How Much Are Claim Rejections Costing You?

May 17, 2018 by Antonio Arias, MBA, CHBME

Topics: Practice Management, Medical Billing Company

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 ( 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.



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