One revenue cycle area that is a cause of concern for all medical practices is claims denial. Denied claims not only add days to the revenue cycle & therefore disrupt cash-flow but can also rob you of potential revenue, if not resolved timely. Also, the cost of working each denied claim adds to the burden.
The best option really is to prevent claims from being denied & according to KK Goel, Vice President of Medical Coding at Cosentus, up to 90% of all denials could be prevented. So, it is a good idea to optimize your healthcare revenue cycle and adopt industry best practices for Medical Billing and AR Management to reduce future denial rate. But you have denials today & they need to be tackled to ensure you do not loose 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 & reduce future denials.
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Strategy#1: Denial Tracking And Management
Some facts about denials: almost 50-60% denials are not worked, at least not timely, this results in 5-7% of lost revenue. Most of the healthcare systems do not have a clearly defined workflow for denial tracking & management.
Cosentus is a leading provider of optimized medical 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, within this bucket create sub-buckets for similar type of issues.
- Determine who are your best suited employees to work a certain kind of denial & give them the ownership of that bucket/sub- bucket.
- Maintain a denial dashboard to keep track of every denial received, when did it get worked & when is the next review date & what is the expected outcome of the follow up done.
- 31% physicians still rely on a manual claims denial management system. If you do not the right technology available to track and work denial effectively invest in one 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 additional 21-45 days. Cash flow is the life line of any business & your practice is no exception, you need sustained cash flow to ensure the exceptional care to the patients can 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 a next review date.
- Create a standard list of action codes to be used in each scenario, define the next review date for each action.
- Make sure this is discussed with the team & every employee has 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 & resolutions is guaranteed.
Strategy#3: Clearly Define Dispute Strategy
Contrary to the general perception not all denials need to be disputed. A well-defined dispute strategy would tell you which denials are to be accepted VS which ones need to be disputed. This is important because these is a cost to work each denial and some industry source put this at approximately $25 for working each denial.
Key elements of an effective dispute strategy:
- Set up a standard of which denials to dispute & what is the most effective medium of dispute.
- Set up your CARCs to determine what happens to a denial after it gets posted with a certain code.
- The ones that need dispute should go to a dispute bucket, others should be either written off or rolled over to the next level. If set up properly & technology permitting 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 & 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 action. It could be a simple refile after the demographic error is fixed.
Strategy#4: Preventive Denial Analysis
The best way to handle claims denial is to not let it happen 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% & should improve to no more than 2%. Preventive denial analysis is the root cause study of all denials received & is aimed at reducing the future denial rate.
You need to analyze the following:
- What caused the denial? Was it a billing error, an issue related to coding, patient eligibility, wrong payer was billed etc.
- Could this denial have been prevented? You would just be amazed with the answer to this.
- How could the denial have been prevented? If it was an eligibility issue, review your eligibility verification process & 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 could they be resolved.
- Do not try to improve every process at the same time, one step at a time will give your better results.
At the heart of a proactive denial management initiative is a sustainable, technology driven workflow supported by data inputs & staff expertise. To stay on top of the current situation & eventually reduce the future denial rate organizations must involve & educate parties from each revenue cycle function. Effective AR management & collection optimization must start with the submission of clean claims.
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