Not one medical practice is immune to claim denials. In general, well-performing practices experience denial rates below 5%, while others see claims denied 10, 20 to an extreme 30 percent of the time. Denial management in healthcare is a key to improving billing and overall financial performance of a practice. One way to evaluate practice performance and denial rates is identifying the main reasons behind these denials. Starting with the why of claim denials will bring you to the appropriate solutions for reducing them while increasing your propensity to get paid correctly and during the first submission of a claim. Here are the ways to improve denial management in healthcare:
- Measure the number and frequency of denied claims. This requires in-depth knowledge and skillful use of your billing practice management system. By tracking and reporting claim denials, it is easier to study and analyze denied claims and zero payment remittances by tracking information like total claims filed to particular payers, the number as well as the dollar value of denied items, the percentage of denials, and general statistics per payer, provider, location and specialty, particularly when you have more than one office.
- Identify reasons for a denial. Counting and evaluating denials by reason is also critical to denial management in healthcare. This requires specifying categories that you can use to track claim denials, like registration (insurance verification, failure to identify patient, incorrect payor), charge entry (invalid diagnosis or procedure codes), referrals, pre-authorizations, wrong information from patient, duplicates, documentation, medical necessity, non-coverage, credentialing, etc.
- Denial remediation. This means the development of a proper and efficient reporting and tracking system that you can use for continuous data collection and analysis of claim denials that you can act upon so as to facilitate even more improvements in your revenue cycle processes and to reduce denial rates.