For any provider, there’s nothing more frustrating than a denied claim. All the hard work is done but, through some technicality or a minor coding error, the insurance carrier refuses to pay. Denials negatively impact operational cash flow, revenue, and billing efficiency. For healthcare practices and providers of all shapes and sizes, claim denials can be a major cost burden. They’re both hard to avoid and costly when they happen, which is why it’s critical to have a comprehensive plan in place to manage them. According to the American Academy of Family Physicians (AAFP), denials for physician practices are between 5 and 10 percent and it costs $25 to $30 to manage the average denial. Improving the denial management process is the only way to ensure consistent revenue flow and reduce the number of denials. While getting to ‘zero’ denials is virtually impossible, reducing them even by a fraction of a percent can have a substantial impact on your organization’s bottom line. For improving the denial management process, you need to understand the different types of medical billing denials, pinpoint the most common billing problems and take suitable steps to avoid them.
Top 5 Denial Reasons
Denials are of types: hard and soft. Hard denials cannot be reversed or corrected and result in lost or written-off revenue. Soft denials are temporary denials with the potential to be paid if the provider corrects the claim or resubmits with additional information. The top 5 medical denial reasons are as follows:
- Missing information: Leaving just one required field blank on a claim form can trigger a denial. Demographic and technical errors, which could be a missing modifier, the wrong plan code, or no Social Security number, prompt 61 percent of claim denials.
- Duplicate claim or service; Duplicates, which are claims resubmitted for a single encounter on the same date by the same provider for the same beneficiary for the same service item, are among the biggest reasons, prompting up to 32 percent of claim denials
- Service already adjudicated: This error occurs when benefits for a certain service are included in the payment/allowance for another service or procedure that has already been adjudicated.
- Not covered by payer: Medical billing denials for procedures not covered under patients’ current benefit plans can be avoided by checking details in the insurance eligibility response or calling the insurer before administering services.
- Timely filing limit expired: Most payers require medical claims to be submitted within a certain number of days of service. This includes the time it takes to rework on rejections.
Improving Denial Management Process
Adding more people to your denial management team won’t necessarily help, you need medical specialty wise billing experts who will focus on the following things:
- Improve patient data quality: Improve patient data collection process done by front desk staff. You must have all the required patient information couple of days prior to the patient visit.
- Eligibility and benefits verification: Complete patient eligibility and benefits verification process for every patient visit. You must have an insurance coverage report for every patient prior to their visit. This will ensure all provided insurance and patient details are accurate and updated. Also, request patient for secondary and tertiary insurance details.
- Track every claim: Submitting a claim is not sufficient, you need to track each and every submitted claim. Get a payer response on them, whether in process, paid, rejected, or denied.
- Categorize denials: Categorize denials as per the above-mentioned denial reason. You can also categorize by insurance carriers, rendering providers, and procedure codes. Finding a resolution to one such claim for a category could help to eliminate all rejections for that category.
- Form a denial management team: This denial management team will determine what resources are needed to track, find resolutions, and resubmit claims. Provider and team members from various billing dept will dedicate their weekly time for denials resolution and its timely resubmission.
- Stay in touch with payers: Your accounts receivable (AR) team is constantly in touch with payers. Before working on any denial resolution, discussing with the insurance rep about denial reason will help to understand the exact required information. Every payer has unique billing and reimbursement policies, so working closely with payers will ensure correct denial resolution.
Many practices lack the technology and expertise to manage denials effectively, especially in light of constantly changing regulations and payer rules. Outsourcing revenue cycle management to billing company like Medisys Data Solutions will help to reduce denials and ensure quicker insurance reimbursements. We can help you establish medical billing benchmarks, reduce backlogs, identify root causes of denials and reduce AR days. To know more about our denial management services, contact us at info@medisysdata.com/ 302-261-9187
