How to Prevent Denied Claims: A Look at Denial Management in Healthcare

How to Prevent Denied Claims: A Look at Denial Management in Healthcare

A report released in 2017 showed that out of the $3 trillion worth of medical claims submitted by US hospitals, $262 billion worth of those claims were initially denied. That’s around a nine percent denial rate.

That same year, the Doctor-Patient Rights Project survey discovered that one-in-four insured Americans have a 24% denial rate. Especially those patients treating a chronic or persistent illness who 70% of the time are denied treatment for their serious conditions.

Clearly, something needs to change when it comes to denial management in healthcare. Patients and those who treat them deserve access to treatment without having to jump through hoops.

If you’re looking to learn how to handle the denial management process, keep reading. We’re sharing with you everything you need to know about denial management.

Look at the Root Cause When Dealing with Denial Management in Healthcare

The first step in dealing with denial management is identifying why you’re experiencing a high rate of denials. One way to determine what the contributing factors are is to use available data to help you analyze the revenue cycle management processes.

You can use it to locate where the denials are happening as several factors help contribute to this ongoing issue. Pay attention to patient access and registration.

See Where Mistakes Are Most Often Made

Make sure it’s an easy process for patients to fill out their information correctly the first time. Look at the documentation on denied claims.

Often, there’s insufficient documentation. See how and where you can improve this process.

Coding and billing errors are often reasons for claim denials. Check to ensure everyone has access to the appropriate codes.

Payer behavior is also another factor. Make sure you have access to all the data you need, that it’s accessible in a timely manner, and that you’ve created a process that enables good decision-making.

Create Interdepartmental Teams

Denial management in medical billing is easier to combat when you have the right team of people helping you make continuous improvements to the processes currently in place. This team should have members from all departments represented.

The team needs to meet on a regular basis to identify the root causes and discuss how to correct them permanently. At first, it’s common for departments to resist change and some may find it difficult to discuss issues in front of others.

However, by speaking out loud the reasons why denials happened and the financial impact these denials have on each department, it should help each department take on more leadership and responsibility.

The result is increased communication between departments with fewer denials.

Learn Good Communication Skills

It’s tempting, when dealing with denial management, to point fingers at other departments rather than communicating as a team. But the only way this works is by adopting a collaborative approach.

Share pertinent information surrounding the results to help put the numbers in perspective. Also, create an atmosphere of trust and safety.

No one wants to share or collaborate openly if they believe they’ll be blamed or face consequences if it turns out a root cause lies within their area. Instead, they’ll purposely hide information and refuse to communicate in order to save themselves.

Make sure to create a blame-free environment that’s focused on fixing issues, not pointing fingers.

Prioritization and Eligibility

Once you know where the problems are happening, it’s time to prioritize areas with the greatest impact on your budget. See if you can follow the root of the problem to see if it leads to something like a specific payer, department/physician or a specific process that clearly isn’t working well.

23.9 percent of denials occur due to lack of eligibility. And there’s a fairly easy way to prevent claim denials due to eligibility.

Hospitals need to implement a policy that checks patient eligibility throughout the entire care process, beginning with when a patient schedules their appointment and continuing all the way through until the claim is submitted.

Establish a process that informs patients they’re not eligible for a procedure and discusses their financial responsibilities and what payment options the patient has access to if they do choose to move forward.

Boost Employee Education

Educate your employees involved with preregistration, registration, and admitting. If they can answer difficult questions about insurance and the verification process at the beginning, it’s easier to avoid insurance denial problems in the future.

Teach these employees how to use analytics to track verification levels. With education and a basic understanding of analytics, it’s easy to increase eligibility verifications while reducing denials.

Create an Effective Claims Processing System

14.6 percent of claims are denied due to missing or invalid claim data. To help combat this issue, create a process to view claims during midcycle and just prior to sending the claim to the payer.

It’s an opportunity to locate errors and make necessary edits. Edits need to be customized to the payer as each payer has a set of different requirements and preferences.

Ask your revenue cycle service provider to work with you to build up custom edits. You can also have them create new rules based on previous payer behavior. These rules should be updated frequently to incorporate any changes that can affect whether a claim is denied or not.

Review edits annually as a way to identify and correct potential inefficiencies and/or problems.

Incorporate IT Tools to Increase Productivity and Decrease Denials

There are plenty of health IT tools available on the market today to help you manage everything from patient care to your everyday business operations. Yet, many providers still are using manual claims.

Claims are already complex enough without having to fill them out manually. Make it easier on your staff, patients, and your business by automating your denial management process.

A vendor-provided solution can help you make sure you’re submitting claims that adhere to each different payer’s rules and codes. You’re then able to submit more claims more quickly and with fewer problems that lead to claim denials.

Work with Us

Denial management in healthcare should be a priority for every healthcare company. Whether you own a small private practice or run a large hospital.

Our management systems help you increase productivity while decreasing denials. That means more money and less work. Don’t wait any longer, click here to contact us.