The majority of a medical practice’s revenue is generated through medical claims filed to insurance companies. However, it has been observed that most practices lose a significant amount of money as a result of medical claim denial. This can have major consequences for income creation, which is why experts feel that every medical practice should have excellent denial management solutions in place. Preventing claim denials reduces problems, but denial management is not straightforward for every medical practice.
While every medical practice may face some claims denials, practitioners must detect when denials are out of hand and signaling a larger problem with revenue cycle management.
Errors in Revenue Cycle Management have a Real Cost
According to the American Medical Association, underpaid, rejected, or refused claims can cost your business up to $100,000 each month.
Furthermore, studies reveal that if an insurance company underpays a claim, it is up to 35% less than the original contract value.
Not only that, but your clinic might lose more than $75,000 per year in refused claims since studies show that many practices do not resubmit denied claims (up to 50% of their denied claims).
Insurance companies are in the business of thoroughly investigating every claim that comes their way. There is always the option to resubmit a claim or appeal refused claims, but this is time-consuming and expensive, and it seldom occurs in most revenue cycle management processes.
How can you ensure that your clinic excels in denial management? Here are the five most important measures to take.
1. Enhance Data Quality
Before patients are seen, front office employees must check their eligibility and determine if the services that will be offered are covered by the patient’s insurance. Simple clerical mistakes, such as the patient’s name being misspelled or a missing Social Security number, might result in claim denial. The payment is not necessarily refused, but the claim is being returned to your employees, resulting in extra time and money being spent.
An example of a claim being denied due to poor data quality would be the use of an inaccurate diagnostic code. While this might be challenging, it is preferable to avoid it in the first place, which begins with enhancing the data quality of each claim.
2. Examine Coding Procedures
If a significant percentage of your claim denials are due to poor medical necessity, you may need to seek extra clinician training. The easiest method to avoid this in the first place is to ensure that physicians, medical billing personnel, and coders communicate well.
Monitor your medical necessity denials to identify patterns and implement the appropriate policies to prevent these denials.
3. Outsource Denial Management
When it comes to successful practices, internal personnel are frequently the most important contributors to the organization’s success. However, regardless of talent, experience, or competence, these professionals frequently lack the time and availability to keep up with the ever-changing tides of the healthcare sector, particularly when it comes to medical billing specifics.
A proper financial health strategy must be prioritized for medical practices to achieve success. Best Medical billing companies allow your clinic to have the most efficient and accurate bill processing possible.
4. Emphasize Pre-Authorization
Failure to get pre-authorization might be costly to your practice. Your practice management software can help (in certain circumstances) by marking specific procedures and insurers so your team knows what to do, but your staff should also understand which insurers demand pre-authorization and for what.
Furthermore, it is preferable to get pre-authorization for a surgery that will not be performed than to do the procedure and then seek retroactive authorization for it. Some practices have found success by committing certain personnel to this procedure fully, which is something you should always explore if your staffing volume is high.
5. File Claims on Time
Time is money, and each insurance company has a window during which you can file a claim. Have you held on to a claim for too long? You’re not going to be compensated.
Some insurance policies require claims to be made within 30 days of the date of service, while others are more flexible and allow you 12 months. Occasionally, claims are submitted but not received, or they were never submitted in the first place.
Another reason a claim may be refused for late filing is if you submitted a claim, it was denied, and then you resubmitted it, which was then denied for late filing. In this case, you’ll need to appeal the refusal, which will add to the length of time.
