Chat with us, powered by LiveChat

Get A Free Revenue Cycle Management Assessment

Register Now

Get A Free Revenue Cycle Management Assessment

Register Now

home
Blogs
January 30, 2023

Secret Steps to Minimize Claim Denials and Recoup Lost Money

Febien Caltin is a dynamic professional with 20+ years of extensive experience in the healthcare RCM space. He has expertise in Consulting, and Strategic Planning on solving critical issues healthcare providers face in the RCM process. Febien is committed to the growth of healthcare providers through his immense experience.

ABA Providers Recover Dues From Patients To Efficient Your Account Receivables

Following proper medical billing processes can prevent 90% of the denials. Most denials happen due to common mistakes like missing information, coding errors, documentation errors, patient eligibility issues, and more.  

While submitting and creating a claim, 86% of mistakes are administrative. Healthcare providers can easily prevent denials if they analyze denial trends and work on them. It is simple to reduce the denials and recoup lost revenue if you know the causes of denials.

What are the seven steps to reduce claim denials and recoup lost revenue?

Denials lead to revenue loss for healthcare providers.  

“Reducing the denials is the simplest way to increase profitability,” Verlon Pabon, Director of Medical Coding at Plutus Health.

Medical claim denials are the simplest to detect, address, and correct. By identifying the reasons for denials and understanding which one is financially essential to tackle first, you can establish a full-proof plan to address the challenges that will help streamline the revenue flow for your organization.

Here are seven steps to reduce claim denials and recoup lost revenue:

  • Verify eligibility and insurance
  • Review provider contract
  • Have a denial management assessment
  • Know your payers and their rules
  • Categorize your denials
  • Audit, analyze, and monitor
  • Create and implement a denial management plan

In this article:

What is denial management in the revenue cycle?

The average claim denial rate across the healthcare industry is 5-10%. Many healthcare providers lose thousands of dollars in revenue annually due to denials. These denials happen due to the lag of a robust denial management system. Almost 65% of denied claims never get submitted again, resulting in permanent revenue loss to healthcare providers.   

Systematically understanding each denial, knowing the root cause of denials, analyzing the denial trends, and reworking the complete process to reduce or prevent the risk of future claim denials is denial management. 

How does denial management work?

Denial management works on the simple process of identification, managing, monitoring, and prevention. 

Identification

Denial management can only give the desired results if you know the root cause of denials.  

Payers often mention the reason behind the rejection. The reason mentioned is known as CARC (claim adjustment reason codes). You should be able to understand CARC.  

Understanding the reasons behind the claim denials is the primary process in denial management. Denial management professionals seamlessly understand the causes of denials and determine the future steps to get reimbursement.

Managing

Once you successfully identify the causes of denials, the next step is managing denials and generating revenue. Denial management experts create a plan of action to resubmit the claim and get reimbursement. 

Monitoring

Denial management professionals stag all the denial records according to the received data. The complete denial management work gets audited in the monitoring stage. Providing proper technological support and ensuring that team members get all the resources required is part of the monitoring process.  

“Denials can be easily prevented if you know the common causes. Analyzing denial and rejection trends is the most powerful method to know common causes of denials in your organization.”

Prevention

Once you have all the required information on claims, the final step of denial management is running a prevention campaign. The prevention step involves properly coordinating with all the teams to avoid errors while submitting claims. The denial management team must work with the front desk and back office supporting staff.  

You should understand the denial management process and identify where to leverage technology, retain staff, or manage workflow. 

What are the different types of denials in medical billing?

Denials in medical billing can happen due to the slightest typo error or if you miss critical medical codes. The causes of denials are many, but almost all the denials primarily fall under these five categories.

Soft denial

You can get reimbursement if you take corrective actions suggested by the payer. Soft denial is interim or temporary that does not demand appeal.

Hard denial

Denial that demands an appeal and has resulted in written-off or lost revenue is hard denial.

Preventable denial  

A denial occurred due to insurance ineligibility, registration inaccuracies, or invalid codes. Preventable denial is a type of hard denial.   

Clinical denial

Clinical denial requires an appeal. It occurs because of missing payments for medical necessities.

Administrative denial

It is a soft denial that the payer notifies the healthcare provider. The payer clearly mentions the reason for denial while returning the claim. 

What are common reasons for claims denials?

Common reasons for claims denials

Submitting claims to the payer is a complex process. Various factors drive the reimbursement for the services you offer to patients. Payers tend to deny the submitted claims even if they find the slightest error in the claim. Claim denials can happen for various reasons, but if you take care of these few points, 95% of your claim will bring reimbursement. Here are the most common reasons for claim denials.

Missing information

If the front-end desk forgets to enter even the smallest details, the same information is carried forward while submitting the claims. The inappropriate information commonly found is the missing last name, date of a medical emergency, accident, or onset. 

Incomplete coding

Coding is the most critical aspect of claims. Sometimes, coders miss important codes and do not include the maximum number of digits for the code. Coders sometimes don’t follow the coding guidelines, resulting in partial payments or claim rejection.

Claims not filled on time

Timely claim submission is crucial to increase your FPAR. Sometimes, a perfectly filled claim gets denied because it missed the claim window. Different payers have different windows of claim submission. Medicare claims must get submitted on time to prevent kick-back.

Inaccurate patient information

Entering the correct DOB, spelling, gender, and all the other patient information is vital to prevent claim denial. Apart from the patient details, it is also essential to check:

  • If the insurance payer is correct  
  • Is the claim number entered validly  
  • Does the claim require a group number  
  • Whether the diagnosis code matches the procedure performed and more.
Prior authorization not taken

According to a report by the AMA, 64% of physicians can’t figure out which procedures or tests require prior authorization. Many claims get denied as healthcare providers do not follow the prior authorization guidelines. 

