Introduction
Processing healthcare claims has become increasingly challenging in recent years. According to research, in 2021 payers initially rejected 12% of total professional charges, 26% of total hospital outpatient charges, and 27% of total hospital inpatient charges. With denials on the rise, it's critical for healthcare organizations to have a comprehensive denial management strategy in place. Unchecked claim denials can significantly impact your bottom line by delaying or reducing reimbursements. In this post, we will explore the top 5 reasons your healthcare claims keep getting denied and provide actionable tips to help you overcome these obstacles.
1. Lack of Denial Management Technology
One of the biggest reasons healthcare organizations struggle with denials is due to a lack of proper denial management technology. Large healthcare systems often have different EHR systems across their various facilities like hospitals, clinics, labs, pharmacies etc. This makes it difficult to get a centralized view of denials data. Smaller practices face technology compatibility issues too and have fewer staff to track down claims. Without automated denial management software, it's challenging to quickly receive denial notices and have them all in one accessible place. Claims and billing staff waste time hunting down denials notices scattered across different systems.
How to Fix It:
Invest in a dedicated denial management software that integrates denial data from all your systems into one dashboard. This gives you visibility into denial trends across service lines, facilities, and payers.
Ensure the software has workflow tools like automated appeal letter generation to reduce tedious manual work for your team.
Pick a scalable solution that can grow as your needs evolve over time. Cloud-based systems are ideal as they don't require on-site IT infrastructure.
2. Ongoing Staff Shortages
The healthcare industry as a whole faces severe staffing shortages, especially of credentialed billers and coders. It's estimated there is a 30% shortage of qualified medical billing talent. Denials require experienced staff to thoroughly examine each case, research regulations, refile amended claims, and provide education to prevent future denials. With insufficient or inexperienced staff, claim appeals and reductions in future denials suffer. These further drains organizational revenues.
How to Fix It:
Invest in denial management technology to maximize productivity of your current staff and minimize manual work.
Provide on-going education opportunities and incentives to retain top billing talent. Support them in gaining certifications and credentials.
Consider outsourcing overflow denial management work to qualified external vendors. They can take on more routine tasks to reduce burden on your team.
Automate redundant tasks like creating appeal letters to improve bandwidth of staff to focus on value-add resolution activities.
3. Inability to Drill Down on Denial Root Causes
Resolving denials often feels like an endless game of whack-a-mole. Your staff works hard to fix each denial but more keep popping up. The better approach is to identify and resolve the underlying root causes creating the denials rather than handling each denial in isolation. Spreadsheets and manual processes make it difficult to spot denial patterns and common sources across codes, facilities, and payer contracts. Without drilling into this denial data, you cannot effectively appeal denied claims or prevent similar denials going forward.
How to Fix It:
Implement denial management software with robust analytics and reporting to reveal denial patterns.
Review regularly to pinpoint service lines, facilities, codes, and payers accounting for the most denials.
Create standards for documentation and coding for problem areas to proactively reduce denials.
Educate staff on payer-specific guidelines to prevent denials on the front-end.
4. Overreliance on Claim Scrubbing Software
Claim scrubbing software validates patient information, coding accuracy and checks necessary boxes are completed. However, it lacks sophistication to understand the nuances of payer rules that lead to denials. Scrubbers can’t tell you if additional documentation is needed for a code under a certain payer contract. They provide limited visibility into the true underlying root causes driving denials. Relying solely on claim scrubbing creates significant volumes of superficial edits which overwhelm staff. The focus becomes clearing errors vs actually preventing denials.
How to Fix It:
View claim scrubbing as helpful validation but not a complete denial solution.
Pair scrubbing with more advanced denial management software that learns payer behavior over time.
Prioritize edits that have greatest financial impact vs clearing all errors which may be inconsequential.
Focus on improving documentation and coding practices on the front end before claims are even submitted.
5. Lack of Documentation Rules
Inconsistent and unclear payer documentation requirements are a major source of denials confusion. Often denial notices provide minimal insight into why the claim was rejected. Billing staff must stay on top of specific payer rules for documentation, med-nec, prior auth etc. For example, one payer may require very specific documentation elements to approve a spinal injection that others don't require. Not knowing these nuances leads to easy denials.
How to Fix It:
Maintain an updated payer policy reference with documentation requirements for top denied codes.
Partner with a denial management expert who understands payer guidelines and regulations inside and out.
Review denials data regularly to reveal documentation-related denial patterns by payer.
Provide ongoing training to coders and clinicians on proper documentation practices.
Implement templates and forms to prompt comprehensive documentation upfront.
6. FAQs
If you're struggling with denied claims, here are answers to some frequently asked questions about denial management:
Q1. What are the main reasons insurance companies deny claims?
Ans: The top reasons for claim denials include missing information (incorrect codes, duplicate claim, etc.), lack of prior authorization, errors in coverage eligibility, services deemed medically unnecessary, and lack of appropriate documentation.
Q2. How can providers prevent insurance claim denials?
Ans: Preventing denials requires a multipronged approach of using denial management technology, training staff on payer regulations, implementing internal documentation guidelines, obtaining prior authorizations, and leveraging claim scrubbing tools.
Q3. How do I follow up on a denied insurance claim?
Ans: First determine the specific denial reason and any missing information from the payer's explanation. Compile any additional documentation required and appeal with a written letter outlining justification within the payer's timeline. Follow up persistently via phone if needed.
Q4. Can you still get paid after a claim is denied?
Ans: Yes, through the appeals process you can get initially denied claims overturned and paid. Be sure to meet all requirements of the payer's appeal process. Bring in additional information and documentation needed to validate the claim.
Q5. How long does it take for an insurance company to process an
appeal?
Ans: Appeal processing times vary by payer but generally initial appeals take 30- 60 days. Rapid appeals may be processed within 72 hours. Further levels of appeals take longer. Stay on top of appeal timelines and follow up if nearing expiration.
Q6. What percentage of denied claims should I appeal?
Ans: Appealing every single denial likely is not cost effective. Focus on appealing denials above a threshold dollar amount where the reimbursement value exceeds the cost of staff time spent appealing. Target denials resulting from administrative errors which have high overturn rates. Denial management technology is key to reducing the labor required to manage appeals. Setting rules based on denial reason codes can help automate the process of determining which denials are worth appealing.
Q7. What can I do to reduce claim denials?
Ans: Get to the root cause of denials by leveraging denial management analytics. Address problems through better payer education for staff, implementing internal documentation guidelines, using claim scrubbing tools, getting prior authorizations, and improving coordination of benefits.
Conclusion
Denials can significantly impact provider revenues but they don't have to keep your organization down. Follow the strategies outlined above to get denial rates under control. Leverage the right denial management technology, experienced staff, and analytics to uncover the source of your denials. With an optimized approach you'll get claims paid quickly and bolster your bottom line. Does your healthcare organization struggle with denied claims and reimbursement delays? Let us know in the comments if this article provided helpful tips to improve your denial management process.
The billing experts at BMMS leverage decades of experience in denial management to help healthcare organizations reduce denied claims. Their team stays up-to-date on changing payer regulations and guidelines across commercial, Medicare, and Medicaid contracts. By partnering with BMMS, providers gain access to denial analytics and auditing services to identify problem areas. Their consultants provide customized education and workflow recommendations to address underlying documentation and coding gaps driving denials. With BMMS's end-to-end denial solutions, clients are able to streamline the appeals process and maximize claim reimbursements.
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