Strategies for Effective Denial Management: Turning Denials into Revenue July 6, 2023
Like tiny holes in a bucket, claim denials cause revenue leakage, draining your practice of potential income. A recent Kaiser Family Foundation report shows private insurers denied nearly 17% of in-network claims in 2021. Considering revenue lost from those unrecovered claims, it is evident why denials can significantly impact your practice’s bottom line.
Preventing a lot of clinical denials can be highly frustrating due to their avoidable nature. If you want to reduce denials in your medical practice, it’s crucial to identify their main causes and implement effective denial management strategies.
What are the most common reasons for denials?
To prevent claim denials, understanding the common reasons is essential. There are dozens of technical reasons for insurance companies to deny a claim, but here are the five most common causes:
1. Inaccurate Patient Information
Before submitting a claim, it’s crucial to check few critical details about the patient:
- Ensure that a patient’s name is correct;
- Verify their date of birth and gender; and
- Double-check the accuracy of the insurance payer, ensure that the policy is valid, and confirm the correctness of the policy number.
If necessary, determine if the claim requires a group number. It’s also essential to verify if the service is covered and if there are any exclusions. Lastly, ensure that the diagnosis code matches the procedure performed.
2. Improper Usage of ICD-10 Codes
As a healthcare provider, you must use the ICD-10-CM standard when diagnosing patients. Make sure to include the total number of digits required for each code. Remember that there are essential differences between ICD-9 and ICD-10, including detailed injury codes, the use of sixth and seventh characters, and the ability to assign more specific codes. Be aware of these changes to ensure an accurate and comprehensive coding assignment.
3. Duplicate Billing
Clerical errors or overlapping responsibilities within the office can result in duplicate billing. This medical billing error occurs when you send a similar or equivalent claim more than once, leading to duplicate charges. Such errors can arise from various factors, including accidental duplicate entries during data entry, misunderstandings between staff members, or inefficient denial processes in medical billing.
4. Insufficient Medical Necessity
Failure to meet medical necessity requirements often results in denial of coverage. This situation occurs when the payer (insurance company) and physician disagree about a patient’s needed services. Even if it’s a doctor-prescribed service, insurance companies can still deny coverage if you fail to meet their documentation criteria. Hence proper claim documentation is crucial to avoid medical necessity denials.
5. Lack of Prior Authorization
If there’s no prior authorization, the insurance company only approves the healthcare service or procedure after it’s performed. The worst part is the patient may be left responsible for the costs if the insurance company only allows coverage for the service with prior authorization. To ensure the patient’s insurance covers their services, follow the necessary steps and obtain prior authorization.
Proper preventative measures help you avoid most of these non-medical reasons for denials. In this regard, engaging every staff in your revenue cycle is essential by adopting a denial-focused mindset.
Why is denial management critical?
Denials cause problems for your revenue. They slow payment collections that lead to late or unpaid medical services. Moreover, denial rates surged in the past few years, increasing by 20% across the industry.
So how to handle denied medical claims? With this statistic, it’s imperative to have a proactive approach or strategies to help identify the cause of the denials and prevent them from occurring again.
5 Best Strategies for Effective Denial Management
Here are five of the best strategies to help you conquer denials like a pro!
1. Identify the Reasons for Claims Denials
As a healthcare provider, it’s vital to understand the reasons behind your claim rejections. By understanding the process, you can streamline it and avoid clinical denials, improving revenue.
However, your patients may need to become more familiar with how the claims management and denial systems work, so educating them on the complex process and reasons behind claim denials is valuable.
You can assign a staff member to assist patients throughout the claims process to help ensure long-term patient loyalty and financial success for your organization.
2. Mitigate Risks With Technology
Due to the complexity of the medical billing process, it can be challenging to spot common errors like duplicate billing or incorrect CPT codes. The use of technology can help address these challenges. For instance, an EHR with a CPT Code Advisor can automate code updates in your practice, thus reducing the risk of using outdated codes.
Aside from an EHR system, electronic claim submission software also speeds up the claims process and reduces the chances of errors associated with manual paperwork. Electronic claims are also less likely to get lost in transit, resulting in faster and more accurate claims processing.
3. Streamline Denial Management in Medical Billing
You should streamline the claim denial management process if you have been manually handling them. Doing so can minimize recurring issues and help you find a long-term solution. Keeping track of denied claims and having complete records are essential to avoid losing revenue and credibility. Organize your processes to manage denied claims so your staff doesn’t have to worry about tedious tasks.
Advanced tools in the market simplify the process, allowing your team to monitor and efficiently handle claim denials closely. Keep the bigger picture in mind when addressing future issues.
4. Create a Collaborative Environment
Use the resources within different departments to create a collaborative team. This team will set benchmarks, reduce backlogs, and identify the root causes of issues.
Include key members from departments such as admitting/registration, case management, patient financial services, nursing, health information management (HIM), information technology (IT), finance, compliance, and physicians. As a result of forming this robust team, you can foster effective communication and coordination between departments, resulting in improved outcomes.
5. Employ Remote Billing Experts
Outsourcing critical roles like denial management reduces costs, saves time, and ensures efficient claims processing. With remote staffing, you can tap into a global talent pool of remote billing experts.
By employing experienced, ready-to-deploy billing staff, you can fill the gaps in your workforce for a fraction of the cost and time of hiring an on-site employee. While your remote team handles insurance complexities, you and your on-site staff can focus on core tasks like patient care.
Tap Into Our Expertise
While it’s not entirely impossible to eliminate denials, the most realistic, low-stakes approach is to minimize them. You should incorporate these effective denial management strategies to safeguard your revenue and maintain stability. Aim to reduce write-offs as much as possible to protect your healthcare organization’s financial health!
At 5 Star Billing Services Inc, we offer the highest level of performance for high-quality medical billing and coding. Save your money by outsourcing to a professional pain management billing service.