Claim denials are a normal occurrence in the world of healthcare, but improving outcomes is not about adding people or working a queue.
Today, denied claims require a team to spend time resolving the issues that hinder cash flow and delay reimbursements. This process costs health systems time and money.
As we begin fresh in 2019, now is a good time for health systems and providers to reevaluate their denial management processes and look at ways to save time and money while improving patient satisfaction. Instead of putting an emphasis on reworking denials after they occurred, health systems should shift their focus to adopt strategies that will identify the root causes of denials. By finding patterns and the source of denials, healthcare organizations will be able to prevent denials from happening rather than working to manage them more efficiently after they occurred.
The Problem is Real
According to a biannual revenue cycle survey by Advisory Board, a healthcare best practices firm, “a median 350-bed hospital would have lost $3.5 million to increased denial write-offs from healthcare payers over the past four years.” A Becker’s Healthcare article continues to explain that one in five claims is denied or delayed. Most healthcare organizations will work to appeal the denials, even though 90 percent of denials are preventable. Due to limited financial and human resources, 65 percent of those denials are never reworked and lead to lost revenue.
In order to shift focuses, health systems need to understand the sources and challenges of denials and learn how to solve them.
1. Get a Holistic View Across Providers
One of the biggest challenges of denial management is the complexity of the process and the lack of standardization across providers. In many cases, health systems are unable to see the big picture in the denials process. Each payer has its own rules for denying claims and communicating denials to providers, causing discrepancies and forcing providers to spend additional time researching the rules for each payer. Additionally, healthcare providers struggle to access claim denial data from payers because payers are reluctant to release the data due to competition with other payers who may have lower denial rates.
To overcome the challenges of varying information, health systems need to gain a holistic view across providers. Having a holistic view helps health systems identify problems early on and avoid discrepancies between providers. Solutions exist that can bring disparate information together and leverage this enhanced view with new technologies that provide predictive capabilities to help identify errors before claims are even submitted for payment, saving providers time, money, and headaches trying to decipher where the mistakes were made.
2. See the patterns to focus efforts
Providers also struggle to track denial statistics and determine the patterns on payments. This challenge is amplified when providers engage with several payers at once and use manual claims denial management tools and processes instead of updated technology. A July 2016 HIMSS Analytics survey found that 31 percent of providers still use manual claims denial management processes, even though a wealth of health IT tools are available to assist. While 90 percent of claim denials are preventable, they are still regularly occurring, often due to the lack of standardization and manual intervention causing unnecessary errors and denials.
Replacing manual claims denial management processes with up to date technology provides a wealth of benefits. Not only does the advanced technology save time, it also allows providers to pinpoint patterns on payments. Tracking patterns helps providers to gain a better understanding of denials and the reasons they are occurring. Identifying the patterns and sources of denials allows providers to focus their efforts on preventing the denials from happening, rather than spending time reworking the denials after they occur. Focusing efforts on prevention minimizes the amount of denials that need to be reworked.
3. Address root cause and prioritize efforts
In order to improve claim denials management, health systems and providers need to identify denials and the reasons they are occurring. This is often easier said than done and is not always as simple as plugging numbers into a formula. Some typical causes of denials include errors on billing statements, duplicate bills and claims sent, charges not being covered on the patient’s plan, and procedure code errors. Being able to identify which denials can deliver the greatest return on rework requires an advanced level of insight.
Once the root cause of the denial is addressed, the next step is to leverage intelligent segmentation. This allows you to change from a “work queue” approach to work on the items that will yield the greatest results from your staffs’ efforts. According to Sift Healthcare, the traditional approach to denials is to tackle the largest amounts first, then the oldest. Because all denials are different, providers need a 360-degree view of the entire claim lifecycle along with the predictive analytics necessary to determine which denials bring the greatest value. Without this level of data clarity, providers must depend on payer remittance information, which does not always depict the denied claim’s true value.
Leveraging Technology Enables Results
New tools and technology help providers identify recurring problems and quickly modify the process to avoid future denials on the front end by providing payer-specific recommendations. Predictive analytics help to determine which denials will bring the greatest value, helping providers achieve greater success and avoid spending time on denials that will likely not be resolved. Enabling healthcare organizations to become more operationally efficient within their existing resourcing.
Taking preventative steps and implementing the right technology will improve claims, simplify workflow for employees, and improve cash flow. Although claim denials may be inevitable, partnering with claims management technology will improve KPIs within revenue cycle management by leveraging existing data. Healthcare organizations can expect to free up resources to provide a better patient experience.
About the Author
Steve Staden is the Senior Vice President of Product Management at Wind River Financial, a payment processing and technology solutions company based out of Madison, Wisconsin. Staden brings over 15 years of experience in the tech industry to the Wind River team in order to lead the development and execution of overall product strategy. For more information, visit www.windriverfinancial.com/.