Effective healthcare denial management: Drilling down into the root causes of denials
Today’s medical practices face more healthcare claim denials than ever before. A recent analysis of ACA exchange plans found that on average, HealthCare.gov issuers denied 18% of in-network claims (i.e., 36.3 million claims) in 2020. Why? Payer requirements are highly nuanced and dynamic. Just when you master one type of denial, you’re suddenly faced with several new ones. Working denials in healthcare has also become harder because of healthcare staffing shortages. There simply aren’t enough staff to review and address every healthcare claim denial. In addition, some revenue cycle staff don’t have the right experience to support appeals or manage clinical denials. Finally, many medical practices may not have the right tools to take a truly proactive approach to revenue cycle management and denial avoidance.
Does that mean medical practices are doomed to fail?
Definitely not. Working denials in healthcare requires a commitment to continuous process improvement. If something isn’t working today, providers have the power to change it. The best part is that you can start small. Effective healthcare denial management is about identifying the root causes of healthcare claim denials so you can prevent and manage them in a more strategic way. Consider the following most common reasons for healthcare claim denials and how to avoid them:
1. Eligibility. Does the patient have coverage, and if so, what specific coverage do they have? Are they covered by more than one plan? Seems simple; however, determining eligibility isn’t always easy. Patients change jobs and insurance plans frequently. They also add or remove supplemental coverage. It’s important for office staff to verify insurance benefits and correct mistakes to avert downstream denials.
2. Prior authorizations. These healthcare claim denials occur when payers don’t approve certain diagnostic studies or complex procedures in advance. Prior authorization-related denials have become particularly problematic for medical practices. The most effective way to combat these denials? Routinely assess for pre-certification before services are rendered. In addition, when obtaining or updating prior authorizations, consider recording authorization verification calls and cataloguing authorizations with digital images.
3. Medical necessity. Medical necessity denials occur when payers don’t agree that a service was necessary to maintain or restore your health or to treat a diagnosed medical problem. The best way to avoid them? Focus on documentation integrity, including capturing the patient’s true clinical picture and severity.
4. Medical coding. Codes change frequently, and it’s easy to fall into the trap of using an outdated or invalid code. Coder education is paramount.
5. Missing or invalid claim data. These healthcare claim denials occur for a whole host of reasons, such as duplicate claims, missing payer IDs, invalid diagnosis codes, incorrect patient demographics, or incorrect procedure codes. Asking a revenue cycle specialist to review claims before they go out the door, or using a claim scrubber to ‘scrub’ the data for any potential errors, can make a significant difference.
6. Untimely filing. This is truly one of the most painful healthcare claim denials because it simply means you missed the window of opportunity to submit the claim. Knowing each payer’s timely filing deadlines, and staying on top of claim submissions, is critical.
Conclusion
Medical practices can avoid many of these types of healthcare claim denials using clear healthcare denial management strategies. One of the most important ones? Monitor claim denials. You can’t fix something if you don’t know it’s broken. Creating a denial management policy and procedure is also important because it promotes a unified and consistent approach. Finally, look for a revenue cycle management partner that can help you achieve success in a cost-effective and efficient way. Learn more about how edgeMED can help or visit the Healthy Snacks Blog for more expert insights, best practices and industry trends.
