Denying Denials: Best Practices for Avoiding Claim Denials

March 6, 2020 by Antonio Arias, MBA, CHBME

Topics: Medical Billing, Revenue Cycle Management, Practice Management

The start of a new year is a wise time to revisit some of your practice’s most important metrics around financial health. Denial rate is one of the most significant indicators of your medical billing success – but unfortunately, it’s also one of the most difficult elements of your billing operation to improve. The only way to keep your practice afloat is to make sure your revenue stream stays steady. If you’re not paying close attention to your denial rate – and making headway toward improving it – you’re putting your practice at risk.

6 Timely Tips to Keep Denials from Decreasing Your Income

Denials eat up an estimated 3-5 percent of providers’ overall revenue (though for some practices the number is much, much higher). Denial rates between 5 and 10 percent are considered ‘average’ across the industry, but many practices experience rates far closer to 20 percent – often, without even realizing it – even though an estimated 90 percent of denials are preventable and can be easily reimbursed if practices follow up appropriately.

Because the traditional way of working denials is heavily manual and inefficient – involving time-consuming calls to payers, costly claim resubmissions, and long wait times for reimbursements – many practices all but ignore the impact denials incur on the income. But by following a few coding and billing best practices, organizations can realize significant improvements in their billing performance without adding hours of administrative responsibility to their staff members’ already full plates.

A denial rate below five percent should be the goal of every medical practice. If that seems wildly unattainable given your current performance, that’s not a good sign; consider contracting with a medical billing service to get your reimbursements back on track. If you’re hovering in the six to ten percent denial range, however, a few changes and improvements to your medical billing processes may be all you need to start getting paid more of the money you deserve from the payers in your network. Try the following denial management tactics, then measure the results they reap at your practice.

1. Track every claim

No claims should ever get “lost” in your practice management system. If that’s happening to you, it’s imperative to implement a more comprehensive process for tracking where claims stand throughout the entire revenue cycle. 

In many cases, claims slip through the cracks because they’re not handled fast enough by the team at your practice. Make sure your coders are coding every encounter on the same day as the date-of-service (one day later, at most) then upgrade your technology to a system that scrubs, submits, and monitors claims with minimal employee effort.

2. Identify the Why

Simply put, you can’t lower your denial rate if you lack an understanding of why your claims are being denied! Review all of your denial notices from a set period of time – say, three or six months – and log the associated reasons for the denial. 

The most common reasons for denials relate to registration (insurance verification, incorrect payer, cannot identify patient) or charge entry (invalid or incorrect procedure or diagnosis codes). The good thing about those kinds of denials is that they can be traced back to the party responsible. Look for patterns, then talk it out with the staff members who are repeat offenders.

3. Follow Up in Time

Only a small percentage of medical practices actually follow up on claim denials and resubmit them corrected or as appealed. If you’re not part of that subset, you’re saving payers money at your own expense! 

Most denials can be corrected and resubmitted within a given time frame, which varies from payer to payer. Find out what the window is for each of your major payers, and make sure it never slips past you. Better yet, create a window of your own – five to ten days – during which it is your billing team’s top priority to follow up on each and every denial and correct or appeal when appropriate.

4. Automate Eligibility Checking

Ineligibility accounts for a large percentage of denials and rejections for some medical practices, yet many practices still handle eligibility checks in an unstructured, unsophisticated way – heavy on last-minute calls to payers in advance of a patient appointment (or sometimes even after services have been rendered).

Neglecting eligibility checks or managing them in an outdated way is a disservice to your patients and practice. Investing in a low-cost software tool that can check eligibility in a pre-scheduled, automated fashion can lower a practice’s denials so much (and so easily) that it can pay for itself over the course of a year. Alternatively, outsourcing verification and other elements of the revenue cycle to a trusted medical billing service can eliminate unnecessary eligibility issues altogether.

5. Enhance Your Documentation Standards

Does your documentation lay the groundwork for streamlined claim submission later on? For many practices, the answer is no: Incomplete documentation and poorly managed documentation processes can create bottlenecks in the revenue cycle process.

