Most physician practices would agree that denied claims are a drain on resources and have a negative impact on cash flow and revenue. What practices may not realize is just how significant that impact can be. Nearly 90% of denied claims are avoidable and 50% to 65% are never reworked, which leaves a lot of money left on the table—money that could be used to bring on new staff, replace outdated technology, or make improvements to the office.[1,2], When you factor in the cost to rework a denial—$25 not including time and overhead—the impact is even greater.
While the causes of denials vary, there is no question that inefficiencies in the revenue cycle play a large role. With decreasing reimbursements and rising patient payments, practices need to do all they can to avoid further downward pressure on revenue. Reducing denials is a smart place to begin. Following are three ways practices can use revenue cycle management technology to reduce denials and improve denials management effectiveness.
According to the AAPC, the top three reasons claims are denied are 1) incorrect or missing patient information, 2) patient not covered, and 3) service not covered. These top reasons can account for up to 24% of all denied claims. Eligibility software can effectively address each of these issues. Providers need to look for solutions that offer both real-time and batch features. Real-time verification gives front-desk staff quick access to the most current coverage information while the patient is in the office, which facilitates time-of-service collections. A batch submission feature offers additional efficiencies as it allows practices to submit an entire group of patients to be processed at one time. Batches can be set to run overnight so a practice has all the coverage information they need for the next day’s roster. Some eligibility solutions also let providers run a batch verification on a subset of patients who have recurring visits. These runs can be saved to make updating and accessing the information easier for future visits. One final note on eligibility solutions: payer connectivity matters. The more payers available through the software vendor, the more accurate and effective the solution will be in reducing denials.
When it’s time to submit a claim, a lot can go wrong; It’s a manual process and manual processes are ripe for human error. These can include coding mistakes, missing information, and clerical errors to name a few. Claims submission software helps reduce denials before a claim is ever submitted. The software will automatically scrub claims to identify errors, then notify the biller of the issue so the claim can be quickly corrected and resubmitted. An additional feature of this technology is the ability to run daily corrections reports, which helps practices better understand the source of errors so they can be addressed and avoided in the future.
When denied claims do occur, practices often work only the highest value claims. This approach ignores smaller claims that could add up to thousands of dollars in additional revenue each year. Denials management solutions help physician practices recover more of the money they’re owed by increasing workflow efficiencies and making it easier to work all denied claims. Features should include the ability to group denials by reason code, and the ability to view the original claim and the Electronic Remittance Advice (ERA) side by side. Having a full library of appeal letter templates that can be auto-populated also helps facilitate faster rework.
Treating denials as a necessary evil is an outdated approach that today’s practices can’t afford to hold on to. With the right revenue cycle management technology, physician practices can greatly reduce denials and make rework faster and more efficient. With cloud-based solutions, there is no expensive hardware to purchase and install. Practices can be up and running quickly and with a minimal learning curve.
Revenue Performance Advisor from Change Healthcare helps providers address denials at every stage of the revenue cycle, from eligibility verification to claims submission to advanced denials management—all in a single, easy-to-use revenue cycle software solution. Providers can benefit from increased efficiencies, enhanced cash flow, fewer write-offs, and faster reimbursements.
1.“An Ounce of Prevention Pays Off: 90% of Denials are Preventable,” Morgan Haines, Advisory Board, December 11, 2014.
2.“The Cure for Claims Denials,” Richelle Marting, JD, MHSA, CPC, American Association of Family Practices, 2015.
4.“The Top 3 Reasons Your Claims Get Denied,” AAPC Knowledge Center, April 16, 2013.
5.Change Healthcare claims data, 2017