The denial management process is important for successful revenue management and the purpose of the process is to investigate every unpaid claim as well as identify the trends of one or several insurance providers and appeal for the denial based on the terms mentioned in the provider’s contract. Claim denials are often for most of the healthcare organizations as they are facing various challenges while implementing effective claims denial management process.
Providers are engaged with several payers simultaneously which makes them difficult to keep their claim denial rates closer to the lower end of the industry average. According to an American Academy of Family Physicians (AAFP) report, the average claim denial rate across the healthcare industry is between 5% to 10%.
Claim Denial Management Challenges
Some common challenges such as keeping track of claim denials, lack of standardization for claim denials, manual intervention, receiving avoidable denials, and resource-intensive process for appealing claims are faced by healthcare organizations while implementing effective claim denial management systems. These challenges are impacting revenue collection for healthcare organizations.
Keeping Track of Claim Denials
The first challenge is keeping track of claim denials and justifications for these denials. However, it is very difficult for providers to gain access of claims denial data from payers as payers are maintaining privacy due to competitive pressure.
Lack of Standardization
Second is a lack of standardization for claim denials as each payer sets its own rules for denying claims and communicating denials to providers. As a result, the healthcare industry is lacking an established strategy for providers and payers which enables them to analyze and present claim denials data.
Lack of Technology Usage
Third, manual intervention affects the productivity of successfully managing claim denials as claims denial management process is very complex and need a large amount of data across organization along with payers’ rules and code. Various healthcare Information Technology (I.T.) tools can easily handle such complexities to reduce the rate of claim denials. Moreover, the automation of claim denials management processes enables tracking errors before submission of claims for payment.
Incorrect or Missing Patient Information
Fourth, Most of the claims denials are the result of incorrect or missing patient information such as patient’s demographic data and other technical errors. These errors can easily avoidable but most medical billing and claims denial management processes are reactive resulted in denial of claims. The staff of the healthcare organization needs to work proactively with the claim denials management team to understand data required for the elimination of demographic errors as well as services that are covered in the patient’s plan.
Cost of Resources
Fifth, appealing claims through a resource-intensive process is costly for the providers as providers spent a significant amount of money on phone calls, investigative work, and claims appeals associated with reworking claims. In addition to costs, appeal processes are time-consuming. Hence healthcare organizations should focus on ensuring that claims submissions are correct and clean to avoid resource-intensive appeals processes.
Claims denial is just another part of the healthcare revenue cycle and claims denial management offers challenges that are impacting the collection of providers.
Medisys Data is a leading medical billing services provider across the USA. Reach out to our medical billing manager to ensure correct and clean claim submissions. Outsource your medical billing to save your time on denied claims.
