When it comes to the financial well being of healthcare providers, denied claims remain one of the most costly problems in the revenue cycle. Denials are estimated to cost providers 3% of their total revenue, and reworking denied claims can take up to 20% of operating costs. While there are a wide range of causes for these denials among different providers across the nation, easily preventable and fixable causes make up a large section of the pie.
The right approach to dealing with these denied claims is to both prevent them in the first place and develop fast, easy fixes. Prevention and repair can be improved through multiple strategies, including data analytics, technological improvement and staff engagement. According to MGMA, up to 65% of denied claims are never re-submitted by providers, meaning there is huge room for revenue growth in this area.
Using Data Analytics
Analyzing denied claims must start with determining the root cause of denials and finding out which staff members have the greatest impact on that cause. It's a good idea to divide causes into unique key performance indicators, or KPIs. Once the provider has determined which KPIs are having the biggest impact on revenue cycle, specific strategies can be implemented to prevent denials before they happen. For example, a hospital that's being denied 15% of the time for untimely filings can develop a submission procedure that prioritizes claims by date. By carefully analyzing changes in KPIs once strategies are in place, providers can see how effective their efforts are.
Implementing New Technologies
According to a 2016 study by HIMSS Analytics, 31% of healthcare providers still use a manual claims denial management system. In an age where software can analyze data millions of times faster than a human, switching to an IT system can have immediate effects. Computerized claim management systems can provide:
- Immediate claims information for use by staff
- Boilerplate appeals letters and data elements
- Integration with existing EHR systems
- Easy sorting and searching through a wide range of variables
With this technology in place, staff will be able to process a much greater volume of denied claims and even generate reports that show where the biggest improvements in the system are needed. Changes can be made immediately to improve efficiency in any given area when needed.
Engaging Clinical Staff
The root cause of many denials occurs at the clinical level when doctors, nurses and other staff provide ineligible services or use incorrect ICD-10 and other EHR coding data. By making staff actively aware of the most easily fixed claims issues, denials are likely to be reduced. Some hospitals have even created a claims denial management group made of nurses and other clinicians who advise other staff members about best claims practices.
No single approach to claims denial management will solve all problems for all providers, but using all available strategies to create a tailored blueprint will reduce denied claims and increase revenue. As payers continue to improve their claims processing accuracy and efficiency, so too must providers in order to stay financially stable.