Somanathan B. Nathan, Director, Client Operations, highlights the importance of denial management within revenue cycle management (RCM) and its impact on financial stability for healthcare organizations. He explains that effective management of claim denials can significantly enhance a healthcare provider's collections rate and financial health.
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Denial management is an essential part of revenue cycle management and improved cash flow. Through this process, practices and hospitals can investigate every unpaid claim, find trends, and appeal the rejection of a claim. The way any healthcare organization manages denials has a major impact on its financial stability. These healthcare providers can improve their processes to avoid payment issues for future claims. Managing claim denials effectively can increase the organization's revenue and collections rate.
Hospitals, physicians, home health agencies, skilled nursing facilities, and other provider groups focus increasingly on payment denials by insurance companies. The denial management team creates a trend between individual payer codes and common denial reason codes. A good medical billing and coding service provider like Vee Healthtek will help you to quickly determine the cause of denials and get paid faster.
A rejected medical claim usually contains one or more errors that were found before the claim was ever processed or accepted by the payer. A rejected claim is typically the result of a coding error, a mismatched procedure and ICD code(s), or a termed patient policy. These types of errors can even be as simple as a transposed digit from the patient’s insurance member number.
A rejected claim can be resubmitted once the errors have been corrected since the data was never entered into the system. These types of errors will prevent the insurance company from paying the bill and the rejected claim is returned to the biller to be corrected. It is important to remember that even though this claim never reached the payer, the time to file the claim is still important. Each payer has a certain timeline in which the claim will be considered a timely filed claim. If not filed within the payers’ guidelines, a timely filing denial could be issued. This would result in provider liability.
Denied claims are those that have been received and processed by the payer but have been marked as unpayable. These “unpayable” claims typically contain some sort of error or lack of prior authorization that became flagged after the claim was processed. Some of the issues for denials may include missing information, non-covered services per plan, or even not medically necessary services. Even though it may sound easy to just resubmit the claim for a second review, a denied claim cannot just be resubmitted. It must be determined why the claim was initially denied.
Most of the time, denied claims can be corrected, appealed, and sent back to the payer for processing. However, this process can be time-consuming, expensive, and resource-heavy to get to the core of the issue. If a denied claim is resubmitted without an appeal or reconsideration request and not as a corrected claim, it will most likely be considered a duplicate claim and denied again. If this happens, the claim will remain unpaid and can cause major issues for a provider’s bottom line, especially if it is a recurring issue.
Time is also a factor when resubmitting denied claims. Each payer allows only a certain amount of time to send in a corrected claim. If this timeline is not met, the payer may then deny the claim for timely filing. This results in an unpaid claim that becomes provider liability.
As per the above data, unpaid claims and denial management can significantly impact the provider’s revenue. In simple terms, practices are not receiving all the payments owed to them.
Practices and hospitals face significant challenges in their denial management processes. Without overcoming these challenges, they lose income, and it impacts the sustainability of their practice. Listed some of these challenges for reference.
Lack of Appropriately Trained Staff: Practice staff members often have various roles to fill and have many administrative tasks they must manage. They also have to deal with constantly changing regulations and rules. Also, if these staff members are not correctly trained in the complexities of claims management, it impacts the practice’s revenue.
Lack of Automation: Manual processes leave a lot of room for human error, offer less transparency, and are usually extremely time-consuming, and increase the turnaround for claims. Plus, even small physician practices often must deal with multiple payers. Those that lack automation in their denial management process miss out on the capability for advanced claims reporting and customized decision support.
The reasons for the claim denials fall into three categories: administrative, clinical, and policy. A majority of denied claims are administrative errors and once corrected you can resubmit them to the insurance payer. Denied claims with a clinical reason may require you to submit an appeal letter: always send this by certified or registered mail.
One of the first steps in managing denied claims is to identify the reason for the denial and determine what steps you need to take to appeal the claim. Create a comprehensive workflow that can track your claims as they enter and leave your system.
With the help of data analytics, one could find out the root problems in denial claims. One must also find the initial denial rate and figure out the best solution. Once it has been identified, one must discover who has impacted most, whether it is the payer or the healthcare providers. The clinical and the revenue cycle management areas should be completely redesigned.
One must investigate registration and the pre-service issues. Denial claims occur when the payer is not responsible for the coverage. It is the front desk’s duty to pay attention and confirm the patient's eligibility beforehand. The preauthorization process will be managed by the payers and plan for the claim. It also includes a medical denial account related to a certain percentage of the denials at the heart of failure if authorization is not done on time.
Automating the entire process makes it easy for the staff to verify everything and provide a smooth, streamlined process. Automation should also be done in the payer’s maintenance policy in every location, which will help raise accuracy to lower the admin work. The staff must ensure all the operational reports, like revenue and finance cycle get circulated and reviewed regularly, providing a clear path on which one to focus. It will help the health practice to ensure future denials will not happen.
The staff must make sure that all operational reports from revenue and finance cycles get circulated and reviewed regularly to provide a clearer path on which to focus. The team must update and manage the data for the sake of raising the health of the practice and to ensure that future denials do not happen.
Denial management plays a vital role in the revenue cycle of any medical practice. By having efficient processes in place, practices can know why claims are denied and take the necessary steps to prevent future denials. And by avoiding denials, practices increase their revenue and their sustainability.
Save your practice revenue from claim denial management issues with the help of this information. The best choice is to go with a revenue cycle management solution provider like Vee Healthtek that will take care of your eligibility verification, credentialing, charge entry, coding, obtaining authorization, and claim submission process for achieving positive cash flow for your practice.
