Denial Management Strategies in Medical Billing

Denial Management Strategies in Medical Billing

One revenue cycle area that is cause for concern throughout all medical practices is claims denial. Denied claims not only add days to the revenue cycle and therefore disrupt cash-flow, but can also rob you of potential revenue if not resolved in a timely manner. Additionally, the cost of working each denied claim adds to this burden.

The best option is to prevent claims from being denied. According to KK Goel, Vice President of Medical Coding at Cosentus, up to 90% of all denials can be prevented. Therefore, it is a good idea to optimize your healthcare revenue cycle and adopt the industry’s best practices for Medical Billing and AR Management to reduce the future denial rate. However, you have denials today and they need to be tackled to ensure you do not lose out on your well-deserved reimbursement.

In our constant effort to help the community optimize Medical Billing and maximize practice revenue,Cosentus has put together 4 real-world key strategies to manage your current denials, as well as reduce future denials.

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Strategy#1: Denial Tracking And Management

Here are some facts about denials: Almost 50-60% denials are not worked in a timely manner, which results in 5-7% of lost revenue. Most healthcare systems do not have a clearly defined workflow for denial tracking management.

Cosentus is a leading provider of optimizedmedical billing services and we recommend you incorporate these in your denial management workflow to effectively resolve denied claims:

  • Create a well-defined list of CARC (claim adjustment reason code) group them by similarity of further follow up actions.
  • Create a separate AR bucket for denials, and within this bucket, create sub-buckets for similar issues.
  • Determine who your best suited employees are to work a certain kind of denial and give them the ownership of that bucket/sub-bucket.
  • Maintain a denial dashboard to keep track of every denial received, when it was worked, when the next review date is, and what the expected outcome of the follow up being done is.
  • 31% physicians still rely on a manual claims denial management system. If you do not have the correct technology available to track and work denials effectively, invest in some or partner with the right billing service.

Strategy#2: Work Denials On Priority

According to Roger Brown, VP of accounts receivable at Cosentus, the moment a claim gets denied, your reimbursement gets pushed back by an additional 21-45 days. Cash flow is the life line of any business and your practice is no exception– you need sustained cash flow to ensure that exceptional care to patients may continue.

We recommend the following:

  • All denials must be worked within 48 hours of being received.
  • Every follow-up should be followed by detailed notes a pre-defined follow-up action with the next review date.
  • Create a standard list of action codes to be used in each scenario, and define the next review date for each action.
  • Make sure this is discussed with the team and that every employee possesses the same understanding of how each code is supposed to work.
  • Stick to the follow-up promises to ensure the loop is closed on the case and resolutions are guaranteed.

Strategy#3: Clearly Define Dispute Strategy

Contrary to popular belief, not all denials need to be disputed. A well-defined dispute strategy will tell you which denials are to be accepted versus which ones need to be disputed. This is important because these is a cost to work each denial, and some industry sources put this at approximately $25 each.

Key elements of an effective dispute strategy:

  • Set up a standard of which denials to dispute, as well as the most effective medium of disputing them.
  • Set up your CARCs to determine what will happen to a denial after it gets posted with a certain code.
  • The denials that need disputing should go to a dispute bucket, while others should be either written off or rolled over to the next level. If set up properly and technology permits, your CARCs should be able to take care of this at the time of posting itself.
  • The appeal success rate is highly dependent on the content of the appeal. This is where having standard appeal templates with approved standard verbiage is a must.
  • Track the success rate for each type of appeal and calibrate your appeal process for continued improvement.
  • Clinical denials should be worked by employees who have exposure to the clinical side.
  • Not all denials need written or telephonic appeal. Review the EOB closely to follow the next best step. It can be a simple refile after the demographic error is fixed.

Strategy#4: Preventive Denial Analysis

The best way to handle claims denial is to prevent it from happening in the first place. According to industry sources, the general denial rate for practices is anywhere between 7-10%, while it should be definitely less than 4% and should improve to no more than 2%.Preventive denial analysisis the root case study of all denials received is aimed at reducing the future denial rate.

It is recommended to analyze the following:

  • What caused the denial? Was it a billing error, an issue related to coding, patient eligibility, or the wrong payer being billed, etc.?
  • Could this denial have been prevented?
  • If so, how could the denial have been prevented? If it was an eligibility issue, review your eligibility verification process and see if it needs to be fine-tuned.
  • Do an 80:20 analysis of your denials to see which issues are affecting you the most and how they can be resolved.
  • Do not try to improve every process at the same time. One step at a time will give your better results.

Conclusion:

At the heart of a proactive denial management initiative is a sustainable, technology driven workflow supported by data inputs and staff expertise. To stay on top of the current situation and eventually reduce the future denial rate, your organization must involve and educate parties from each revenue cycle function on how to most effectively do so. Effective AR management collection optimization must start with the submission of clean claims.

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