed include whether a number of claims are being denied for the same reason; are denials are taking a lot of time to complete; and are denied claims expiring or getting lost.
All this data is good food for thought when optimizing denial management as well as overall practice performance.
Set a deadline for processing claims denials
Tracking claims is one half of a solution, the other is to process denial claims within a week. This will require you to establish an effective workflow that captures and resolves denials in an efficient and timely manner. If this will be burdensome for you or your small staff, it is advisable to take steps that can assure fewer billing errors and claim rejections in the first place, such as by partnering with a medical billing provider.