Medical claim denials pose a significant threat to hospitals today. Despite the numerous advances in medical technology and the declining number of uninsured Americans, hospital administrators’ number 1 concerns are still split between providing adequate, comprehensive care to their patients, while also getting paid fully and in a timely manner.
As up to 1 in 5 claims are delayed or denied, denials are a persistent problem and cause for concern for hospital administrators. Denials on billing claims often cannot be attributed to a specific cause or a single trouble area. Instead, hospital administrators know there are several areas along the billing cycle in which problems can arise.
By implementing a multi-system approach to denial management across the billing submission lifecycle, hospital administrators can begin to combat this pervasive problem.
An Analytics-Based Approach
Knowledge is power. Knowing where in the lifecycle that your practice has issues in processing accounts receivable and billing claims is the first step in knowing how to combat the multifaceted issue.
There are some key reasons for a claim denial, and errors occur in several areas of the processing lifecycle. They include (but are not limited to):
- Requests for additional information
- Medical necessity
- Claims for services not covered
- Coordination of benefits with primary carrier
Most of these reasons for denial are often thwarted by preventative measures taken before the patient is seen by the doctor. As part of your revenue cycle management, take time to analyze the number of claims denied in the past, and learn why they were denied. By doing so, hospital administrators take an important first step in composing a plan to prevent future denials.
Up to 90% of claims denials are preventable if hospital staff is equipped with the foresight to implement best practices every time they press “submit.” Denial prevention begins with the first patient encounter.
Some areas in which denials prevention becomes invaluable is in:
- Data Entry Accuracy
- Medical Necessity
- Coding Accuracy
- Deadline Adherence
From the start, ensuring that patient data is retrieved, documented and processed accurately on the front end will significantly reduce medical claim denials. Ensuring that patients accurately give insurance information will help providers accurately and efficiently collect funds owed. Identifying eligibility under the patient’s plan is also vital in preventing denials down the road.
It’s equally important to know which procedures require a preauthorization of services and to follow the filing procedures specific to the medical plan. Tying into this step is knowing what procedures are bound by medical necessity. While medical necessity is often considered a vague component of the claims process, by submitting for preauthorization of procedures, administrators and staff can know beforehand if a claim will be approved or denied.
Coding accuracy is another vital part of denials prevention. It’s crucial to know which codes are often kicked back for denials with increasing frequency. By doing so, providers can provide a better service to their patients by ensuring that the most medically necessary and appropriate treatment plan is implemented.
Finally, adhering to deadlines is an easy, yet also easy-to-miss factor in denials prevention. Administrative hang-ups due to errors in patient information, coding mistakes, and other data entry issues can delay the timely processing of claims, and in turn, can cause an irreversible claims denial. By automating your systems and setting in place processes to streamline your billing claims processing, practice administrators are more likely to see a decrease in denials and therefore an uptick in net revenue.
Despite your best efforts, hospital administrators will still experience some denials. By streamlining your accounts receivable and claims management processes, when these denials do occur, staff and hospital administrators can more easily recognize the reason for the denial, and efficiently move through the appeals process.
Timeliness is of the utmost importance when responding to a denied claim. Claims staff need to correct any claims errors within 72 hours, and most certainly within seven days, to pursue the most complete and accurate reimbursement for the facility and provider.
By streamlining denials management, staff and administrators can learn through the submission and appeals process where they need to refine their AR management. Instead of merely correcting and resubmitting each claim with little thought, empower staff to analyze the reason claims are rejected in the first place as part of an analytics-based approach to correcting the issue and reducing claim denials.
Claim denials are part of any hospital or medical provider’s financial life. To reduce the frequency of this very prevalent problem, encourage staff to compose an analytics-based approach to claim denials.
Analyze claim data to determine why claims are being denied in the first place, then create actionable steps to reduce data entry errors, establish prior authorizations and medical necessity and adhere to deadlines. By being proactive in the submission of claims, administrators can anticipate a more streamlined claims process and in turn, see a reduction of denials.