3 ways to prevent denied claims

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For healthcare facilities, denied claims are a constant threat to the businesses’ bottom line. This is especially true for practices that rely on a constant inflow of revenue from claim reimbursements. An increase in the number of denials burden the revenue cycle, the negative effects further compounded by additional workload and inability to generate more revenue.

It is a vicious cycle!

Healthcare management professions estimate that out of $3 Trillion in medical claims submitted last year, approximately $262 billion worth of claims were denied.

Healthcare facilities nationwide leave behind a lot of money on the table but it doesn’t have to be that way.

A careful approach to claims processing combined with consistent follow-up can eliminate a majority of denied claims. If a medical facility or hospital wishes to accelerate their cash flow and bring the administrative cost down, they need to work on reducing the amount of denied claims.

A successful appeal on denials takes time and adds an opportunity cost for the staff. Furthermore, resubmitting denied claims means the billing staff is pulled away from the more important task of working and submitting new claims.

Denials will always burden and affect the revenue cycle negatively, determining the root cause is an important step medical facilities need to take. Otherwise, they will suffer from this ongoing revenue leakage process.

3 Ways to prevent denied claims (revenue leakage):

[1] Insurance Coverage & Network Status:

A common reason for denials is problems with the patient’s insurance benefits.

Deductibles and co-payments can affect the status of a claim. Problems can also be created If a health profession is out-of-network or if prior authorizations for the medical procedure are not obtained.

Healthcare provider needs to ensure all patient data is verified and ensure they are in-network with the insurance payer.
No Healthcare provider wants to unexpectedly be out of the network from a payers panel due to an oversight in paperwork. It is important to ensure status and information on all existing panels are monitored, including Medicare, Medicaid, and the CAQH.

[2] Healthcare Provider’s Insurance Contract:

A potential source of revenue leakage for many healthcare providers is not being updated on the large degree of variance in the previously agreed upon reimbursement rates.

Medical specialty, location of practice and the volume of claims handled can impact the reimbursement rates from insurance payers, negatively impacting the provider’s cash flow.

Providers need to ensure they are updated on specific details of their insurance payer’s contract. These contracts contain the procedures, prior authorizations, coverage policies, referrals, etc. They are legal documents and fully negotiable.
Providers need to ensure payer contracts are negotiated effectively so that they can maximize the net profit.

[3] Closely Track Accounts Receivable:

Accounts receivable for practice needs to be monitored and evaluated every day. An integral part of an effective revenue cycle is a consistent flow of claims with all bottlenecks or blockages eliminated. The amount on the aging report and verifying if the claims have been received is integral.

A direct phone call to the payer when the claim is in the system for more than 60 days is required. This ensures a check on the current status of the claim and recording the claim number and date of the expected payment.

This verification process also ensures claims are not forgotten and eventually written-off. If the claim has been paid, providers need to record the date of payment, the amount paid and the transaction/cheque number. If a cheque has been issued, verification of mailing address is also important. Furthermore, Appeal any claims that are denied unexpectedly.

At Bikham Healthcare we have found that consistency over time is what will create a level of optimization in a hospital, facility or small practice. Reducing denied claims and optimizing revenue is not a sprint, it is a marathon.

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