According to a American Academy of Family Physicians (AAFP), the average claim denial rate across the industry is between 5 and 10%, ultimately costing healthcare organizations roughly 3% of their net revenue stream.
Take a minute to let those numbers sink in. 3% of your net revenue stream. Three percent. That means, conservatively, if your organization’s net revenue is just $50,000,000, you are losing out on $1,500,000 every year on denied claims alone. Money that your physicians have already performed the work to receive, that should already be in your revenue stream.
The question now becomes – what can be done about that missing cash? There are several answers. Denials management programs can be extremely effective. With proper follow up and persistence, oftentimes many denials will be overturned, and the overturned claim will pay in full. However, this is not always the case. Insurance companies will bombard you with a list of reasons that they are “not responsible” for any of the payment (let alone the payment in full) – and the money may never make its way back into your revenue stream. That is why your focus should be turning to a real solution to the problem: denials prevention.
The key to preventing denials from occurring in the future is understanding why they happen in the first place. This reason will change constantly – it can be a coding error in one case, incomplete patient information in the next, or maybe a medical necessity claim the third time. Therefore, it is imperative to understand the root cause of each denial your organization receives, and from there create a trending analysis of that data. By carefully keeping track and understanding why your claims are being denied from the beginning, it becomes a simple process of making sure those errors don’t happen in the future.
Read our case study detailing how MCI found the root cause of a multitude of denials for one client and prevented them from occurring in the future.
Denials prevention is an ongoing, time consuming process. A partner company with the experience and resources can be a valuable asset for organizations that don’t have the time to commit to doing this process themselves. Learn more to see if MCI is the right partner for you.