Inaccurate insurance ID

Manual entry of patient data can lead to errors in billing. The payers might not recognize old ID numbers or insurance cards submitted.
If untrained staff do data entry, they might enter inaccurate insurance IDs, resulting in claim denials.

Non-covered services

If the services offered to the patients are considered unnecessary according to the payer guidelines, they will reject the submitted claims. Even if the patient get treatment according to the health condition, the provider would not receive the payment from the payer if the actual diagnosis is not communicated to the coder or biller.

Services not reported separately

Some services can not be bundled and should get separately updated in the claim. Patients might receive treatment from a practice not covered under the patient’s insurance policy. Hence, medical coders should cross-check before bundling a particular service.  

“Billers must know the bundling policy to combat denials.”
Use of improper modifiers

Modifiers vary with the day of service, provider, and body organ. If the modifiers are used incorrectly, there are high chances of claim denials.   

Upcoding

Trying to get reimbursement higher than the services offered is upcoding. Using upcoding can get you high reimbursement a couple of times. In the long run, it would lead to denials and severe complications in the RCM cycle.  

Filing duplicate claims

If the same claim is submitted for the same treatment to the same healthcare provider it is considered a duplicate claim. Duplicate claim submissions are a result of workflow problems. Duplicate claims lead to denials. These denials can be prevented by appropriately training your staff.

How can healthcare providers decrease the number of denials?

Healthcare providers are constantly under pressure to provide exceptional patient care and deal with payers. Offering exceptional services and care to patients does not mean you will get total reimbursement. Payers always look for mistakes and deny claims, even for small mistakes like spelling errors. You can decrease the number of denials if you take all the necessary measures to file clean claims. Here are a few methods to minimize claims tried and tested by professionals.

Verify eligibility and insurance

24% of the claims get denied due to ineligibility. People change insurance plans, jobs, and locations more quickly than you think. Even if a patient has been visiting you regularly for years, it is essential to verify their eligibility. You need to verify if the patient’s coverage expired, whether their plan covers the services they opt for, or if they have reached their maximum benefit. Your staff should know how to interpret the policy, understand the plans you accept, and can discuss coverage benefits with the patients.  

Review provider contract

Numerous claims get denied because of insufficient documents, incomplete data, or incorrect information. You should know the payers and their requirements to submit clean claims. Payers have their own set of guidelines and requirements for claim submission. You should create an overall summary that can help you get the payer’s individual requirements. Use the following points to develop a comprehensive requirement summary of the payers.

  • Payer format
  • Claim submission timeframe
  • Timeframe of reimbursement
  • Medium of claim submission
  • Supporting documents 
  • Emergency contact number for assistance
Have a denial management assessment

The revenue cycle process in healthcare is dependent on how well you manage denials. You should analyze the claims submitted in the past twelve months. Denial analysis will let you know the total number of claims submitted vs. the rejected claim. You can understand the amount of revenue lost due to denials. Here is a small denial management assessment you can conduct. 


Know your payers and their rules
“Knowing the payer and their rules will get you maximum reimbursement and reduce denials.”

If you check the procedures covered by the payers and check for insurance eligibility, you significantly reduce the denials. Payers accept the claims only if you follow all their rules and guidelines. Payer guidelines can differ in documents required and the time given to submit claims. 

Categorize your denials

If you categorize denials according to the causes, you can better understand the most common causes of denials and work on them. Denials should be categorized based on the type and cause of denials and mention the monetary value lost. Categorization will help you identify the areas you should work on priority to increase reimbursements. Knowing the reasons will prevent future denials.

Audit, analyze, and monitor

Are your denial rates below 5%? If yes, you don’t need to worry you are at the acceptable rate. But, if your denial rate is more, you should review your processes. To increase the clean claim ratio, you should learn from your mistakes and know why denials are happening. You should closely look at the documentation, data entry, charges entered, and all other mid-cycle tasks. Ensure appropriate coding, documentation, and billing with staff audits. Strengthen all the inefficient processes and finally work on the tasks affecting your bottom line.   

Create and implement a denial management plan

List the top categories for revenue loss and create different subcategories for each. List the methods to combat denials from each subcategory and start implementing the changes.
Once the plan is final, share the plan with the team and discuss the steps to be taken. Set up goals you want to achieve with the new denial management plan and constantly monitor it. Provide constant feedback to the staff throughout the process. Connect with the payers to discuss their rules and seek their advice on denials.  

Common reasons for claims denials

Are you looking to reduce your denials and increase reimbursement?  

Plutus Health helps healthcare providers in the revenue cycle management process. We have helped healthcare organizations to bring down their denials below 5%. Our medical billing and coding professionals are well-versed with all the industry guidelines and are known to deliver exceptional results. Plutus Health provides end-to-end RCM services to healthcare providers and can help you achieve all business goals. Connect with a denial management expert now.

Liked the blog? Share it

Loved our blogs?

Subscribe and stay updated with the latest announcements, information and more.


Website


Website
*We Value Your Privacy.
*We Value Your Privacy.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Febien Catlin

Febien Caltin is a dynamic professional with 20+ years of extensive experience in the healthcare RCM space. He has expertise in Consulting, and Strategic Planning on solving critical issues healthcare providers face in the RCM process. Febien is committed to the growth of healthcare providers through his immense experience.