Claims Denials: SOLUTIONS TO Maximizing Revenue and Minimizing Losses

​CLAIMS DENIALS: SOLUTIONS TO MAXIMIZING REVENUE AND MINIMIZING LOSSES

Healthcare organizations are facing significant financial pressure due to various factors such as wage inflation, rising costs, declining patient and service volume, and the lingering uncertainty caused by the pandemic. These challenges are further compounded by the prevalence of unresolved claims denials, which lead to substantial annual losses for hospitals and healthcare facilities. In order to alleviate this financial burden, it is essential for organizations to adopt a strategic approach that focuses on preventing denials and effectively managing the claims process.
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The Rising Denial Rates: Over the past five years, denial rates have been on the rise, with an average increase of over 20 percent. Currently, the average claims denial rate exceeds 10 percent. A recent survey conducted by the Medical Group Management Association (MGMA) reveals that medical practices experienced an average increase in denials of 17 percent in 2021 alone. Industry data indicates that nearly 20 percent of all claims are denied, and a significant portion of returned claims are never resubmitted. The cost of reworking or appealing denials further exacerbates the financial impact, with practices spending an average of $25 per claim, and hospitals facing a staggering $181 per claim.

CLAIMS DENIALS: SOLUTIONS TO MAXIMIZING REVENUE AND MINIMIZING LOSSES

Identifying the Common Causes: ​

Preventing denied claims begins with understanding the most common reasons for claim rejections. 

1. Prior authorization: Failure to obtain prior authorization prior to providing a service may result in claim denials.
2. Missing or incorrect information: Inaccurate or incomplete data, such as blank fields or incorrect plan codes, can lead to claim rejections.
3. Failure to meet medical necessity requirements: If a healthcare service is deemed medically unnecessary by the payer, it may not be covered under the policy.
4. Non-covered procedures: Claims may be denied if the performed procedure is not covered by the payer, emphasizing the importance of reviewing patients' plans in advance.
5. Out-of-network providers: If services are provided by out-of-network providers, payers may deny all or part of the claim.
6. Duplicate claims: Submitting multiple claims for the same patient, service, and provider on the same day can lead to denials.
7. Coordination of benefits: Claims for patients with multiple health plans may experience delays or denials until coordination of benefits is updated.
8. Bundling: Payers may group separate services together and pay a reduced fee instead of individual fees.
9. Services already included in payment: If a service is already covered by another service or procedure, payment may be adjusted accordingly.
10. Exceeded timely filing limit: Claims filed beyond the payer's required timeframe may be denied, necessitating consideration of processing time for resubmissions.

Effective Denial Management and Prevention:

CLAIMS DENIALS: MAXIMIZING REVENUE AND MINIMIZING LOSSES

To mitigate the financial impact of denied claims, healthcare organizations should prioritize prevention efforts while also implementing effective denial management strategies. This involves:

1. Prevention: Establishing a zero-tolerance mindset toward preventable denials by implementing comprehensive audit systems to ensure clean claims are submitted.
2. Understanding denial codes: Categorizing denial codes into contractual obligations, other adjustments, payer-initiated reductions, and patient responsibility, and responding accordingly.
3. Correcting and appealing denials: Timely correction of errors, appeals, and understanding payer requirements, involving coding professionals and providers as necessary.
4. Continuous improvement: Regularly evaluating internal workflows, analyzing denial patterns, and conducting staff training to enhance efficiency and identify areas for improvement.
5. Collaboration with payers: Engaging in collaborative efforts with payers to address denial issues more efficiently and improve system-wide effectiveness.
6. Utilizing outsourced services: Considering the use of outsourced medical billing and coding operations to access specialized expertise and support in managing denials, allowing internal teams to focus on other critical aspects of healthcare operations and patient experience.

Best Practices to Combat Denials: ​

CLAIMS DENIALS: SOLUTIONS TO MAXIMIZING REVENUE AND MINIMIZING LOSSES

Implementing the following best practices can significantly enhance denials management and improve overall outcomes:

1. Know the statistics: Gain a deep understanding of initial denial, dollar, and claims rates to identify root causes and develop targeted process improvements.
2. Maintain an organized process: Utilize HIPAA-accredited tools and technologies to track and manage denied claims effectively, minimizing revenue loss and administrative challenges.
3. Identify trends: Quantify and categorize denials, leverage data analytics to uncover patterns, and proactively address underlying issues with the assistance of physicians and payers.
4. Act in a very timely manner, do not delay: Establish a well-defined workflow to address denials promptly, aiming for corrections within a week to optimize revenue flow.
5. Establish a dedicated team: Assemble a cross-functional team consisting of key stakeholders from various departments to collaborate, strategize, and implement solutions, while continuously monitoring progress and identifying root causes.
6. Collaborate with payers: Foster collaboration with payers to streamline the resolution of denials and improve overall system efficiency.
7. Prioritize quality over quantity: Focus on thorough follow-up and resolution of already-addressed claims to maximize revenue generation and quality outcomes.
8. Monitor progress: Regularly track and analyze performance, conduct audits, and leverage automation to streamline denial management processes and reduce rejections.
9. Verify patient information: Utilize patient portals for accurate and updated patient information, ensuring data quality and proper insurance coverage verification.
10. Learn from historical claims rejections: Analyze rejection trends, leverage available resources such as electronic health records, and continuously improve data quality to avoid claim rejections.
11. Meet deadlines: Adhere to insurance company policies and deadlines to avoid claim filing delays that could lead to denials.
12. Foster a strong relationship with clearinghouses: Maintain a solid partnership with clearinghouses to facilitate smoother interactions with insurance companies and gain insights into rejection explanations.
13. Understand claim formats: Familiarize yourself with standardized claim formats such as ANSI837, enabling efficient identification and resolution of problems associated with denied claims.
14. Conduct regular follow-ups: Track each claim, promptly correct and resubmit denials within scheduled appeal timelines to minimize revenue losses.
15. Follow a decision tree approach: Train staff to utilize decision trees, systematically considering all possible outcomes and tracing each path to resolution, enhancing the effectiveness of denial resolution efforts.

