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Denials are a hidden killer to obtaining maximum revenue potential. The impact it plays is not fully understood until the appropriate resources are spent determining the root cause and how to avoid them. Most practices simply choose to give up on some of the denials they see, due to inability to track or due to the shortage of resources. According to a 2020 article by Change Healthcare analyzing ~102M insurance claims, the average denial rate has increased 23% since 2016 but surprisingly, 86% of all denials are potentially avoidable. As the saying goes, prevention is always better than cure!
Below are 10 steps to reduce denials and maximize cash flow.
Robust Data Analytics – When a patient seeks medical care, the diagnosis of the patient plays an important part in healthcare. Similarly, the first step in understanding and reducing denials is to analyze the data. This boils down to availability. Denial data needs to be captured and stored and consequently analyzed to understand what the possible root causes could be that trigger the denials. One of the major problems for most practices is the inability to capture denial data which leaves them fighting blindly. Once data is obtained, analysis is needed to determine the trends and who are the biggest offenders.
Proactive Credentialing - A common belief across most practices is to get the billing out the door as early as possible, to maintain steady cash flow. This is a misconception that results in steady but lower than expected cashflow. The first step in order to reduce denials is to evaluate the credentialing status with payers. At the end of the day, if a claim is denied because a practice is not credentialed it is a denial that is hard to turnover and starts a ticking clock. Incorporating a proactive credentialing process will help plan what payers should be credentialed and help ensure the claims not only get out the door timely but get paid when they are received.
Eligibility/ Coverage discovery/Up front data collection - Capturing correct information up front is critical. Even in an established practice, a patient’s employment status and insurance plan can change frequently. Similar insurances can have different group or member ID numbers, coverage, deductible, or co-pay fluctuations from year to year. By initiating a stronger insurance verification protocol, you are able to identify patient’s coverage details, if or when maximum benefits are reached, coverage termination and if the plan covers the service that’s been provided. Software tools can help to automate this process, saving time over having staff manually call on each query to verify the insurance status.
Prior Authorization - Prior authorization denials are extremely time-consuming, partially due to a lack of standardization among payers. It takes time to learn which services are considered medically necessary, which require prior authorization, and which require referrals. Having an establish protocol to consistently document data required for prior authorization in the medical record may help prevent the denials. Likewise, streamlining the process by using digitization or electronic authorization to stay within the bounds of medical necessity will help the revenue flow.
Timely Submission - Most insurances permit a period of 60 to 90 days to file a claim from the time of service. If the claims are not filed or the claim submission is made after the stipulated time, there may be a claim denial. Most common hurdles in timely filing of claims is the fact that simple errors can and do occur. To prevent such errors, it is essential that all billing and coding staff understand different insurers' requirements for timely submission of claims. Identifying tasks that are repetitive and automating them may increase the turnaround time on claims submission. Similarly, figuring out the main sources of delays in receiving claims to fine-tune the process may add efficiency to the claim cycle.
Medical necessity - Once you have all your ducks in a row, you may risk the sneaky medical necessity denial. Medical necessity is like a puzzle board. All the pieces have to fit in order to ensure the complete picture is displayed. This includes ensuring the patient’s diagnosis codes align with the procedure codes for that patient based on their age and gender. This takes some coding expertise to ensure what’s billed out is accurate and meets medical necessity guidelines. In order to avoid this denial, understanding the coding, identifying frequent offenders and providing feedback is key.
Payer guidelines - It’s not always possible to win every battle. Understanding payer coverage guidelines helps you be prepared for the battles that cannot be won. Certain Payers might consider procedures as experimental/investigational. This isn’t a denial that can be easily turned over without causing a change in payer policy. However, understanding how this impacts your practice helps you plan for the alternative route (e.g.: possibly a patient cash pay program). Ensuring that your knowledge base stays up to date ensures you make the most out of a bad situation. Developing a comprehensive database of payer guidelines/nuances is essential to effectively fighting denials and minimizing their impact.
Use machine learning to identify denial trends - If your practice deals with a large volume of claims or if your claims typically contain a multitude of CPTs, diagnosis codes etc., you may not be able to identify denial patterns denials by simply creating a pivot table of your data on a spreadsheet. This is where Machine Learning techniques come in handy as they enable you to identify those complex patterns and automatically make sense of why your claims are getting denied. For example, it could be that a certain combination of a procedure code, diagnosis code and a rendering provider that is always being denied for a specific reason and understanding the root cause and how to fix it would become easier when you know the attributes common to your denials. Such technology would also make your practice more efficient at correcting denials and addressing denial root causes, as compared to reviewing the denials one denial at a time and trying to connect the dots.
Use a competent workflow management system to drive an effective denial management program - Even the most sophisticated of practice management systems available today have a commonly observed weakness; they come with a suboptimal workflow management module for denial management. A competent workflow management system should enable your staff working on denial management to organize their work in a meaningful manner and be able to customize the workflow rules (grouping by denial codes, payers etc.). The execution of the fixes via the system (ex: rebilling claims with corrections) should be facilitated with the least number of steps. Further, the workflow management system must enable tracking of the fixes executed, by means of logging notes at a visit level so that when the time is right, any unpaid claims can be further reviewed. Finally, the system should provide the necessary analytics (or be able to integrate with an analytics tool), so that the success rates of the fixes can be evaluated periodically. If there are fixes that are not yielding any results, your practice may need to explore other options and prevent the administrative burden of executing redundant fixes.
Implement an efficient appeals program with RPA - Robotic Process Automation (RPA) can be leveraged to implement an efficient appeals program which would increase your practice revenue and minimize the administrative burden. From simple mail merge tools to more sophisticated applications, RPA can increase your appeals efficiency at least by 10 times. It’s important to note here that you need to make sure that you formulate strong customized appeal letters for the different permutations (by denial reason, payer etc.) first and then use RPA to gain efficiency. Your appeals letters must have a strong basis addressing specific points of the payer denial, as to why the claim should be paid. Once the appeal letter templates are established, when to use them are clearly defined and your RPA program is configured, the amount of time your staff would have to spend will be less than a few hours a week.
