Denial Management in Value-Based Care: A Changing Landscape February 21, 2024

denial management

The transition to a value-based care model has revolutionized the healthcare industry by focusing on patient outcomes and delivering high-quality and cost-effective patient care.

Under the current U.S. administration, the Centers for Medicare & Medicaid Services (CMS) emphasize health equity as a fundamental component of value-based healthcare. Research shows that social determinants of health (SDOH) significantly influence health outcomes.

Presently, healthcare providers actively seek ways to incorporate SDOH into their healthcare delivery strategies. Yet, according to a 2022 survey by The Physicians Foundation of American doctors, 60% of physicians report needing more time for patient consultations to address SDOH. This indicates challenges in the integration process.

In addition, the shift to value-based care also brings about a change in the billing and reimbursement landscape, where claim denial management significantly impacts revenue cycles. 

Healthcare organizations must be aware of the healthcare technology tools available to them to maintain good financial health, operational efficiency, and effectively adopt a value-based framework. 

Common Reasons for Claim Denials in a Value-Based Care Model

According to a recent study, around half of all healthcare providers reported a rise in their rate of denials compared to the previous year. Another survey revealed that there has been a substantial increase in the denial of claims, with rates climbing between 10–15%. 

The question arises: What factors contribute to this significant volume of denials?

Below are some of the most notable factors that impede efficient denial management in healthcare.

1. Lack of Authorization or Pre-Certification

In a value-based care model, payers often require prior authorization or pre-certification for specific procedures, treatments, or services to ensure they are medically necessary and they align with care standards. Failure to obtain this authorization before service delivery may lead to automatic claim denials. 

2. Insufficient Documentation

Documentation is the backbone of claim submission in value-based care. It must comprehensively detail the care provided (including diagnoses, treatments, and outcomes) to justify the medical necessity and align with payer-specific guidelines. Insufficient or unclear documentation that fails to support the necessity or the level of care provided often results in denials, as payers cannot verify that the services were appropriate and necessary.

3. Coding Errors

Accurate medical coding is vital in the claim process, as codes communicate patient diagnoses, procedures performed, and equipment used. Errors in coding, such as outdated codes, incorrect procedure codes, or lack of specificity, can misrepresent the care provided, leading to denials. Moreover, value-based care models often rely on precise coding to assess the quality of care, outcomes, and adherence to clinical guidelines.

4. Missed Filing Deadlines

Timeliness is a critical factor in claims management. Each payer sets specific deadlines for claim submission following the date of service. Missed deadlines are a straightforward reason for claim denials, as late submissions breach contractual agreements between providers and payers. 

5. Incorrect Patient Information

Simple errors in patient demographic information (e.g., name spelling, date of birth, gender) lead to claim denials. Accurate patient information is essential for claim processing, as the details must match the information the payer has on file. Such errors reflect the need for meticulous attention to detail during patient registration and data entry.

6. Incorrect Insurance Information

Like patient information, accurate insurance data, including policy numbers and payer details, is crucial. Incorrect or outdated insurance information leads to denials because payers only process the claim if it matches the payer’s records. 

7. Non-Compliance with Policy Rules

Each insurance payer has its own set of policies, guidelines, and coverage limitations. Understanding and adhering to each payer’s policies is critical in a value-based care model. Claims that do not comply with these specific rules, such as those for covered services, referral requirements, or service locations, are prone to denials.

Strategies for Managing Denials in Medical Billing

Addressing the common reasons for claim denials involves a multifaceted approach, including staff training, process improvements, and the use of technology. By focusing on these areas, healthcare providers reduce the frequency of denials, streamline their revenue cycle, and dedicate more resources to patient care and the pursuit of value-based care objectives. 

Here are ten strategies proven to be effective in claims denial management

1. Implement Proactive Authorization Management

Proactive authorization management helps prevent denials related to lack of authorization, ensuring that services provided are pre-approved and covered. It’s vital to develop a comprehensive system to track and manage all authorization requests.

The best way to do this is to invest in a denial management software solution that automates the pre-authorization and pre-certification processes. This includes features for tracking authorization statuses in real time, automatic alerts for pending authorizations, and integration with payer systems to streamline the authorization process.

You must also train staff to understand payer-specific requirements and regularly review authorization processes for efficiency and effectiveness.

2. Accurate and Up-to-Date Coding

Ensure coding accuracy by providing your coding staff with ongoing education on the latest coding guidelines, updates, and changes in ICD-10, CPT, and HCPCS codes. Utilize coding audits to identify and correct patterns of errors and implement feedback loops to educate coding personnel. 

You should also implement denial management software solutions, including advanced coding tools, such as coding validation checks and automatic code updates and suggestions. These tools help reduce human error and ensure codes are up to date.

3. Thorough Documentation

Foster a culture of comprehensive and detailed documentation among healthcare providers. Leverage EHR integration with medical billing software to ensure thorough and accurate documentation. Use templates and prompts that guide providers to include all necessary details to justify medical necessity, with automatic checks for documentation completeness and compliance with payer-specific requirements.

4. Regular Training and Education

Conduct regular training sessions and educational workshops for billing staff, coders, and healthcare providers to inform them about the latest billing practices, payer policies, and compliance requirements. Ongoing education is critical in adapting to changes in the healthcare landscape and reducing errors that lead to denials.

