Hospitals are writing off more claim denials than ever before, which poses a major concern within the healthcare industry. By failing to collect payment from patients a significant amount of the time, healthcare providers nationwide are seeing unacceptable losses in their revenue cycles. As the industry transitions towards a value-based system instead of a fee-for-service model, and payer-provider contract requirements increase in complexity, the volume and risk of claim denials have increased exponentially. Currently, when receiving a denied claim, providers are faced with a burdensome appeals process, along with the several challenges associated with cash flow, patient collections and collection costs. As a result, the solution for effectively managing and preventing claim denials has become a top priority for many providers. In this article, we will discuss the financial challenges associated with write offs, claim denials, and insufficient appeals and collections process.
Claim denials continue to endanger the financial security of hospitals, with rates of unchallenged claim denials rising. One reason for this trend is that hospitals are having more difficulty appealing denied claims, leading them to write off potential sources of revenue. The difficulty stems in part from the complex requests embedded in provider-payer contracts, which makes appealing claims more labor-intensive and costly to hospitals. In particular, Medicare Advantage, Medicaid, and commercial payers have posed the most strain on hospitals and their billing departments when it comes to denied claims. Value-based healthcare models, in which providers are paid according to patient health outcomes, are gaining prominence in the industry. Due to its reliance on thorough clinical documentation to ensure quality care and medical necessity of treatments, a value-based model creates an added emphasis on the hospital professionals who submit claims. This growing emphasis on documentation suggests that typical clerical errors will not likely be the primary creator of claim denials going forward. Hospitals will need to be increasingly diligent about confirming the medical necessity of their treatments in order to receive payment. In addition, securing pre-authorization for treatments is essential to reducing the risk of a claim denial. Hospitals would benefit from updating their employees on best practices for clinical documentation to ensure money is not left on the table.
In addition, claims are frequently denied for a small handful of reasons, which include submitting claims containing errors in patient data or lacking eligibility. By submitting claims that are incomplete or contain faulty information, providers are setting themselves up for costly denials. Furthermore, verifying that a treatment is medically necessary is a key step in denial prevention, which can be aided by a methodical and reliable denial management system. Adopting enhanced measures to ensure clinical documentation during patient treatment will help hospitals become proactive in their battle with claim denials. In order to limit mistakes made in medical coding or failing to verify patient data, healthcare providers should look to use software to catch mistakes in real-time. Using software on the front-end to ensure in real-time that the hospital records accurate and valid patient data can save healthcare providers countless hours and dollars trying to collect payment later. Nobody is perfect, but with the help of the right software, providers can expect fewer denials and reduced strain of managing claims for staff.
While the Affordable Care Act ensured more patients, high-deductible plans increased the out-of-pocket cost to consumers. As a result, hospitals have acquired more bad debt as many of their insured patients have difficulty paying or cannot pay their medical bills. Thus, hospitals have the opportunity to improve the health of their revenue cycles by using point-of-service patient collection. Offering incentives, such as discounts, to patients who provide upfront payment for their care may increase the hospital’s ability to collect payment. In addition, patient satisfaction with the billing process will grow as the cost of their medical bills and their method of paying them are made crystal clear from the beginning.
The ability of real-time, automatic software to iron out the wrinkles in hospital billing systems will eliminate the mystery of costs and payment collection for patients and providers alike. The cost of manually appealing claim denials is unacceptable to hospitals, as well as excessively labor-intensive. Switching to an automated, software-driven denial management process is the key to overcoming the drain of denials. Hospitals would also benefit from working to keep the cost of collecting payment as low as possible. Through centralizing their accounting activities, hospitals can prevent collection costs from further detracting from their revenue, and reduce the likelihood of a potential cash flow issue from occurring.
There are a myriad of components in today’s healthcare industry that have contributed to revenue losses and operational challenges. Using the right tools to identify and target areas for improvement is vital to the success of a healthcare provider. For customizable and effective solutions to your billing and claim management needs, look no further than eReceivables. Our patented, automated claim denial software will solve your claim denial issues and optimize your billing procedures. Partnering with us will provide you with support to help you collect more revenue and protect the financial health of your enterprise.