Anuraag Srivastava
Healthcare providers as a practice dedicate their efforts and energy into patient care. However, a portion of their revenue is lost due to claims being denied. These denials disrupt cash flow and increase administrative burden, and ultimately impact patient care, making it much more than minor inconvenience.
It becomes important for any healthcare organization to manage and prevent denials to maintain financial stability, where denial management comes in handy. What is denial management in healthcare, one may ask? This process involves identifying, analysing, and preventing insurance claims denials to ensure reimbursement on time.
The central idea of the concept is not about fixing errors after an issue is discovered. It’s about building a preventative system so that error doesn’t occur in the first place. This often requires a combination of trained staff who can use the robust technology and understand why claims are denied.
Why does denial management matter?
Denied claims matter, since they often lead to revenue loss, delays in payments and increased cost due to reworking claims. Nearly 10% of all claims are denied on their first submission, and around 65% of this set are never reworked. That’s money left to be claimed and can create frustration among administrative teams. It can also lead to increased patient dissatisfaction and compliance risks.
They typically fall into two main categories: hard denials and soft denials. Hard denials are the ones that cannot be reworked, corrected or reversed, leading to loss of revenue. For instance, if claims are denied due to incorrect medical coding that violates the payer policies, or lack of insurance coverage, they would be termed as hard denials.
Soft denials on the other hand are temporary, and can be corrected and resubmitted. They often arise due to missing information, lack of medical necessity, or even minor avoidable coding errors.
Why do denials happen?
Within the broad categories of hard and soft denials, they often happen because of:
1. Eligibility Issues
There can be multiple reasons why a claim can be rejected based on eligibility issues. For instance, the patient’s coverage was inactive on the date of the service. Another possibility is that the service provided wasn’t covered under the plan. The claim could also be submitted to the wrong payer itself, thus being rejected on the basis of eligibility issues.
2. Coding and Documentation Errors
Claims can be rejected based on submitting incorrect procedures or diagnoses code. Lack of specificity in documentation and missing or incorrectly used CPT/IPD modifiers are other common reasons why claims could be denied. These issues are preventable, and a trained staff could ensure a review of the documentation before submission.
3. Authorization and Medical Necessity Issues
Many insurance providers need pre-authorization for specific procedures. Claims are denied if this authorization is not obtained before delivering the service. If a payer considers a procedure medically unnecessary based on their guidelines, the claim could be rejected. Incomplete documentation or lack of specificity in it from the physician’s end can also lead to claim denials. To mitigate this risk, proper communication between the physicians and billing teams, while also ensuring clear documentation of medical necessity should be implemented.
4. Delay in Filling Issues
Every insurer has a deadline for claim submission, and missing this deadline can lead to automatic denial. This includes cases of resubmissions which must also be completed within the given timeframe. To ensure there is no delay, providers must ensure that claims are submitted promptly and that any necessary corrections are made before deadlines expire. Automating claims tracking and establishing internal deadlines can help avoid these issues.
The Denial Management in Healthcare: A Step By Step Guide
If the strategies of denial management are well executed, the unpredictive revenue cycle can be turned into an effective and a stable system. Here are some strategies:
Identify and Categorize Denials
The first step for any organization is to understand the reasons for denials. This involves detailed tracking and categorization of denial claims. They use revenue cycle management (RCM) software to track patterns and identify recurring issues, such as particular insurers frequently denying claims for specific codes.
Conduct Root Cause Analysis
Many organizations tend to first examine why a claim was denied before submitting it for review process once again. Firstly, this involves reviewing documentation and coding errors. Secondly, it is important to consider checking payer policies for any recent changes. It might also be useful to analyse the workflow inefficiencies that could contribute to errors.
Prioritize and Correct Denied Claims
Not all denials might be worth fighting. Some require minimal efforts to be corrected, while others require heavy burden on the administrative cost. Thus, prioritization becomes a key and it becomes essential to start with high value claims and those with high chances of successful reimbursement. Additionally, for correctable claims, ensure all missing information is added, compliance is verified as per the guidelines, and the company has worked with providers to improve documentation.
Implement Preventative Methods
Once common trends are identified, it is important to implement certain preventative measures to ensure that the errors don’t repeat. Educate the team on insurance policies, common coding errors, and documentation best practices. Review claims before submission to catch the errors early. Leverage technology like AI and automation tools to flag potential denials before submission.
Monitor and Improve Continuously
Denial management in healthcare is an ongoing process and is not a one-time fix. Businesses must regularly analyze denial reports and stay updated on insurance changes to ensure accurate data is reflected.
PCH for Denial Management
Access skilled staff and expert automation solutions to input accurate details to ensure coding errors are eliminated and claims submissions are expedited. PCH resolves both hard and soft denials to ensure maximum reimbursement.
PCH Health is an expert at commercial, state, and federal policies to harness the best of automation and strategy, ensuring cost and time saving. Visit us to request a demo.