Can hospitals afford millions of dollars in potential revenue to go unrealized?
Yet, that is the real cost of having inefficient follow-up processes for managing claim denials.
When a billing claim is denied, it should trigger a predetermined system of action. The unfortunate reality is that this is not the case for many hospitals. This type of shortcoming points to outdated management methods and systems (or lack thereof), and a less-than-effective use of management personnel.
Hospital executives should view this as a largely preventable loss that can be remedied by implementing a few good practices.
We outline these three practices below.
Better Use of Billing Claims Data
It’s common for hospitals to calculate an overall billing claims denial rate for a specific period. It’s simply based on all claims submitted to all payers.
This general claim denial rate does give a picture of a hospital’s efficiency, but by digging deeper into key performance indicators, it’s possible to put billing claim denials under the microscope. They can be differentiated in several ways and then processed accordingly.
First, “hard” and “soft” denials can be separated out.
A hard denial, for example, would be one issued on the grounds that the services claimed did not meet the rules of the insurance policy. An annual criterion was not met, or a maximum was exceeded.
Soft denials, on the other hand, can result from simple errors on claim applications such as a mismatched policy number, or an incorrect group ID.
Once this basic separation is done, the hospital can focus efforts quickly on the issues most easily addressed and rectified. This is the low-hanging fruit.
Data can also reveal which payers historically return the most denials. The hospital can then determine the order in which denials will be most profitably processed, and which payers have procedures that may be better understood for future efficiency.
Everything that is needed to accomplish these things is already available in the data. It’s simply a matter of analyzing and using that data correctly.
Harnessing the Power of IT Solutions
Almost a third of health care providers are still managing claim denials manually. It’s staggering that these providers have yet to automate claim denials management.
The truth is that, without proper IT systems, claim denials management key performance indicators cannot be calculated.
So, yes, an automated system is an upgrade, but it alone is not enough. It is most advantageous for hospital executives to implement systems that can identify claim denials management inefficiencies and also be integrated with existing billing systems and electronic health records.
Some hospitals have great success when they integrate claim denials management with their electronic health records system, specifically. The combined system allows one to sort using a variety of fields that include payer, dollar, and timely filing indicator, while also giving one the ability to filter the work queue for greater efficiency.
If providers upgrade their patient scheduling and registration systems, a majority of claim denials can be prevented altogether.
The most common reasons for these particular denials range from incorrect patient information to incomplete insurance verification. Efficient registration systems resolve many of these issues.
Mobilizing the Expertise of Clinical Staff
When electronic health records (EHR) and ICD-10 were first implemented, providers benefitted from updated systems with more accurate medical billing. At the same time, however, providers were subjected to a greater number of claim denials due to the added specificity.
Some providers had the foresight to predict this increase in claim denials, and a few chose to engage clinical staff instead. By collaborating with physicians individually, executives were able to convey the need for better clinical documentation.
This action led to additional collaboration – this time between physicians and documentation specialists who were able to address any questions that physicians had regarding ICD-10.
It is the success of this type of partnership that has encouraged hospitals to implement the “team” approach to claim denials management. Today, many claim denials management groups are multidisciplinary teams. In a few cases, there are claim denials management groups that consist only of nurses.
The benefit to this model is that these nurses can review a documentation issue and almost immediately determine whether the claim denial has a case for appeal or whether there is a bigger issue that needs to be resolved. This adjustment facilitates greater efficiency in processing claim denials, but it also conserves resources and maximizes time spent by personnel.
Though some claim denials management groups may struggle to accommodate an increase in claim denials, all is not lost. These issues are preventable.
By implementing these three best practices, hospitals can begin to relieve the growing logjam of claim denials, improve their financial positions, and remain well equipped to react to future changes in the industry.