Once an insurance claim is denied, you’ve already lost money. True, you may be able to recover it — 63% of denied claims are recoverable, according to Change Healthcare — but when you consider labor and other costs, it turns out you pay a hefty price just to resubmit: about $118 per claim. And, of course, if you fail to recover, for what might be any number of reasons, the cost will be much steeper.
The best strategy for dealing with denials? Don’t let them happen.
And yet, surveyed hospital executives say that roughly one in five claims is delayed or denied. Even the top performers face denials about 4% of the time, says the Medical Group Management Association. The bottom line, says Change Healthcare, is that for the average hospital, denials threaten about 3.3% of net patient revenue, or nearly $5 million a year.
When you consider the myriad reasons claims get denied, you realize how important it is to have the right people, the right communication, the right priorities and the right procedures in place to minimize what can be devastating financial consequences.
Get to the root
Whether the mistake is as simple as a misspelled name or as complex as a failure to code to the highest level of specificity, the result will be the same. But if you dig deeper, you’ll likely uncover patterns that can be addressed. That’s why claims experts recommend using root-cause analysis as a first step toward reducing denials.
By using data from denial reports and analyzing processes, you’ll be able to see where denials are occurring, says Carmen Sessoms, associate vice president of the revenue cycle management advisory services program at Change Healthcare. Pay attention especially to:
- access and registration,
- insufficient documentation,
- coding and billing errors,
- payer behavior, and
- utilization/case management.
Once you’ve discovered your weak spots, you’ll know where to focus your prevention efforts. Mission Hospital, in Asheville, N.C., decreased its denial rate by 17%, thanks to ongoing root-cause analysis. Hospital data showed a disproportionate number of denials were related to the lab department. The reason being that the lab was short-staffed. Feeling pressure to keep the line moving, staff members had been skipping the verification process.
Also bear in mind that denials should be seen as everyone’s problem. Advisory Board’s Morgan Haines recommends engaging leaders from across multiple departments — including, at least on a rotating basis, the CFO, the COO and the VP of Nursing — and having them meet on a monthly basis to discuss denial issues.
Coding and billing may not be a priority for clinicians, but they should also be given regular and specific feedback, and held responsible for properly documenting and capturing all necessary charges.
Staying up to date
Meanwhile, for coding and billing staff, regular ongoing training and feedback may be musts. ICD-10, with its 14,000+ codes, has added complexity to the job, making it extremely challenging to stay on top of correct codes and usage. On top of that, different payers have different requirements and formatting preferences.
Can you improve performance by providing solid feedback? Ridgeview Medical Center, in Waconia, Minn., increased its registration accuracy from 90% to 99% by issuing regular report cards to staff members.
Also, remember that quantity isn’t the same as quality when it comes to documentation. Too often, says an insurance company employee, claims and requests for authorization are weighed down by reams of documentation that have little or no relevance. And they’re often compounded, she says, by a lack, or complete absence, of the information the payer needs.
The QueueLogix solution
In the best scenario, revenue cycle management would be a perfectly coordinated and seamless endeavor, with information flowing easily among physicians, medical coders, office managers, and administrative staff. Every facility would have a productive workflow that all staff members could understand and follow.
But anything short of that scenario at best reduces the time between services and payment and, at worst, results in denied claims that may never be paid. The revenue cycle is complex. Understanding how best to manage it can profoundly influence your success.
QueueLogix provides customizable solutions to help tame the complexity by, among other things, turning technology into an asset, instead of a burden. Back-end business processes can be connected with frontline patient encounters in real time so, for example, symptoms are diagnosed and coded simultaneously. And patient exams, documentation, and billing procedures can be integrated into a system in which information is executed efficiently, but also double-checked for accuracy in rapid time, thus eliminating costly mistakes.
By vastly improving revenue cycle efficiency, you not only increase revenue, you also get paid faster. The goal is attainable, once you’ve committed to making it happen.