5. Utilize Data Analytics

Utilize the denial management software’s data analytics and reporting capabilities to identify trends and root causes of denials. Customizable dashboards provide insights into denial patterns, success rates of appeal efforts, and areas for denial management process improvement. This data-driven approach allows for targeted interventions and continuous monitoring of denial management efforts.                 

6. Effective Communication with Payers

Establish and maintain open lines of communication with insurance payers. This step involves understanding payer-specific requirements and policies, resolving disputes through dialogue, and negotiating contracts that align with the provider’s capabilities and services. Effective communication helps clarify billing requirements and resolve issues that may lead to denials.

7. Collaborate Across Departments

Encourage collaboration between clinical teams, billing departments, and administrative staff to ensure a unified approach to managing denials. Interdepartmental meetings, and integrated processes help bridge gaps and ensure that everyone contributes to minimizing denials.

Some integrated EHR systems offer collaboration tools that enable seamless communication and workflow management across departments. Features such as shared worklists, notification systems, and role-based access ensure that everyone involved in the denial management process is aligned and able to contribute effectively.

8. ANSI X12 837 Claims Management

The ANSI X12 837 transaction set is a crucial component in the healthcare industry, serving as the standard for electronically submitting healthcare claim information. 

Adopt and optimize the use of ANSI X12 837 electronic claims submissions. This strategy standardizes the format and content of healthcare claims, reducing errors and processing times. Training staff on the specifics of electronic claims submission and ensuring compliance with this standard streamlines billing processes and reduces denials.

9. CMS 1500 / HCFA 1500 Claims Management

For organizations that still deal with paper claims, healthcare denial management software systems offer digital processing tools for CMS 1500 forms, including scanning, data extraction, and error checking. This strategy minimizes manual entry errors and streamlines the submission process for paper-based claims. You should also have regular training on how to accurately complete these forms, coupled with checks and balances, to catch errors before submission.

10. Continuous Quality Improvement

Implement a continuous quality improvement (CQI) program focused on denial management. This step involves regularly reviewing denial data, implementing process improvements, and measuring the effectiveness of interventions. 

Tap Into Our Expertise 

Managing claims and avoiding denials are crucial for ensuring financial stability and delivering high-quality patient care in today’s healthcare landscape. 

Stay ahead of the curve with 5 Star Billing! With our expert medical billing services and advanced medical billing software, you can streamline your revenue cycle management processes and significantly reduce the risk of claim denials.

Don’t let claim denials hinder your practice’s financial health and patient satisfaction.

Schedule a call with us today to learn how we can empower your organization to achieve greater efficiency, profitability, and success in the value-based care era.

Strategies for Effective Denial Management: Turning Denials into Revenue July 6, 2023

denial management

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:

  1. Ensure that a patient’s name is correct;
  2. Verify their date of birth and gender; and
  3. 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.

Schedule a call with our experts today!

Denial Management and Prevention Tips for Your Medical Practice November 23, 2020

Denied claims eat away 6-8% of a healthcare provider’s overall revenue. It hampers the financial stability and the growth of a practice. Contrary to popular belief, 90% of denied claims are actually preventable. You just need to take your denial management and prevention to the next level. We’ve gathered the best tips to stop these revenue leaks: 

1. Monitor you progress.

First, assess your denial management process frequently. You need to discern what’s working and what areas need improvement. To know your progress, you need to document all wins and losses for your unpaid claims. Thus, you’ll be able to use that data to improve the efficiency of your denial management strategies. 

2. Recognize why claims were rejected.

Understanding the causes of your denied claims will help streamline the process of maximizing your revenue collections and prevent the denial of future claims. Not all of your patients are knowledgeable about when their claims are being denied by insurance companies. Thus, it is your responsibility to educate them when tackling the issue. In connection, It is also important for the overall performance of your company to be able to assist them in a timely manner.

3. Identify the most common denials and trends.

Try to identify the types of denials that are most common to your organization. Initially, each form of denial can seem like a minor issue, but when you begin to track and examine these patterns, it can lead you to the root cause of some major problems in your organization.

4. Establish Incentive Programs

To motivate and encourage healthy competition, rewards and incentives should be put in place. Your staff should have the right motivation not only to successfully appeal denials but to recognize trends, share knowledge, and have great camaraderie.

5. Expedite your Denial Management Process

Denied claims may pile up over time and it may easy to lose track, which may lead to serious problems in the future. Utilize the latest technologies and tools that help you keep track, manage, and expedite your denial management processes. 

6. Do it within a week

You need to set high standards for timeliness in processing your denied claims. An effective tracking system would lead to more efficiency and help impact all factors of your practice. If you get a rejection from an insurance provider, there must be a procedure in order to ensure that the denial is handled in less than a week.

7. Leave it to the experts

You can never go wrong in outsourcing your medical billing and denial management processes to a trusted name in healthcare. It will surely give you the financial prosperity and stability that you always desired. Specialized teams that are highly trained in handling the complexities of the insurance system are used by the top denial management providers. You’ll have more time to focus on your core competencies by outsourcing your denial management needs.

Tap Into Our Expertise

At 5 Star Medical Billing, we offer the highest level of performance for high-quality medical billing. Let us help you during these dire times.

Schedule a consultation with our experts today!

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