Five Hacks To Prevent Denied Claims

Out of the $262 billion denied claims submitted by health organizations last year, 90% of them were avoidable.  You’ll see a lot of other writers call that 90% “hidden revenue”, but it’s not really hidden, is it?  It’s easy money.  At least it is if you have the right solutions in place.  Fortunately, many pieces can become automated but there is also a need for collaboration if you expect to drastically improve your organization’s denial rate.  Here are a few hacks you should be using right now!

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1. Confirm coverage automatically.  It comes as no surprise that insurance eligibility is the most common type of denied claim.  Sometimes a patient’s insurance lapses, or the patient switched policies without informing their provider.  Other times, a patient may not be aware of exactly what their insurance will cover and not cover.  There are automated solutions for revenue cycle management, like ImagineDiscovery, that discover patient insurance coverage that can be applied to a patient visit for payment.  So, you’re capturing revenue upfront - even before the patient’s visit - making the payment process easier for the patient and reducing your denial rate (which we will discuss in more detail in this blog post.)

2. You do the math! There are a few simple numbers and formulas you should have on hand if you want to discover the root(s) of the problem.

Rate of appeals - There’s a healthy balance between appealing no denials and appealing so many that you’re potentially wasting money that should be spent on prevention.  On average, the best rate of appeal is between 85% and 88%.  If you’re appealing over 90%, you’re fighting too many.  If your rate is low, you’re not communicating enough with your payors. 

Denial rate - Which is the percentage of claims denied by payors.  The denials rate is calculated by total dollar amount of claims denied by payers within a given period divided by the total dollar amount of claims submitted within the given period.  This metric quantifies the effectiveness of your revenue cycle management.  If your denial rate is low, it indicates a healthy cash flow, which means fewer staff members are needed to maintain that number.  The industry average is between 5% and 10%, so if you can attain a rate below 5%, you’re in really good shape. 

Average Reimbursement Rate - Which is the average amount your practice collects from total claims submitted.  The higher your percentage, the better revenue will be.  The industry average is between 35% and 40%.  When tracked over time and compared to historical results, you really get an idea of how the practice is performing financially. 

3. Capture accurate patient information with artificial intelligence.  The majority of denials are caused by manual error.  The single most important task a receptionist can perform to reduce denials is to capture the correct insurance and demographic information upfront, but often times that’s not easy.  Denials based on this type of incorrect information are high-probability candidates for write-offs because the effort to re-work them often drags on past the filing deadline.  Giving your front desk staff the tools they need to capture that information upfront, like ImagineAI, will allow them to verify and correct patient demographic details immediately.  This will streamline your patient collections process while ensuring that your practice is producing more clean claims.

4. Collaborate and make it personal.  You should involve as many departments as possible in the process of managing denials and discovering root problems, perhaps even developing a team to oversee process improvements.  However, you will undoubtedly struggle to get a buy-in from employees unless you make it personal to them.  At Maricopa Integrated Health System (MIHS), denials are communicated to employees on a monthly basis by reason code and financial impact to each individual department.  This way, each department feels a sense of ownership and understands the part they play in reducing denials.  Keep this in mind: when it comes to sharing these insights, it’s important to be more collaborative so that colleagues won’t fear that they will be blamed as a root cause.  If employees fear repercussion, you won’t receive the cooperation needed to solve the problems that are causing denials.  Include enough information to put numbers into perspective, instilling trust instead of fear. 

5. Make claims generation and submission hands-free.  We’re human, so naturally we can’t do it all when it comes to medical billing.  If your revenue cycle is built on manual data entry, there’s a lot of room for error.  With thousands of diagnostic codes, insurance policy requirements, payer rules and changing regulations, it can be exhausting for staff to accurately keep up.  Plus, many providers lack the staff or expertise needed to manage denials effectively.  Revenue cycle management software solutions like ImagineAppliance® automate general file transfer, charge coding, checking against payer rules and submitting for payment with automated timers and natural language processing.  Automating the claim lifecycle gives you much more functionality as a department and shifts billing staff responsibility into reviewing claims instead of manual creation, saving staff time and automatically creating clean claims.

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