$270 billion in U.S. hospital claims are initially denied each year according to Healthcare Financial Resources. Reworking these denials increases administrative costs by close to $9 billion annually. The impacts of high denial rates are less cash collected, higher administrative costs, and incorrect patient charges, making claims denial management and prevention a vital component in effective revenue cycle management.
While nearly 2/3 of claims are recoverable, 90% are in fact preventable. Being able to identify underpayments and minimize denials upfront is critical for hospitals to thrive and strengthen revenue flow. There are a variety of root causes for denials, which must all be addressed within any effective denial management process.
Common causes of denials include:
- Authorizations and medical necessity
- DRG downgrades
- experimental treatments
- Insurance coverage
- real or perceived errors
- patient eligibility
- coordination of benefits
- coverage issues
- Contractual issues
- payer underpayments
- bundled payments
- Coding and billing issues
- Reason Code 97 rejections
- Demographic errors
- filing errors
- Submission problems
- primary EOB
- missing medical records
- software errors
Changes in rules and policies further complicate the cycle, so addressing potential causes proactively minimizes loss reduction. There are implications along the full care continuum that can lead to rejection. Keeping abreast of all issues is complicated and can result in elevated cost and revenue loss due to lack of denial prevention.
Your facility relies on prompt and accurate reimbursement to generate cashflow and support operations. Understanding what is causing preventable denials and developing an effective plan to correct the process can lead to more timely payments. The result is less time spent dealing with burdensome paperwork and more time focusing on administering quality care.
How do you tackle this issue head on? It’s imperative to design and execute an effective denial management and underpayment process that can boost cash flow by:
- Reducing administrative burden and claims management cost
- Increasing payment recovery through root cause analysis and correction
- Improving revenue recovery on underpaid and/or inappropriately denied accounts based on managed care contracts
- Increasing the level of successful payer appeals
- Resolving chronic payer issues linked to systemic errors, lack of contract compliance, and inappropriate denials
Signature Performance is an end-to-end RCM firm with an extensive background and subject matter expertise with all types of claims, payers, processes, systems, and technologies and a strong network of collaborative relationships with major regional and national insurance payers. We also utilize a proprietary Contract Management System to provide claim/payment review, underpayment identification and recovery solutions. Look to us as a trusted partner to support your claims denial process and maximize revenue consistency. Find out more about how we can improve the health of your business with a tailored denial management solution.
Chris Vairo is the Chief Revenue Officer at Signature Performance Inc., in Omaha, NE. Signature Performance is an industry leader in reducing healthcare administration costs for private and public healthcare sectors. Our unmatched experience in serving both the payer and provider side of healthcare financial management allows us to implement innovative solutions for every administrative demand.