Improve Your Healthcare Organization’s Claims Denial Management Processes

Revenue cycle management (RCM) technology modernization is the next phase for hospital IT software since the completion of the massive electronic health records (EHR) implementation. Now, the challenge hospitals, ambulatory surgery centers, and providers are facing is the the process of updating their RCM software to support value-based care and minimize revenue leakage.

With nearly 97 percent of hospitals and almost three-quarters of providers using EHR software, it looks like the time has come for RCM technology solutions. What are the next steps? Mark Weber, Infor’s Senior Vice President of Healthcare Development explains that the implementation of RCM technology will be the next wave in an article with RevCycle Intelligence:

“Everybody’s been focused on the EHRs, but revenue is getting tighter and tighter. Now the questions are becoming, ‘how do I improve operational efficiency and how do I better get to understanding cost per physician, cost per patient, and costs across all my service lines?”

Manual Claims Denial Management Processes Causing Revenue Leakage?

Claims denial management processes are a vital component to any healthcare organization’s revenue cycle management. In fact, claims denials are a frequent occurrence accounting for between five and ten percent of hospital claims according to data from an American Academy of Family Physicians (AAFP) survey. Ideally, providers should aim to keep this number closer to five percent in order to improve reimbursement revenue.

While nearly all hospitals have adapted to electronic health records and order entry, an HIMSS Analytics survey showed that an astonishing 31 percent of providers still use manual claims denial management processes, which can slow productivity and hinder the denial management process. According to a recent article in RevCycle Intelligence most hospitals and providers do not have effective claims denial management processes in place, either electronic or manual in nature. Michelle Tohill, Director of Revenue Cycle Management at Bonafide Management Systems told RevCycle Intelligence:

“Keeping up with all the diagnostic codes and different insurance policies can be exhausting, but there are many software providers that will automatically update codes and requirements. This cuts down on your research time, allowing your billing team to spend more time double-checking claims to make sure they meet every single requirement.”

Medical Billing Best Practices for Claims Denial Management

  1. Identify the most common denial reasons and trends. A recent article from the Go Practice Blog recommends that you identify the most common reasons for denials, which often include:
    • Incorrect info from patient
    • Charge Entry error
    • Incorrect registration data
    • Duplications
    • Referral and Pre-authorization errors
    • Lack of medical necessity
    • Bundled or Non-covered
    • Credentialing and documentation errors
  2. Implement the right claims denial management technology. Revenue cycle management leaders need to consider implementing a system that is capable of handling denials efficiently. Michael Kan, the Revenue Operations and Administration Corporate Director at Partners Healthcare System told HFMA: “For the person who has to work the denial, technology that can segregate the claims is essential. It’s also important to use technology that provides staff with the necessary information at their fingertips to determine whether a claim is able to be appealed. Also, we provide them with data elements and canned appeal letters to make their jobs easier. That’s the key to getting through the volume.”
  3. Complete claim denials within a week. Becker’s Hospital Review reports on how to improve your denial management solution in a recent article. One of the steps they recommend includes the creation of a strong workflow with a process in place that ensures that each denial received is corrected within a week. The article states that in order to do that, “you need to establish a workflow that can track your claims as they enter and leave your system. It’s important because, not only will it lead to a more effective system, but many insurance companies set limits on how long a hospital has to appeal a denial. And losing money you’re owed because you’re a day past the ‘time limit’ isn’t a conversation any party wants to have—except maybe the insurer.”