10 Ways to Automate Your Denial Management

Does your denial management process resemble a closed door, or a bridge? If you are a billing manager, you are all too aware of how difficult it is to manage denied claims. While looking for ways to increase the number of claims your healthcare organization is processing, it’s important not to lose sight of how many of those claims are being denied by the payer. When you’re processing hundreds, if not thousands of complex medical claims every week, a small percentage of denied claims can have a significant impact of your bottom line. This is where automated denial management comes in. Here are some ways automation can help bridge the gap between claim denials and higher profit for your healthcare organization.

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Importance of a Denial Management Strategy

Healthcare organizations lacking a focused strategy for denial management are more likely to receive declined denials. According to the American Medical Association, between 1.38 percent and 5.07 percent of claims are denied by insurers on the first submission. What’s more, denied claims are 3x more costly to rework than submitting a clean claim the first time. If the average cost to rework a claim is around $25, then the difference in value between a clean claim and a denied claim is around $15-17 dollars per claim depending on your clearinghouse. The challenges only compound with the increase in payers and specialties your practice adds to its revenue cycle.

Automating the Denial Management Workflow

According to a 2016 HIMSS survey, nearly a third of providers are still using manual claims denial processes. Out of the 69% using an automated denial management solution, 44% use a vendor and 18% manage their own system in-house. The best solutions to common medical billing mistakes are those which catch a mistake before they occur. For larger healthcare organizations, the sheer volume of claims requires more than a manual process. Automation fits into a well-tuned denial management strategy at three-phases: pre-denial, post-denial, and advanced reporting:

Pre-denial Management

    Start by putting the necessary processes and technology in place to ensure all anticipated causes of denials are accounted for and segmented into the correct course of action to be resolved.

  • Correct errors like duplicate billing, incorrect CPT modifiers, and inaccurate patient demographic information. Reconcile missing patient information with existing records. An automated tool like ImagineAITM verifies and corrects patient demographic details immediately.
  • Get insurance authorization for healthcare services that require prior approval. Systems like Imagine’s Pre-AuthorizationServices can do this in minutes instead of hours like manual processes.
  • With changes in a patient’s policy and greater payment responsibility falling on the patient, it’s no surprise insurance eligibility is the most common type of denied claim. Tools like ImagineDiscoveryTM are great for identifying coverage opportunities including overlooked alternative payment methods.
Post-denial Management
    Recover hidden revenue and minimize the impact of denials by top causes and sources of denials.

  • Automatically sort by dollar amount from greatest to least and/or date of service to head off filing any late claim denials. NOTE: This can take an entire day to do manually. With an automated system, it can happen before billing managers start their day.
  • Systematically assess the business impact of each kind of denial. Prioritize denials that either represent the greatest opportunity for quick revenue recovery.
  • Implement a system where claims with the same payer and cause of denial are appealed in bulk.
  • Isolate complex bills into a separate bucket to be reviewed by a trained billing manager.
Advanced Reporting
    High-level data analytics can help determine if you do not have enough people working on denials, if your process is broken, or if there’s problems elsewhere.

  • Conduct “root cause analysis” to pinpoint trends in denials. Say for instance claims submitted over the course of a few months were denied because a provider was mistakenly marked as not contracted with a payer.
  • Share insights about the reasons for denials with front-end and middle-stage revenue cycle teams can help reduce the flow of denials and address issues further upstream. For instance, if a significant portion of your denials are prior-authorization denials, review your front-end authorization process.
  • Establish benchmarks, analyze workflow performance, and track staff productivity related to denied claims. Review automatically created clean claim and denial rates with your employees can open silos and discover new opportunities for collaboration.

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