How much time and effort do you spend working claims denials? With the growing demands and challenges facing every medical practice, dealing with denied or rejected claims may be the most costly and, fortunately, the most preventable.
According to a recent MGMA article, the average cost to rework a claim is $25. When you multiply that cost by dozens of denied claims, it quickly adds up. Denial management is often a neglected area due to the labor involved and intrinsic knowledge needed. Practices must identify reasons, assign a dedicated team to follow-up and find ways to capture revenue.
Three important components to effectively manage, identify and reduce denials in every practice include: utilization of a superior EDI tool, employment of clinical claim scrubbing for LCD & NCD, and the ability to detect and identify trends.
Identifying Denials & Trends
Understanding the issues surrounding a denial is critical to rectifying the situation and obtaining payment. The first step begins with detection and identification of trends. Insurance claims are denied for a multitude of reasons including but not limited to:
- missing referral and pre-authorization
- invalid patient information
- duplicate claim
- missing or incorrect modifiers
- failure to meet medical necessity requirements
- failure to file in a timely manner
Understanding the insurance company’s reason for the denial provides a basis for responding to the denial. In order to respond appropriately, staff should have resources that show denial reasons, procedure codes, modifiers, and diagnosis codes.
Tools such as claim scrubbing and patient eligibility improve the claims submission process and ultimately help to reduce the number of denials. Staff should be well versed in submitting clean claims to minimize the denial impact.
Denial Management Process
Managing the process can be time-consuming and difficult, but it is essential to optimize collections. Once you have determined the reason for the denial, you have a better idea of how to proceed with the insurance company. If you disagree with the insurance company’s reason for the denial, you can ask what it will take to get the claim paid.
It is very common for a payer to deny a claim incorrectly or because there was not enough information on the claim form. Be persistent, professional and thorough in your response. All communication, follow-up, notes and reference numbers should be documented. Many practice management applications have the ability to auto generate appeal and timely filing letters. This efficient feature saves time, provides a date log and helps in getting claims adjudicated.
Denied claims should be handled as quickly as possible. A lot of money can be lost if the denials are not handled correctly and in a timely fashion. Many hospitals and practices lack the technology and staff capacity to manage denials effectively, especially with the constantly changing regulations and payer rules. Electing to outsource denial management ensures a dedicated effort is applied and also enables staff to focus on other areas of the practice and patient care.
Strategies to Reduce Denials
Improving patient data quality at registration is very important and often the source of many errors that contribute to denials. Verifying patient eligibility prior to the patient visit also contributes a better claim process and lets you know exactly how much you need to collect from patients.
Clinical claim scrubbing effectively checks claims for accuracy prior to submission by applying a pre-configured set of edits. Scrubbers return clear and concise error messages in an easy-to-read, integrated response report. This significantly decreases rejections and denials and improves the reimbursement process.
Managing the denial process is time-consuming, difficult and expensive, but it is essential to optimize collections. With a defined management process, efficient practice management tools and persistence, claims denials can be improved and positively impact the bottom line.
For more information on our EDI solution that include claim scrubbing or outsourcing, please contact AssuranceMD.