The increased complexity of insurance management systems has created millions of dollars in lost revenue and forced hospitals to prioritize cost control in recent years. The revenue deficits have in part resulted from insurance claims denials and ineffective management of claims processing.
Claim denial rates vary between 0.54% to nearly 5%, depending on the payer, and healthcare organizations that interact with multiple payers are subject to significantly higher denial rates. While claim denials are a normalcy in healthcare, insufficient regulating and analysis can cost organizations 3-5% of their revenue stream.
To maximize claims reimbursement revenue, data analytics and a collaborative approach are vital. Because 90% of denied claims are deemed preventable, providers can minimize lost revenue with three efficiency-boosting strategies.
Utilizing the Correct Claims Denials Management Resources
In 2016, 31% of hospitals still used a manual claim denials management system. Manual claim denials systems are highly prone to error, and reduce efficiency as compared to automated systems. Automation can build a strong foundation for processing claim denials but alone will not ensure efficiency.
Administrators should be aware that different IT systems may better serve their facilities needs, and should incorporate those that directly target known problem areas. It is also essential that IT systems integrate with medical billing and EHR systems. Periodically installing, updating, and maintaining these systems is vital to preventing claims denials.
By introducing the appropriate registration systems, providers can resolve issues regarding incomplete patient information or insurance verification. The system should be compatible with the hospital’s needs, whether it is high-volume, or uses ICD-10.
Working with Medical Staff Members to Prevent Claim Denials
The medical staff is a crucial part of the claims process. Because they are the lead contributors to correctly filing claims, clinicians must be well-trained, and administrators should not assume that technological changes are easy to handle. Medical staff should be rigorously trained on ICD-10 standards and provided with resources to understand coding system advancements.
Claims denials increase when hospital staff cannot allocate the time necessary to learn new technology or coding systems. If clinical documentation specialists continually work with medical staff, however, their input can help clinicians reduce coding errors and ensure records are kept correctly.
The proactive approach from these specialists was an important factor in making sure that the transition from ICD-9 to ICD-10 in 2015 went smoothly. A multi-disciplinary team approach is vital to keep claims denials at a minimum, because it takes input from many different departments, working in cohesion, to successfully manage claims processing.
Data Analytics can help Identify Problems and Solutions
Data analytics is another essential part of the claims management process. Healthcare organizations process thousands of insurance claims every day, making it unfeasible for medical staff to file through denied claims manually.
Data analytics can lift this administrative burden, and help organizations identify what facets may directly contribute to claims denials. Be it a human error in registration and documentation processing or a problem with the payer, identifying places for improvement through data analytics lowers denial rates and maintains a healthy revenue stream. The industry standard for denials averages 4%, so hospitals shouldn’t worry about bringing their denial rate to 0%, but having a rate much higher than the industry standard could be a cause for concern.
Once organizations know what causes denials, steps can be taken to prevent them. Business intelligence analytics can develop analyses by denial cause, and facilities should implement processes that distinguish between hard and soft denials. Data analytics can also identify which claim denials are most likely to result in write-offs, which cause lost revenue.
These three claim denial mitigation strategies have the potential to preempt a substantial number of preventable denials. Because the efficiency of a claims denial process directly correlates with lost money, implementing these strategies can minimize denials, maintain the health of an organization’s revenue stream, and enhance the quality of patient treatment.