Revenue is the lifeblood of every healthcare provider. Denials staunch those revenues, delaying reimbursement and creating more work to examine, research, correct, and resubmit claims.
Unfortunately for hospitals and health systems, payers are taking more time to process claims. They’re also denying more claims – and denying more dollars per claim.
According to MDaudit research, payers in 2021 initially rejected:
- 12% of total professional charges
- 26% of total hospital outpatient charges
- 27% of total hospital inpatient charges
“Denials are increasing across the board, which takes money out of the pockets of providers. It’s critical that hospitals and health systems tackle this issue with a comprehensive strategy,” says Dana Finnegan, Director of Market Strategy at MDaudit. “Reducing denials requires the right people, the right processes, and the right technology working together to identify and eliminate the root causes.”
Most organizations that experience high denial rates share some or all of the following reasons. Which ones are preventing your organization from maximizing reimbursements?
1. Lack of denial management technology
Reliable, automated processes can ensure that organizations receive denial data quickly and in a centralized location where it can be easily found by claims and billing staff. But that’s not often the case for organizations of all sizes. Large organizations likely have different EHR systems for their hospitals, medical practices, imaging centers, labs, pharmacies, etc. Remittance advices show up in different places – places that compliance staff either don’t know about or struggle to access. Smaller organizations have many of the same technology compatibility issues, compounded by fewer people to hunt down claims. Facilities of all sizes are not operationally prepared to effectively handle denial management.
2. Ongoing staff shortages
Even if your organization has the right technology and a central repository, you must have sufficient staff who are properly trained to handle denials. It’s an industry-wide problem, with healthcare organizations reporting an overall biller and coder shortage of 30%. Until recently, organizations were willing to train billers and coders to handle billing compliance. However, because of the rising legal ramifications for incorrect or overcoded claims, most are now looking for people with relevant experience. It takes experienced personnel and the right technology to distill denials, discover commonalities, amend denied claims, and educate coders and providers on how to minimize similar denials in the future.
3. Inability to drill down into denials
Getting to the root cause of denials is like putting out multiple small brush fires. Your staff fixes one denial only to have another one pop up, and another, and another in an endless stream. A better way to extinguish multiple fires is to call out the fire department, which will put them out at the source. In the same way, the best approach to denial management is to understand the source and fix the underlying cause. Manual processes and spreadsheets will only get you so far and likely won’t help you to identify the specific CPT/DRG codes, facilities, and specialties where most denials are occurring. If you don’t have the right tools to uncover the root cause of denials, you can’t effectively appeal denied claims, much less solve the issue going forward.
4. Overreliance on claim scrubbing software
Traditional claim scrubbing software does a great job at claim validation edits, ensuring the patient information is correct and that all necessary boxes are ticked. But it lacks the sophistication to understand payer adjudication behavior. Does a particular payer require additional documentation for a certain CPT/DRG? Is this test or procedure medically necessary? The key is to code the claim properly in the first place, so that it’s not only accepted, but reimbursed at the appropriate amount. Another major issue with traditional scrubbers is that they inundate end users with too many superficial edits with little dollars to recoup.
5. Lack of documentation rules
Denial management can be a head-scratching experience. Often, payers don’t explain why the claim was denied, only that it was. Okay, so now what? Each payer has its own rules about medical necessity, documentation, prior authorization, and more, which can trigger denials. Billing staff must stay up to date on those eccentricities. One client example is a spinal injection to relieve pain. The procedure kept triggering a denial, even though the coding was correct. The problem was eventually traced back to a payer-specific requirement for documentation that included answers to five specific questions. Software that can spot potential denials before they are triggered can improve claims workflows while speeding up reimbursement.
Denials are a complex issue that continue to plague billing departments and impact revenues at a time when every dollar counts. The answer lies with the right combination of people, processes, and technology.
To get a head start and learn even more about denial strategies to employ, have a listen at the recorded webinar, Best Practices for Strengthening Revenue Integrity in 2023.
