Five strategies to reduce Healthcare Claim Denials in your Medical Practice
How to Reduce Healthcare Claim Denials?
Even despite your best efforts to avoid payment denials, they happen every day—sometimes to the tune of hundreds or thousands of dollars a month. That’s money your medical practice needs and deserves—money it could use to purchase new equipment, pay existing staff higher wages to reduce healthcare employee turnover, or hire additional staff. The good news? Although you can’t eliminate denials entirely, you can take steps to reduce your denials by following healthcare denial management best practices. Consider these five strategies to reduce denials and ensure revenue integrity.
1. Know your baseline. What exactly is your current denial rate? To calculate it, add the total dollar amount of claims denied within a given period, and divide that amount by the total dollar amount of claims submitted within that same period. Do this for each payer, provider, specialty, and location (if your medical practice has more than one location).
Also do it for each reason why claims are denied. Payers communicate ‘the why’ through remark codes they provide after processing the claim. Ask yourself this question: What are the top reasons for insurance denials in your practice? Here are a few common denials for medical claims: Duplicate claim, lack of prior authorization, incorrect CPT modifier, invalid diagnosis code, lack of medical necessity, wrong insurer billed, service not covered, and payer requires additional information.
2. Invest in staff education. Now that you understand your volume and types of healthcare claim denials, you can formulate a targeted education strategy. For example, do front desk staff understand the importance of collecting accurate insurance and demographic information? Do they double check the spelling of the patient’s name, date birth, and insurance information they’ve entered into the practice management system? Do they run insurance eligibility checks in advance or in real-time when the patient presents for their appointment? Do they understand whether Medicare should be primary or secondary? Do they know what information to collect if the visit pertains to an injury that worker’s compensation or auto insurance might cover as primary?
Likewise, physicians need to know how to provide accurate and thorough clinical documentation that justifies medical necessity. Do they understand payer-specific medical necessity requirements? Do they know when and how to document laterality, severity, and anatomical location? Do they know what payers expect to see for each level of evaluation and management service? A recent HHS report found that the majority of improper payments (64.1%) occurred because of insufficient documentation.
Similarly, coders need to understand the important role they play as well. A savvy medical coder, for example, can educate the medical practice on ever-changing payer-specific requirements, frequency/global rules for specific procedures, new and revised medical codes, and more. They can also perform proactive audits and develop compliance checklists to mitigate risk.
3. Leverage technology. In addition to education, technology is paramount. For example, built-in claim scrubbing can detect and eliminate errors in billing codes, thereby reducing the number of claims that are denied or rejected. Your practice management system may also provide detailed reports and analytics that highlight medical claim denial trends and other important information you can use in your healthcare denial management strategy. You may even be able to explore opportunities to leverage automation and artificial intelligence. For example, you might be able to automatically route certain types of denials to specific coders, prioritize work queues for claim resubmission, streamline manual processes, predict denials to ensure accurate data entry, and more.
4. Establish, monitor medical claim denial management key performance indicators (KPI). Medical claim denial management isn’t a ‘one and done’ project. Over time, as you provide ongoing staff education and leverage healthcare denial management technology, be sure to look at your data to see whether your efforts are paying off. Monitoring your overall denial rate is a good place to start; however, you should also be looking at your denial write-off as a percentage of net patient service revenue (i.e., your net dollars written off as claim denials divided by your average monthly net patient services revenue) and your clean claim percentage (i.e., the number of claims paid on first submission divided by the number of claims accepted into the claims processing tool for billing).
5. Improve workplace culture. This may sound unrelated, but culture can make a big difference in medical claim denial management. When employees feel supported, they’re able to shed light on compliance problems with confidence and without fear of negative repercussion. When they’re paid fairly and offered the ability to telecommute or have a flexible schedule, they’re more likely to give 110% when they’re at work. They’re more willing to follow healthcare denial management best practices and go the extra mile to ensure compliance.
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