Healthcare leaders are no strangers to the headaches of managing denied claims from payers. When claims are denied, this places roadblocks between providing excellent quality care and receiving reimbursement for it. Managing these denials has grown from an administrative pain to a big financial problem. The resulting delays in reimbursement impact organizational cash flow and the ability for administrators to make important financial decisions.
Payers have grown pickier about the claims they approve, with increasing incidences of denials along with the number of ways in which claims can be denied. A December 2023 report from Kodiak RCA indicates that about 12% of claims across both Medicare and commercial payers are initially denied. From reasons such as insufficient documentation, to requiring prior authorization for certain high-dollar services, denials add up quickly and the resulting reimbursement delays are wreaking havoc on providers’ bottom lines. If denied claims are not reviewed for appeal or correction, providers may not get paid at all for services provided.
With nationwide denial rates hovering around 12%, imagine not receiving payment for 12% of services rendered. For many smaller clinics and rural hospitals, this is their unfortunate reality. Industry staffing shortages have left many entities without the bandwidth to appeal denied claims, forcing them to eat these costs in the form of administrative write-offs.
Denials have become a big enough financial threat that organizations are spending money in order to save money. Many revenue cycle teams now include denials management staff specifically dedicated to managing denied claims, submitting appeals, and tracking trends. The trend analysis piece is particularly important when it comes to quality improvement. For example, a denials management team may notice a sudden increase in coding denials for a certain procedure from a particular payer. Patterns like this can be fixable but can quickly grow costly if not addressed.
Proactive Approach
Thankfully, denials don’t have to be a dead end for providers. Taking a proactive approach in other areas of the revenue cycle can help reduce denials rates and get your financial performance back on track. Let’s look at a few ways to stay ahead of denials:
Clean Data, Clean Claims:Â To get to the bottom of denials, it pays to start at the top of the revenue cycle process. Errors made during the pre-access and patient access processes are a common offender for denials, so revisit these procedures often. Missing patient information or prior authorizations for certain procedures can raise red flags for payers. Gathering all pertinent information is critical to ensuring an accurate claim is submitted for payment.
Doctors Who Document: Physician documentation is another pivotal piece of the denials management puzzle. If clinical documentation is not thorough, it can impact how an encounter is coded and therefore how it is billed. Payers are privy to this and will deny payment if they don’t have enough supporting documentation or suspect improper coding. Implementing a Clinical Documentation Improvement (or CDI) program will help physicians stay up to date on best documentation practices and how they can do their part in preventing denials.
Interconnectivity: Forge strong working relationships both internally and externally. Collaboration with your payers is key to promptly addressing denial issues and gaining a better mutual understanding of contractual expectations. From the internal perspective, routine feedback loops across your organization’s revenue cycle departments can sustain a culture of quality assurance. Communicate denial trends at regular multidisciplinary meetings with key stakeholders such as denials management, patient access, clinical staff, HIM, billing, and contracting.
Prioritize Accounts:Â Prioritizing denials by dollar amount and timeliness is an important tool in denials management. Providers may want to focus more of their efforts on the higher value cases that provide more financial return if resolved. Most denials also have appeal deadlines, so organizing the denials queue by the earliest due date will ensure timely filing.
Take Charge of Your Denials Today
Interested in how to effectively reduce your organization's denial rates? Signature Performance is on a mission to reduce administrative burden in healthcare and help organizations reshape the healthcare landscape. Our team of subject-matter experts will help you leverage the latest technology to reduce your denials and optimize your revenue cycle processes. If you are ready to take the next step toward increasing your organization’s financial stability, contact us today for more information about our solutions.