With many healthcare organizations transitioning from a fee-for-service to value-based-care payment model, some recent market trends have spiked the urgency of such facilities to enhance their denial management processes. Struggling to collect outstanding payments and rework denied claims, organizations are facing more challenges than ever as they attempt to ground denial management, decrease overhead, and re-boost their revenue cycles.
Below, we will explore main reasons why healthcare providers are struggling with denial management – and how they can make moves to combat these challenges.
The claim requirement changes and complexities that payers have recently instituted have emerged as a common struggle for today’s healthcare providers. Insurance companies are challenging the role of clinicians and their administrative teams by significantly increasing the contract requirements associated with pre-authorization. These rules and restrictions are having an impact: Healthcare organizations are seeing up to 20% of initial claims returned with denials.
What does this mean for healthcare organizations? On average, providers are tasked with having to rework and appeal one out of every five claims. This process puts a strain on administrative teams. It’s time-consuming, which inhibits initiatives for revenue cycle improvement, and it takes away from value-based care, patient engagement, and physician focus. The administrative burdens also reduce cost optimization for organizations.
Further, while most denied claims are approved when appealed, some physicians have to either write off or try to collect owed balances as part of the patient responsibility, as they never receive reimbursement for some claims.
Increased Patient Responsibility
Healthcare is expensive, and with insurers shifting costs to the patient via high deductible health plans, for instance, financial burdens and care avoidance are at an all-time high.
In the past six years, the number of American adults enrolled in high deductible health plans has increased nearly 50 percent.
As the increasing payment portions shift to patients, they have become harder to collect than the traditional commercial or government payments. To combat this, facilities today are putting a laser-focus on denial prevention and management. Their goal? To maximize insurance collections in order to maintain RCM vitality.
Value-based initiatives, while posed to benefit the patient, also come with some downfalls for organizations. Margin pressures are a risk to revenue cycles, and ultimately, have the potential to affect overall profitability.
Value-based care aims to lower healthcare costs and increase efficiency in care. However, due to the standardization of costs and payments, the value-based care initiative has, in many cases, decreased the profitability of service lines. Today, facilities must lower their overhead to mitigate this financial risk.
Outdated Denials Management Software
Technology challenges pose a real risk to the vitality and profitability of an organization. An HIMSS Analytics 2016 Survey found that 1/3 of healthcare providers still use a manual claim denial management process, which can potentially result in a higher denial rate due to administrative error or human oversight. Automation of the denials process is often the most efficient and accurate method of reporting, but providers are slow to adopt management software.
Why? Transitioning to a new set of processes is difficult and time-consuming. Providers must educate their staff on the new methods of denials management and claims submission, and cross-incorporate new systems and technology with their current processes.
However, outdated paper-based processes and databases lack automation and decision support. These two features are vital to helping optimize and streamline denials management and stay at pace with the value-based care model and developments. For the best healthcare outcomes for the patient and to reduce denials for better payment approval, upgrading systems to become more efficient (and digitized) will often produce the best results.
As patients are becoming more concerned about the healthcare structure, and active participants in the decision-making process — concerning wellness and the financial impact of receiving care — regulatory changes will persist, along with the problems plaguing hospitals denials management. The key to successfully navigating the waters in this tumultuous organizational climate is partially dependent on the right denials management solution. By blending the right service and technology, the appropriate denials management solution can address issues before they become overly-burdensome.
Consider partnering with eReceivables; the experts in finding and implementing denials management strategies that will best fit your organization’s financial and structural goals. Offering a suite of customizable solutions, including one billing, claims follow up, appeals, or receivables financing, eReceivables was built to help streamline facility processes, reduce overhead, and increase returns for healthcare organizations nationwide.