Leveraging Technology Solutions: Implementing the right technology resources can significantly enhance denial management efforts. Claim editor or "claim scrubber" software can help identify coding errors, medical necessity issues, and technical errors before claims are submitted. Medical claim scrubber solutions automate the matching of diagnosis and procedure codes, ensuring compliance with coding guidelines. Code check software and encoders validate and improve coding accuracy, saving time and improving efficiency.
Mitigating Losses and Protecting the Bottom Line: While it may not be possible to eliminate denials entirely, a strategic and proactive approach, backed by data analysis, automation, and technology tools, can mitigate their impact on the financial bottom line. By continuously monitoring, identifying trends, collaborating with payers, and adhering to best practices, healthcare organizations can reduce write-offs and safeguard their revenues.
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Efficient denial management requires a comprehensive approach that includes prevention, understanding denial codes, effective correction and appeals, continuous improvement, collaboration with payers, and leveraging technology solutions. By implementing these strategies and practices, healthcare organizations can minimize the financial impact of denied claims, optimize revenue generation, and maintain a stable bottom line while providing quality care to patients.

The Role of Staff Training: Investing in staff training is crucial for effective denial management. By equipping employees with the necessary knowledge and skills, organizations can reduce errors and improve the accuracy of claims submissions. Training should cover topics such as coding guidelines, payer requirements, documentation best practices, and effective communication with payers.
Continuous Monitoring and Analysis: To stay ahead of denials, it's essential to continuously monitor and analyze denial data. Regularly running reports to identify denial patterns and trends can provide valuable insights into the root causes of denials. By identifying these patterns, organizations can take proactive measures to prevent future denials, implement process improvements, and enhance overall revenue cycle management.
Utilizing Outsourced Services: For healthcare organizations that lack the resources or expertise to handle denial management internally, outsourcing services can be a viable solution. Outsourced medical billing and coding companies specialize in managing denials, ensuring efficient claims processing, and optimizing revenue collection. By leveraging the expertise of these external partners, organizations can alleviate the burden on their internal teams and achieve better denial management outcomes. Our company, the GoHealthcare Practice Solutions can easily help you with this! 
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Denial management is a critical component of revenue cycle management in healthcare organizations. By focusing on prevention, utilizing effective denial management strategies, leveraging technology solutions, and investing in staff training, organizations can mitigate the financial impact of denied claims and protect their bottom line. Continuous monitoring, analysis of denial patterns, and collaboration with payers are essential to identify opportunities for improvement and implement proactive measures. By adopting these best practices, healthcare organizations can optimize revenue generation, enhance operational efficiency, and provide quality care to their patients.

Reading Sources and References: ​

1. "Strategies for Reducing Claim Denials and Improving Revenue Cycle Performance" by Healthcare Financial Management Association (HFMA)
   • This resource provides insights into strategies for reducing claim denials and improving overall revenue cycle performance in healthcare organizations.
   • Source: https://www.hfma.org/topics/revenue-cycle/article/strategies-for-reducing-claim-denials-and-improving-revenue-cycle-performance.html
2. "Effective Denial Management: A Proactive Approach to Revenue Cycle Optimization" by American Health Information Management Association (AHIMA)
   • This article highlights the importance of proactive denial management and provides recommendations for optimizing the revenue cycle through effective denial management practices.
   • Source: https://library.ahima.org/doc?oid=301233#.YzLbIegzaUk
3. "The Role of Technology in Denial Management" by Healthcare Information and Management Systems Society (HIMSS)
   • This resource discusses the role of technology solutions in streamlining denial management processes, improving efficiency, and reducing claim denials in healthcare organizations.
   • Source: https://www.himss.org/resources/role-technology-denial-management
4. "Best Practices in Denial Management: Strategies for Success" by Medical Group Management Association (MGMA)
   • This MGMA resource provides best practices and practical strategies for successful denial management in medical group practices, including prevention, analysis, and resolution of denials.
   • Source: https://www.mgma.com/resources/revenue-cycle/denials-management/best-practices-in-denial-management
5. "Effective Strategies for Preventing and Managing Claim Denials" by Becker's Hospital Review
   • This article offers insights into effective strategies for preventing and managing claim denials, including process improvements, staff training, and technology utilization.
   • Source: https://www.beckershospitalreview.com/finance/effective-strategies-for-preventing-and-managing-claim-denials.html

Please note that availability and access to these sources may vary, and some of them may require a subscription or purchase.

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