Denied claims are a persistent thorn in the side of healthcare organizations.
Across the entire revenue cycle management (RCM) spectrum, various opportunities exist to prevent, resolve, or lessen these issues. Addressing pain points at each stage, from patient data to claim appeals and resolution, allows organizations to protect valuable revenue streams.
The Front Desk
Prevent Issues Before They Begin
Effective denial management begins before you even submit a claim.
Front-end processes like insurance verification, eligibility checks, and prior authorizations are critical to reducing the likelihood of denials. Automating these tasks with front-end eligibility tools ensures accuracy and frees staff to focus on higher-value activities.
Another essential component is training staff on the importance of correctly capturing patient demographics and insurance details. A single typo or outdated insurance policy can cascade into a denial and cost time and resources to resolve. Establishing clear workflows and cross-departmental communication can also prevent errors and ensure you obtain all necessary information upfront.
Transparent communication with patients is also key. Patients who understand their financial responsibility before receiving care are more likely to provide accurate information and less likely to dispute charges later. Implementing digital tools that allow patients to verify their insurance coverage and review cost estimates can improve financial awareness and reduce patient liability in the future.
Missing/incorrect patient data and issues with authorizations are reported as the top reasons for denials in 2024.
Coding and Charge Capture
Reduce Errors at the Source
Denials stemming from coding and data entry errors highlight the delicate balance between both clinical and billing accuracy requirements.
One common challenge is staying updated with frequently changing coding regulations and/or payor-specific requirements. Failure to review denial trends regularly can leave organizations vulnerable to repeated errors. Developing a comprehensive, data-informed playbook that addresses root causes with payor nuances and denial patterns is essential.
Addressing these challenges requires a mix of well-trained coders, ongoing education, and technology to streamline the process. Rule engines can flag inconsistencies in real time, and AI-powered tools establish best practices and successful fixes. Regular review of denial data that includes identifying trends in denial codes, CPT/ICD-10 codes, and other recurring errors by payor can also guide proactive adjustments along with continuous process improvement.
Mistakes in medical billing cost Americans $210 billion each year and lead to $68 billion in avoidable healthcare expenses.
Claims Submission
Promote Accuracy and Timeliness
Submitting accurate claims promptly is paramount, yet it’s often easier said than done. While clearing houses can assist with routine edits for cleaner claim submissions, claim rejections are predominantly manual and labor-intensive to review.
Automation tools can assist with the staff workflow prioritization for increased efficiency in handling claim rejections. When combined with robust data analytics, these technologies enable organizations to identify trends that will refine their claims submission process and significantly reduce claim rejections.
Denials and Appeals Management
Turn Challenges Into Wins
The financial impact of denied claims becomes most apparent in the denials and appeals process. Navigating this process is complex, often requiring detailed knowledge of payor requirements and significant staff resources.
One critical mistake many organizations make is automatically sending medical records in response to an appeal denial, an approach that is often insufficient. Many payors now send letters instead of or in addition to electronic remittance advice (ERAs), which may include specific requests or instructions for alternative submission processes. In some cases, medical records aren’t required to overturn a denial.
Organizations that prioritize a data-driven approach to denial management—analyzing trends in denial reasons and historical outcomes—can craft targeted strategies and responses to address recurring issues.
Creating a denial playbook by denial code combinations based on payor and CPT/DXS codes can provide your team with successful fixes to overturn the denials. Playbooks must be analyzed regularly to ensure recommended fixes produce the preferred outcome. Once you have a playbook in place, accuracy is improved along with staff adherence. The revenue cycle teams can also focus their efforts on working denials that have the greatest success in overturning the appeal.
Hospitals and health systems spend an estimated $19.7 billion annually to combat denied claims.
Patient Billing
Close the Loop with Transparency
Denials also impact patient responsibility, creating frustrations for both patients and providers.
A transparent, patient-centric billing approach can mitigate this impact. Offering patients clear, itemized bills and providing flexible payment options helps build trust and encourages timely payments.
Understanding patient payment behaviors through analytics can also help organizations tailor their communication strategies. Tracking key metrics like days in accounts receivable (AR), denial rates, and time of service collection patterns helps providers identify potential bottlenecks and proactively address issues.
In recent years, providers collected less than half of the amount owed to them for services rendered.
The Bigger RCM Picture
Denials are on the rise, but they don’t have to be a barrier to success.
An RCM partner offering true end-to-end solutions, services, and expertise delivers the technology and insights needed to address the root causes of denials.
With innovative tools, industry-specific knowledge, and customized strategies, we’re empowering healthcare organizations to streamline operations, reduce errors, and recover revenue faster.
Struggling with denied claims? Learn what your organization can do to improve your denials prevention and management.
