Three Ways to Reduce Denied Claims

Preventing Claim Denials

“An ounce of prevention is worth a pound of cure,” as the old saying goes. The adage certainly applies, as healthcare industry data indicate that 90% of medical claim denials are preventable. Industry experts also acknowledge that clean claims can get paid within as few as five days of submission to a payer. So what does a clean claim look like?

Although the healthcare industry adopted a standard data set and single billing form back in 1982, insurers have different rules that make filing clean claims challenging for providers. For the latter, it means building payer rule variations into the claims-filing system, essentially customizing the definition of a clean claim by payer.

This is where healthcare information technology, like PracticeAdmin’s practice management software solutions, can make a drastic difference in revenue cycle management. Our applications continually manage all software upgrades, claim code-set maintenance and NPI database updates to ensure you’re always working with the latest information available. For example, PracticeAdmin’s Billing Manager digitizes your claims filing process, sending you alerts of claims errors before they go out to a payer. Our claims acceptance rate are greater than 95%, compared to a national industry average in the high 80%.

Managing Claim Denials

Unfortunately, not every payer rejection or denial can be prevented: industry experts say insurers routinely deny about 20% of all medical claims. While about two-thirds of all denials are appealable, only about 35% of providers actually appeal — generally because of the high cost in labor and lost productivity to do so.

MGMA data indicate an average cost of $25 and 75 minutes in staff time to research and process an appeal manually. Almost half of health systems are still managing their denials processes this way.

Happily, there is light at the end of the tunnel. HIMSS Analytics study results reported by Healthcare Finance News in mid-2016 indicated that 60% of healthcare-executive respondents with no vendor-provided information technology solution plan to buy one within the year. Automating processes enables providers to identify denial root causes, then fix and resubmit claims quickly. It also helps them track accounts receivables more effectively, generally shortening the collection cycle by 20% using PracticeAdmin solutions such as Receivables Manager, and reducing the percentage of denial write-offs.

However, completely automating claims denial management requires more than just implementing technology solutions. It requires proactive people processes involving multiple staff functions to prevent the same mistakes from happening repeatedly.

Learning from Mistakes

Truly MANAGING claim denials, rather than simply working them, demands using available practice management tools to sort rejected and denied claims by cause. The further step requires routing those with obvious owners by staff function like missing or incorrect procedure codes (coders), eligibility issues (front office), and missing or inaccurate pre-authorization codes (provider team member who saw the patient) appropriately for correction and resubmission.

Creating a dedicated, cross-functional workgroup to oversee your denial management process is ideal. This empowers staff and builds teamwork that, in itself, can go a long way toward preventing denials. After sorting denials by cause and delegating correction and resubmission appropriately, you must determine which of the remaining denials offers the greatest potential to boost your bottom line. Cross-functional communication, rather than simply fixing errors in departmental isolation, is key to preventing your claim denials management process from becoming an endless cycle.

Business-process experts suggest creating staff incentives based on continuous improvement to help motivate staff and promote healthy competition that improves your practice profitability over time. You could even make it a team practice management challenge to conquer. Come to think of it, deciding to MANAGE, or even MASTER, claim denials could be the glue that binds your practice, department or account team together.

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