One of the realities of operating a health care practice is dealing with claim denials. This can be a major issue for some organizations, but there are some steps you can take to make your denials management system more efficient and effective.
It all starts with establishing greater attention to detail. According to the 2013 National Health Insurer Report Card, about 6% percent of all medical claims were inaccurately processed. Many of these problems involved avoidable errors, including issues related to data entry, invalid coding, inadequate medical necessity and lack of authorization, costing an average of $2.36 per claim for doctors, clinics and hospitals. In all, fixing these errors and achieving greater administrative efficiencies could save the health care industry an estimated $12 billion per year.
The following are the top three reasons why hospitals and physicians’ offices experience claim denials:
Data entry issues
Misspelled names and incorrect birth dates may seem relatively harmless, but they can actually cause major delays in payment. To help improve and prevent data entry issues, patients should be required to submit their insurance information prior to their scheduled appointments and during each unscheduled visit. Your office should verify patient and guarantor information as soon as possible so that you can clarify any issues before or after the visit.
When a denial occurs due to an error, it’s your office’s responsibility to correct the problem and resubmit the claim. According to the American Medical Association, only about 70% of claims are paid the first time. The remaining 30% of claims are denied, lost or ignored. In addition, of those unpaid claims, 60% are never resubmitted to payers. A quality assurance program will help provide feedback and education to registrars, eventually improving your cash flow.
Lack of authorization
Overturning a denial can be challenging and time consuming. To mitigate a claim that has been denied for lack of authorization, first have your follow-up team check the claim to see if an authorization is noted on the claim. Often time claims are denied in error. If authorization is present on the claims, verify if services rendered and dates match with the authorization. If the information matches, contact the payer to have the claim reprocessed for immediate payment. If there is no authorization, contact the hospital or physician’s office to obtain it and resubmit the claim.
Lack of medical necessity
In some cases, you may find a claim is denied due to “lack of medical necessity.” It can be very difficult to overturn these denials, as there are often two or three levels of appeals required and the delay in payment can be 90 to 180 days. Mentoring to make sure patients are being admitted to the correct level of care is vital to reducing these types of denials. Moreover, providing physician education whenever your facility is trending these denials.
At Howell Consulting Group, our priority is to ensure you have the proper processes in place to reduce your rate of claim denials and ultimately improve your cash flow. To learn more about improving your revenue cycle practices for the overall benefit of your operations, contact us to set up a zero risk blanket assessment today! Request a Consultation →