Your coders should always have access to clear documentation to help them select the right codes for every encounter. Does your coding team have to consult multiple IT systems to acquire the right information? Are they often contacting your physicians or nurses for more information? As the year gets underway, make sure your clinical staff members are providing comprehensive information that clearly supports the right codes without demanding extra effort from your back-office team.

6. Revisit Your Processes for Remits & EOBs

How long does it take you to incorporate the information from remittance advice notices (aka ‘remits’) into your medical billing process? What about explanations of benefits – do you still rely on paper EOBs? How long do they linger on your billing team members’ desks before you reconcile them with your software?

You can’t work a denial until you know it’s there, and if you consistently allow for delays, you’re undoubtedly missing opportunities for timely resubmittals and follow-ups. Embrace electronic EOBs and streamline remit management so that you’re aware of every denial as soon as it happens and can eliminate the opportunity for human error from the process overall.

Top 5 Common Causes of Claim Denials

If there’s one metric most likely to drag down your medical practice’s income stream, it’s your claims denial rate. If you’re like most providers, you’re no stranger to the consequences. According to the Kaiser Family Foundation, nearly one in five claims were denied by healthcare.gov marketplace insurers in 2017, with some insurer denial rates as high as 45 percent.

If that’s the case at your practice, it’s problematic. A claims denial rate below four percent should be the goal of every provider group – if only for the lessened administrative burden it places on your in-office office team. Dealing with appeals processes and resubmitting denied claims increases administrative costs while decreasing cash flow, which is a lose-lose situation for everyone involved (except the payer, of course). Even then, all that work could be for nothing, considering that only 14 percent of 2017 appeals were overturned.

Keep your practice’s revenue lifeline pumping by protecting yourself against unnecessary denials. Working with a trusted medical billing service can not only lower the costs associated with your revenue cycle management process at large, but it can also keep the most common denial causes from happening at all.

1. Lack of Coding Specificity

Especially in our now ICD-10-only landscape, claims that aren’t coded to the fullest level of specificity possible are ripe for denial by both public and private payers. That means that all identifiers and modifiers must be included on every claim, every time, covering concerns as granular as possible.

2. Duplicate Claim

Even in well-organized operations, it’s surprisingly easy for practices to submit claims for the same encounter to the same payer more than once. It may happen when a team member resubmits a claim before hearing back from the insurance company on the initial submission, or fails to check on existing documentation as to whether the claim was submitted from the get-go. Either way, it’s an easy ticket to an unnecessary denial.

3. Incorrect or Missing Information

If you’re not ‘scrubbing’ your claims prior to submittal – that is, using technology to auto-validate that all necessary information is included in the claim and was input properly – then you’re likely losing revenue. Use a practice management system with built-in eligibility checks and automated business rules to lessen the risk of error.

4. Lack of Documentation

In cases where a payer is unsure of the veracity or medical necessity of an encounter or procedure, they’ll request back-up intel that should always be available. Practices should be prepared to follow up on these denials with proper documentation, as they go commonly un-appealed but can be easily reimbursed on resubmission.

5. Timely Filing

Organizations often see unnecessary denials for failing to submit claims within the payer’s filing window. Why do practices wait? While reasons vary, the issue usually comes down to bandwidth and time: If your staff is stretched too thin, it’s impossible to address all of your front-office and back-office responsibilities in a timely manner. Contracting with a medical billing company is a smart way to keep filing deadlines from slipping past you.

Deny Denials With Medical Billing Service

Speaking of outsourced medical billing, partnering with an experienced billing services vendor is often the best way to ensure your healthcare practice’s claims and collections processes are up to date and incorporating all best practices. With four decades of experience helping medical offices streamline their revenue cycle management and improve their clean claims ratios, NCG Medical has the knowledge and resources to implement customized solutions to drive your revenue goals. Contact us today to learn how to leverage our experience to transform your healthcare practice.

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