Denial Management – Definition, Goals and Challenges

Denial Management is the process of systematically investigating each denial, performing root cause analysis of why each claim was denied, analyzing denial trends to uncover a trend by one or more insurance carriers,and redesigning or re-engineering the process to prevent or reduce the risk of future claim denials.

Many physician practices forgo thousands of dollars annually in revenue through denied healthcare claims. These denials typically stem from a lack of strong denial management policies and procedures.

Essentially, you want to lessen the number of denials by seeking the root cause for it as well as the coded cause. Every instance where no payment or lower than expected payment occurs must be investigated.Doing this is an essential part of optimizing your revenue cycle.

These numbers paint a clear reason as to why denial management is an imperative process for physician practices:

• The average claim denial rate across the healthcare industry is between 5% and 10%.
• Commercial and public payers deny about one in every 10 submitted claims.
• Gross charges denied by payers have increased to 15% to 20% of the nominal value of all claims submitted.
• An estimated 90% of denials are preventable. 
• Up to 65% of denied claims are never resubmitted.
• An estimated two-thirds of all denied claims are recoverable.

Ask how we can help you recover lost money due to denials

Types of Claim Denials

Though all denials result in your physician practice losing out on money you’re owed, they primarily fall under five main categories:

1. Soft Denial: A temporary or interim denial that may be paid if the practice takes corrective action; no appeal is needed.

2. Hard Denial: A denial resulting in lost or written-off revenue; an appeal is required.

3. Preventable Denial: A type of hard denial due to a practice’s action or lack thereof, typically because of registration inaccuracies, invalid codes, and insurance ineligibility.

4. Clinical Denial: Another type of hard denial, though it is due to lack of payment for medical necessity,an appeal is necessary.

5. Administrative Denial: A type of soft denial in which the payer notifies the physician practice exactly why the claim was denied; an appeal is possible.

What are Claim Rejections?

Knowing the difference between denied and rejected claims in medical billing is an integral part of denial management. Claim denial occurs when a claim is processed and then repudiated by a payer. In contrast, rejection takes place when a claim is submitted to a payer with incorrect or missing data or coding.

There are a variety of billing and coding issues that commonly cause claim rejections. Some issues include an inaccurate Medicare or CLIA number, insurer name eligibility, non-payable service, a missing diagnosis code reference number, a duplicate claim submission, or a diagnosis not coded to the highest level of specificity.Two key ways to mitigate claim denials and rejections in your practice are to beware of data entry errors and verify referrals on the front end.

A clean claim is one thatis submitted without any errors or other issues, including incomplete documentation that delays timely payment. It also meets all the following requirements:

• Identifies the health professional, health facility, home health care provider, or durable medical equipment provider who provided service sufficiently to verify, if necessary, affiliation status and includes any identifying numbers

• Identifies the patient and health plan subscriber sufficiently
• Lists the date and place of service
• Is a claim for covered services for an eligible individual
• Substantiates the medical necessity and appropriateness of the service provided, if necessary
• Contains information sufficient to establish that prior authorization was obtained for certain patient services where prior authorization is required
• Identifies the service rendered using a generally accepted system of procedure or service coding
• Includes additional documentation based upon services rendered as reasonably required by the health plan

 

Top Denial Reasons in Medical Billing

Physician practices might not realize how much money they’re losing by not paying enough attention to the denial management process. In addition to not recouping all the revenue they’re owed or receiving it days or months later than possible, these practices increase their risk of non-compliance with various regulations, decrease patient satisfaction, and waste time and resources that can be utilized elsewhere in the practice.

Probably the number one source for denied claims is patient eligibility. This means that the service submitted for payment isn’t included in the insurance plan under which it’s being billed. Other causes include:

• Missing or incorrect data
• Duplicate or late submissions
• Improper or outdated CPT or ICD-10 codes
• Lack of documentation or prior authorization
• Out-of-network care
• Lack of medical necessity
• Procedure coding errors
• Lack of prior authorization

According to RemitDATA, which provides comparative analytics data for the outpatient provider market, the five procedure codes that most frequently result in unexpected denials are:

• 99213 (outpatient doctor visit, level 3)
• 99214 (outpatient doctor visit, level 4)
• 36415 (routine blood capture)
• 99232 (subsequent hospital care)
• 97110 (therapeutic exercises)

Tips to Reduce Claim Denials

Reducing claim denials can be accomplished by performing these five easy steps:

1. Code diagnosis to the highest level of specificity
2. Ensure insurance coverage and eligibility
3. File claims on time
4. Stay current with payer requirements
5. Track the claim throughout the entire process

In addition, you can prevent and better manage claim denialsby tracking all your claims, identifying the reasons they’re denied, knowing each of your carrier’s deadlines and rules for claim submission, and involving patients in the denial process. By following these tips, you can optimize your revenue cycle one step at a time and not lose out on money your practice is owed.

How can Secure Billing Solutions help?

At Secure Billing Solutions, we are claim denial processing experts. Our denial management solution is comprised of three main components – data capture, denial analysis and reporting, and denial process redesigned. Our denial management solutions add value to your practice’s bottom line and improve the care you provide to your patients.

Our solution ensures that 100% of your claims are paid correctly after the first claim submission. It addresses a variety of rejections and denials issued by payers and gives each functional unit within your organization the tools needed to identify and take corrective action before denied revenues have to be written-off. By analyzing trends over time, you uncover problems, pinpoint causes, and reduce denials, allowing you to cover not only current costs but also finance strategic growth and improvements within your practice.  

Contact us today to learn more about procuring the revenue you’re owed without having to spend hours doing it. Or, check out some of the other medical billing services we offer.