Submitted by Antonio Arias, MBA, CHBME on Thu, 05/17/2018 - 0:00

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How Much Are Claim Rejections Costing You?

How clean are your claims? According to the Medical Group Management Association, medical practices should strive for a 95% “clean claims” rate – meaning all but 5% of claims get to payers with no mistakes (and get paid) upon first submittal.

Alas, few practices reach that target. Most providers receive first-pass reimbursement for somewhere between 75% and 85% of claims they bill, and tend to see that as an acceptable state of affairs. Is it?

Every claim that is not paid on first submittal wastes a practice’s precious time and resources: The MGMA estimates that the cost to re-work a claim that has been rejected or denied ranges from $10 to $25 per bill.

That may not sound like much on a case-by-case basis, but it adds up in a big way. If you submit, say, 300 claims each month and ~25% are routinely rejected or denied, that means around 75 encounters per month need to be processed at least twice.

That can total up to an extra expense of up to $1875 every month. Depending on your location and how much your pay your administrative staffers, that could represent almost an entire employee’s salary going to duplicate work (...work that could have been done properly the first time).

Since many rejected claims are resubmitted multiple times – often without their errors even being addressed or corrected – there’s further potential for expenses and revenue losses to mount. That’s especially true when a rejected claim gets stuck in the weeds beyond its timely filing deadline, or when per-claim revenue gets written off without the practice even attempting to re-work and resubmit.

Often, practices don’t even realize the mounting fiscal impact of Why? Because the lost revenue can easily go unrecognized in the net collection rate when A/R looks clean.

Reaching a clean claims rate above 90% is one of the key benefits of working with a trusted medical billing company like NCG. Reducing preventable rejections and minimizing the need for staff to re-work claims creates twofold benefits: It increases your net collection rate – which improves overall revenue numbers – and lowers the cost to earn those collections at large.

Given the resources you save in both areas (lost money and lost staff time), the cost of working with a medical billing service may even pay for itself in improved efficiency and outcomes.

Are you interested in learning more revenue cycle management tips? Visit our blog! 

...and if you need help from a medical billing company...

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Topics: Practice Management, Medical Billing Company

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