MedClaims International Blog

How Hospital CFOs Can Prevent Complex Claim Denials

Posted by Brady Dolan on Nov 10, 2017 12:27:00 PM


The roles of CFOs who manage the financial department of a hospital or healthcare system have become significantly more complex in recent years. This is due to a combination of factors, such as value-based reimbursement models, increased difficulty making collections, an increase in expensive, high deductible health plans and countless regulatory changes.

Complex claims, such as workers’ compensation, general liability, injury, motor vehicle and catastrophe-based cases often present multiple challenges for any hospital’s collections and billing departments. Staff members are typically inexperienced in dealing with non-traditional payers because many healthcare organizations haven’t developed an in-house denials management program. Instead, they tend to rely on a traditional administrative approach when handling delays and denials in claim collection cases.

The Challenge of Complex Claims

Denials not only eat away at a medical provider’s bottom line, but the organization also bears the costs of reworking those claims - utilizing resources that could be better used elsewhere. However, it’s estimated that about 90% of claim denials are preventable and approximately two-thirds are recoverable.

Unfortunately, many hospitals consider delays or denials as a failure to properly register patients, although studies reveal that up to 40% of denials can be traced to patient accounting systems. A growing number of hospital CFOs are shifting their focus and strategies to capturing lost revenue through management technology and vendor selection. With those goals in mind, many CFOs plan to or already are outsourcing revenue cycle management services such as coding, claims processing and collections.

Data Analysis Drives Strategies

The need to access real-time data to successfully assess their organization's core competencies and problems is vital to developing an efficient process to deal with claims. The causes for inefficiencies in approaching denials or delays can be found in one or several areas of the organization – from insufficient documentation during patient registrations to errors in coding, billing or case management.

Once the analytics are studied and the cause(s) identified, it must be determined which factor or combination has the most impact on the denial problem. From there, strategies can be developed that will reduce or eliminate future errors in the clinical and revenue areas.

Preventing Complex Claim Denials

Nearly half of all complex claim denials begin with a patient’s initial interaction with the hospital. Claims are denied for many reasons – the result of missing or incorrect information, coding errors, changes in eligibility or lapsed/canceled coverage. Not securing procedure or treatment authorization in advance is another cause for denials. 

The lack of an organization wide pre-authorization procedure is another problem. By taking a proactive approach to address such possibilities, a CFO can create a continuous and efficient back-and-forth flow of information between payers and providers.

A team dedicated to claims management can successfully reduce claim denials by staying focused.

  • Track, measure and categorize trends in denials by gathering information from medical personnel, departments, payers, and providers.
  • Develop a pre-authorization screening and verification process to be followed by all involved personnel.
  • Invest in and customize claims management software to help ensure all procedures are actively functioning to improve the hospital’s claims rate.
  • Monitor changes in payer authorization policies to increase overall accuracy.
  • Inspire a denials prevention mindset in all areas of the organization’s revenue cycle, including coding, case management, patient access and accounting, medical records and compliance.

Health organizations will continue to face revenue cycle challenges in 2018. However, it’s possible to expand revenue opportunities by preventing claim payment delays or denials. A cohesive claims management team will address complex claims without major changes to the hospital’s staff, budget, structure or operations.

Topics: denied claims, outsourcing denied claims, Complex Claims, CFO