Revenue cycle management (RCM) is a complex process involving documentation, coding, and billing — and no matter how meticulous a medical practice’s billing and administration staff is, claim denials will occur. Denials are costly for RCM, in both time and expense, as well as patient satisfaction. Denials prevention is crucial to stopping them before they happen, but when they do, the next step is effective management of the denials process. By taking proactive measures, medical facilities can reduce the incidence of costly denials.
Costs and causes of claim denials
A medical claim denial occurs when an insurance provider refuses to pay a bill for healthcare services rendered by a medical provider. The situation not only is frustrating for providers; it also causes billions of dollars in lost revenue and expenses to rework and resubmit denied claims. According to the American Academy of Family Physicians (AAFP), claim denial rates range from 5% to 10%. Those claims must be reworked at an average cost of $25 per claim and may still end up as a denial and eventually a write-off.
Denials can never be fully eliminated, but by understanding the main reasons behind them, providers, billing staff, and payers can work to manage and reduce them. Here are six of the most common reasons behind medical claim denials:
- Eligibility. A patient may not be covered for a particular service.
- No prior authorization. Payers may require a patient to obtain approval before receiving treatment, especially in circumstances when the payer may deem the procedure not medically necessary.
- Incomplete or missing patient information. Lack of information or errors in data entry can lead to denial status.
- Coding mistakes. Health Information Management (HIM) staff may put a wrong or outdated CPT or ICD-10 code for a service or procedure.
- Duplicate billing. This can be caused by clerical error or overlap in staff duties.
- Untimely filing. A claim is submitted past the deadline for filing.
The best and least expensive way to manage claim denials is to prevent them from occurring in the first place. A key part of prevention is educating staff about the most common reasons for denials and then training staff in the departments involved, including Patient Access/Registration, Health Information Management Coding/Charging, Billing, and Insurance Claim Submission.
Next, create a Claim Prevention Task Force that takes the lead in educating staff about ways to reduce the incidence of claim denials. The following areas are perfect starting points for the task force:
- Eligibility verification. Administrative staff should check for eligibility at check-in/registration to verify that the patient has prior authorization, if required, and that the service is covered. Staff members also must ensure the patient information is accurate, complete, and free of errors.
- HIM coding and charging. Patient-provider interactions require a great deal of documentation from the provider, which then needs to be interpreted, coded, and billed correctly.
- Billing. This department needs to ensure accurate deciphering of coding so that charges are billed correctly. Staff also need to ensure duplicate bills or bills that have already been processed are not sent out.
- Timely filing. Providers and billing staff must have processes in place to ensure claims are filed according to payers’ guidelines and deadlines.
There are several factors that influence the management of denials, including training and technology. It’s important to educate and provide adequate training for your RCM staff. The better informed and trained your staff, the better prepared they will be to manage claim denials effectively when they occur. Automation in the revenue cycle also can simplify and accelerate claims processing, including rectifying claim denials. For example, with advanced RCM technology, your team can proactively receive alerts to review claims for missing or incorrect information before they are submitted, enabling teams to catch mistakes before they are denied.
Does claims denial management sound overwhelming? It can be, especially when providers and their coding and billing staff are focused on patient care, documentation, and customer services. That’s why many medical practices outsource their claims submissions and denials management to a third-party RCM firm, like TruBridge. TruBridge supports healthcare organizations in all aspects of the revenue cycle and is a champion for claims denial prevention.