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January 26, 2022

All You Need to Know About Denial Management in Medical Coding

by Plutus Health
Top 3 Unknown ASC Coding Tips to Reduce Denials Revealed

Effective claims management in a robust RCM system is crucial for the proper functioning of a healthcare provider. It is the systematic process of investigating each denied claim, analyzing denial trends, and redesigning procedures to reduce the risk of future claim denials.

The basics of denial management in healthcare:

Did you know that the average claim denial rate in the industry is almost 10%? According to research, commercial and public payers deny about one in every ten submitted claims, representing lost revenue.

Dealing with denial management in medical billing is quite complicated. First, as the biller, you must perform a root-cause analysis, correct the issue, and finally, file an appeal with the payer.

There are several types of claim denials you might come across:

• Soft denial - Temporary denials in which the claim is paid after corrective action without the need for an appeal

• Administrative denial - A type of soft denial where the payer notifies the practice why the claim is denied

• Hard denial - Denial resulting in written-off revenue and requires an appeal

• Preventable denial - Denial due to registration inaccuracies, invalid codes, and insurance ineligibility

• Clinical denial – Denial due to lack of payment for a medical necessity

Note that denials can happen for several reasons, such as patient ineligibility, missing data, late submissions, and lack of prior authorization.

The importance of optimizing your denial management in medical coding

Denials are inevitable. Unpaid claims add to your AR bucket when left unattended for a more extended period. The only solution is to find a set-up robust denial management process and a team that will allow you to achieve the following:

• Maximize your cash flow

• Identify root causes of denials by identifying and interpreting patterns

• Collect denial appeals information, including status, escalation, and correspondence with payers

• Provide accurate and timely reports regarding the denied claims

• Analyze the effectiveness of your denial resolutions to avoid errors in the future

Furthermore, you can prevent denial management in medical coding by staying on top of the latest changes in your denials and filing the claims as early as possible.

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