Today quality of revenue cycle management process depends on preventing and solving denials of claims effectively. A claim translates into revenue only when payment towards claim is collected. A denial of claims leads to lost revenue or delayed revenue if collected later after resubmission. Any underpayment can also be termed as partial denials due to exclusion of payment for certain procedures billed in the claim. Higher denials put revenue cycle under tremendous pressure. An effective strategy must be developed and followed to address the most alarming issue of claims denial faced by healthcare providers today. The ultimate objective of any highly efficient medical billing process is to get the maximum possible reimbursement for claims submitted to the payers. Denial management, a strategic process within revenue cycle, if executed properly will not only improve financial stability of healthcare providers but also improve billing process in the long run.
Current Scenario
According to The Change Healthcare Claims Denials Index the current claims denial rate is 12% which is a 23% increase from 2016. And the rates for top 5 reasons of denials are:
- Registration/eligibility – 26.6%
- Missing or invalid claim data – 17.2%
- Authorization/pre-certification – 11.6%
- Service not covered – 10.6%
- Medical Documentation requested – 9.2%
So, approximately 75% of denials occur due to five top denial causes. A robust and result oriented denial strategy must be built on data analytics and a well defined process management framework and its success depends on billing team’s expertise and ability to navigate the challenges.
What is Denial & Denial Management in Revenue cycle
Denial in medical billing is a refusal by Medicare or other insurance company to pay for services or products under benefits coverage. Denials can happen for various reasons but are most often occurs due to an incorrect claim or on grounds of medical necessity. When a health insurance company denies a claim, it can leave the provider responsible for the full cost of the services provided, making him financially vulnerable.
Denial management in revenue cycle is a process to correct and prevent claim denials. Claims denial management involves analysis, identification, correction and appeal to resubmit corrected claims and get reimbursement. A better approach is to analyze denial trends and reasons for denials; to monitor performance metrics and take proactive steps to prevent denials from occurring in future.
Top Reasons for Denials
There are two types of denials – a hard denial that cannot be reversed or corrected for resubmission, and a soft denial which is temporary and can be corrected for resubmission to get reimbursement.
According to our analysis of denial trends in medical billing, we list the top denial reasons.
- Missing or incorrect information
- No prior authorization
- Invalid claim data
- Incorrect Coding
- Services not covered
- Medical necessity or documentation
- Delayed filing of claim
Strategies for Effective Claim Denial Management
Resubmitting a denied claim after correction is the immediate goal of any denial management process. However, claim resubmission is a costly and time-consuming process as it involves more effort to correct, resubmit and follow-up just like any new claim. A robust and dynamic denial management strategy handles denials more holistically and emphasizes more on denial prevention at the first place.
- Denial Trend Analysis: A thorough analysis of denial claims over a period of time will give a bigger perspective and trends of denials. A root cause analysis will help to identify the source or billing stage where the errors occurred.
- Which steps are not in sync with best practices and facing quality issues?
- Is it billing or coding issue?
- Is it procedural issue or human error?
- Is it documentation issue, global or specialty specific?
- Claim Correction & Resubmission: A standard operating procedure to swiftly assign the denial claims to the respective team to take immediate remedial action is essential to meet revenue objective. Billing team must have a policy defined to prioritize their work on denied claims. A daily report on denial claims, action taken and up-to-date status will help to keep control over denied claims.
- Catch the Error at Source & Prevent Propagation: A good denial management strategy relies on denial mitigation at every stage of revenue cycle. A thorough review and audit process at the end of every stage of a claim life cycle will improve the quality of individual process, that in turn helps in reducing denials and improving revenue cycle process.
- Performance Measurement: Denial management strategy must involve performance measurement of denial management process as well as overall revenue cycle regularly. Considering the ultimate goal of continuous process improvement, it is necessary to conduct periodic process benchmarking along with performance evaluation within healthcare industry. Any deficiencies are to be addressed to achieve the best outcome out of revenue cycle.
- Transparent & Comprehensive Reporting: A management policy of reporting bad and good news is the foundation of transparent reporting to all stakeholders. This gives a complete visibility of all revenue cycle management processes including denial management. Transparency in reporting makes the foundation for a trustworthy and reliable medical billing process.
- Collaborate with Right Billing Partner: A trusted and reliable outsourcing billing company brings huge benefits in the short term as well as long term. A billing service provider like RCM Workshop not only specializes in medical billing but fully focused on adopting a best-in-class process management and metrics-based performance measurement methodologies, and committed to fully transparent reporting to give healthcare providers complete visibility of the revenue cycle process.
Conclusion:
It is imperative to say that every medical billing team works on denial management but not every billing team has adequate focus or experience on denial management. The team at RCM workshop has exactly the required experience backed by a very effective operations and quality management process. So, it is not an exaggeration to say when you reach a company like RCM Workshop, you are in safe hands to minimize denials and maximize revenue.