Are you taking an administrative approach to managing your claim denials?

Denied claims are one of the most persistent problems influencing healthcare organizations, and causing losses of millions of dollars of revenue each year. To manage the financial performance of a practice, hospitals require some administrative techniques in order to identify the denied claims.

A few years back, revenue cycle management focused more on administrative tasks like coding claims, and more registration activities. Now, with new systems and structure, the whole spectrum has moved towards data analytics.

In this post, we will discuss where the problem lies, what are the possible reasons for denied claims, and the ways to effectively strategize administrative approach.

What is the claim denial?

Claim denials are basically the refusal of the insurance company to pay for certain medical services. There could be many reasons the claim can be denied. The denied claim represents unpaid services and identifying the reason behind it is the first step for hospitals to avoid any delayed revenue.

Causes of Denied Claims and its Challenges

Denied claims not only erode the bottom line of medical practices but they also impact the opportunity cost of resources – since provider organizations pay an average cost of $25 to rework an individual claim. In addition, 30% to 40% of denials are registration and pre-services related which, in fact, can be prevented. Similarly, pre-authorization and medical necessity related denials account for over 11% of all denials.

Most health practitioners emphasize the need to abolish pre-authorization hassle.  Well, this is the area where revenue cycle management can provide help. The good thing is that 90% of all denied claims are preventable if the right strategy is adopted, and about two-thirds of denials are recoverable.

Steps to an Effective Denial Management Program

Implementation of field test techniques and best practice tools can help to get claims paid.

• Identify the possibilities and correct the issues that could cause the claim to be denied by the insurer.
• Classify the denials on basis of their source, cause, reason and other various factors.
• Produce and analyze effective denial management strategies.
• Carry out strategies that involve patients, referring physicians to appeal unproven denials.

Revenue Cycle Prevention Strategies

Medical practices that lack a focused strategy are more apt to see lost revenue.  Look for root causes. As mentioned above, registration errors are more expected to give for denials. Most of these denials take place due to ineligibility for coverage. Owing to this, it could be the most appropriate administrative area that needs to be improved.

Certainly, the success of revenue cycle begins right here at the step of registration. Therefore, eligibility of patient needs to be thoroughly verified by staff. In case of regular patients, check eligibility at the time of appointment, three days prior to service, once again on the day of service and then before submitting the claim. For emergency patients, it should be checked at the point of service.

Conclusion

Look for ways to better organize the structure and ensure quick handling of denial-related data. Sophisticated software and tools should be employed for efficient work. Educate your employees, streamline the whole process and get paid what you deserve.

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