Reducing Claim Denials and Increasing Clean Claims

Sending out a clean claim that’s paid promptly and appropriately on first submission is the goal of every medical billing office. Too many claims fall short of that goal, unfortunately, and the statistics from the past few years are startling:

The Medical Group Management Association (MGMA) estimates that is costs an average of $25 just to rework a single claim.
The Healthcare Billing and Management Association (HBMA) has reported that as many as 30 percent of claims are denied or ignored on the first submission and a startling 60 percent of those are never resubmitted.
MGMA also estimates that payers underpay practices in the U.S. by an average of 7-11 percent.

If so much money is either spent or left on the table because of denials, how should physician billing offices or outsourced billing companies respond? Here are several suggestions to help create or improve a denial management program for your practice or clients.

Be proactive.

Surprisingly, as many as 43 percent of claims denials result from eligibility problems, according to RelayHealth. Confirming a patient’s insurance information and eligibility at various times throughout the patient encounter, including before the service is provided and again before the claim is submitted, can help ensure a clean claim.

Simple registration errors, like a wrong date of birth or member ID, also account for a significant portion of denied claims, according to Tammie Phillips, RN, vice president of business consulting with McKesson Health Solutions. Performing regular accuracy audits, and holding employees to high standards can help reduce denials on the back end of the claims process.

Automate everything.

About one third of healthcare providers still manually process denials, according to a recent HIMSS Analytics survey. Adopting an automated denial management system, whether from an outsourced vendor, a homegrown solution, or an integrated component of your EHR or practice management system, will allow you to create rules-based protocols that will help you work denials more efficiently. As well, a claim scrubber used prior to claims submission can flag any Correct Coding Initiative (CCI) issues, payer-specific guidelines, or other user-defined scenarios for preemptive review and resolution.

HIMSS Analytics researchers suggested more automated solutions for denials management will become increasingly important as value-based care models are adopted. Also, automated claims denial management systems allow providers to monitor and report on denials en masse, making it easier to spot trends and deal with recurring issues in aggregate.

Align clinical practices with billing guidelines.

Medical necessity also accounts for a large percentage of denials. Resolving a payment dispute often requires billing specialists to determine whether a procedure truly was unnecessary or the whether the documentation simply failed to support the necessity.

To reduce the number of medical necessity denials, John Holyoak, director of product management with RelayHealth Financial, suggested the following strategies in a recent Beckers Hospital CFO article:

Validate medical necessity by the payer prior to the service.
Conduct a medical review at admission and every couple days during hospitalization.
Use evidence-based content according to accepted standards.
Document all decisions and levels of care thoroughly.
Show physicians how clinical documentation affects charge capture and payment.

Work denials daily.

Keeping current on all denials and underpayments is as important to your revenue stream as entering new charges. A backlog of denials means a drop not only in your collection percentage but in your actual collections as well. Also, because of filing and appeal limits and deadlines, some of the denied claims may eventually have to be written off, even if the claim was denied in error or simply required additional documentation.

Investigate causes.

When you receive a denial, don’t just resubmit the claim without first determining why it was denied the first time and how to avoid subsequent denials. Provide your denial management team with the tools and resources they need to communicate with payers, identify trends, and resolve issues individually or collectively, as needed.

Audit, audit, audit.

Errors at any point in the revenue cycle can result in denials, underpayments, and lost revenue. From registration to clinical documentation to coding to charge entry, implement regular audits that allow you to identify and correct systemic problems and avoid additional delays or losses.

You may not be able to eliminate all denials, but with a comprehensive denial management program, hopefully you will reduce the number of denied claims, increase the number of clean claims, and improve your bottom line.