Globally, medical practices are facing tough financial times. The growing population coupled with the rise in new diseases is taking its toll on the healthcare system. Healthcare claims are coming under intense scrutiny, and the ever-increasing paperwork and frequently changing laws ensure compliance issues being faced by a medical practice. One of the critical challenges facing medical practices is claims denial.
The formal definition of a medical billing denial is, “the refusal of an insurance company or carrier to honor a request by an individual (or his or her provider) to pay for healthcare services obtained from a healthcare professional.”
Every medical practice experiences claim denials. While the better performing practices have denial rates below 5%; the average practice faces 10 to 20 percent of their claims being denied. There are practices where the denial percentage goes up as high 30%. Unfortunately, denial of claims by insurers is very common in the healthcare industry. In 2017, out of $3 trillion in total claims submitted by health organizations, $262 billion worth of claims were denied.
Improve Denial Management
It is critical that medical practices improve their denial management. Research indicates that more than 30% of the healthcare claims are denied on first submission. Shockingly, 65% of denied claims are never resubmitted. Denied claims have to be reworked or appealed. While reworking a denied claim costs on an average around $25 per claim, depending on the medical denial management team’s capabilities, the success rates can vary between 55-98%.
According to the overview section in the American Medical Association guide to collecting denied claims called Appeal That Claim, many practices do not make the effort to appeal denied claims. Although there are numerous reasons, the most common, according to the AMA, is that doctors do not believe they will recover enough from appeals that will justify the administrative expenses that a denial management process will impose on their practice. These physicians are 100 percent mistaken. Recouping a denied appeal depends on the type of denial – hard or soft. Hard denials cannot be reversed or corrected, and result in written-off revenue. Soft denials have the potential to be paid if the provider corrects the claim or sends additional information.
Why Claims are Denied
Irrespective of whether you are a solo practitioner or a healthcare organization, payment posting and denial management are two extremely critical steps of your revenue cycle management. So, what leads to the denial of healthcare claims? Some of the most common reasons behind healthcare claims being denied include:
- Incorrect submission of patient information
- Duplicate claim or service
- Insurance coverage which has been terminated
- Non-covered services under insurance
- Services which require pre-authorization
- Claims filed too late
- Invalid ICD-10 and CPT codes
- Wrong POS
The good news is many medical billing denials can be avoided. While they may never go to zero, reduction even by a fraction of a percent can substantially improve your organization’s bottom line. While working denied medical billing claims is a critical component of revenue cycle management, it is better to proactively measure the volume and causes of denied medical billing claims and work towards preventing them. Remember, prevention is better that cure.
Denial Management Solutions
- Understand why the claims were denied in the first place
- Quantify and categorize all denials
- Implement a claims denial log
- Create a task force to analyze denial trends, implement solutions and track and report progress.
- Implement an EHR System and get your vendor to optimize the claims management software.
- Use automated predictive analytics to flag potential denials and address them before claims are submitted.
- File all appeals within five days of denial.
- Work with payers to eliminate contract requirements that often lead to denials overturned on appeal.
How can MedConverge help?
While it is true that a proactive denial management approach can help reduce denied claims and improve collections, it will require trained and experienced staff and updated technology, especially in light of constantly changing payer rules. One way to ensure that you improve denial management in your organization is to outsource your medical billing to the experts in the field. At MedConverge, our billing experts and dedicated denial management team ensure that your claims are submitted correctly and payments received in full. The right partner can help you manage your claims and ensure that your denials are well within the best practices of the industry. Get in touch with us to improve your claims denial.
- Ellison, A. (2014, July 02). 4 Tips on Claims Denial Management . Retrieved November 16, 2018, from www.beckershospitalreview.com: https://www.beckershospitalreview.com/finance/4-tips-on-claims-denial-management.html
- Grossinger, R. (2018, August 07). Denial Management: How to Avoid Medical Claim Denials. Retrieved November 16, 2018, from www.mtbc.com: https://www.mtbc.com/learningcenter/denial-management-tips/
- Larch, S. (2011, March 09). Denial Management 101 for Medical Billing: Remember the Basics. Retrieved November 16, 2018, from www.gopractice.kareo.com: https://gopractice.kareo.com/article/denial-management-101-medical-billing-remember-basics
- Reasons and Tips to Improve Healthcare Claims Denial Management. (2018). Retrieved November 16, 2018, from www.outsource2india.com: https://www.outsource2india.com/Healthcare/articles/healthcare-claims-denial-management-tips.asp
- Webinar Recap: The Path to Success in Proactive Denial Management & Prevention: 8 Tips to Set You Free from Claims Denials. (2018, February 26). Retrieved November 16, 2018, from www.nthrive.com: https://www.nthrive.com/blog/denial-management-8-tips-to-help-prevent-denied-claims