You may be thinking you’re doing everything possible to submit clean, accurate claims to payers—yet denials persist. And if it seems that every day insurers are sending back different types of denials, you’re probably right.
"That’s the way it is,” says Elizabeth Woodcock, MBA, FACMPE, a healthcare consultant and author with Woodcock & Associates. “No matter how hard you try to make everything perfect, denials still happen. But you have to recognize that the insurance companies have an economic incentive to deny claims, so you’re never going to get it down to zero.”
That’s the bad news. The good news, however, is that with a strong parallel strategy of denial prevention and follow-up, you can significantly reduce your denial rate and ensure that almost all denied claims get paid.
Follow up promptly
To maximize reimbursements, review all denials within 72 hours and act on them within seven days, Woodcock says. Gone are the days billing staff can simply reprint a denied claim and send it back to the payer with a rubber stamp that says “appeal,” she adds. “Insurance companies would laugh at you.”
But by correcting claims, such as by adding requested information, and sending them back to payers quickly, Woodcock says that at least 80% of them eventually will get paid.
Open your treasure chest
The key to long-term revenue-cycle improvement, however, is learning from and correcting recurrent mistakes. Your most valuable resource in this quest is the denial report, Woodcock says.
It can be tempting simply to correct denied claims and send them back, but failing to analyze the reasons claims are rejected in the first place only perpetuates the problem. “Denials are your treasure chest for performance improvement,” Woodcock says. “This is your guide to really make a difference.”
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For example, by reviewing your explanations of benefits you might learn that you’ve been submitting procedure codes that are inconsistent with diagnosis codes, indicating that you need to work on coding. Or you may find a pattern of missing or inaccurate demographic information, indicating possible problems with your front-desk registration procedures.
Divide and conquer
But to really put this information to work, you need to organize it. For Brett Waress, MHA, FACMPE, chief operating officer at Tenet Florida Physician Services, the first phase of that process is dividing denials into those the practice understands and those it does not.
“There are denials for reasons that are specified by insurance companies that we can understand, such as maybe we didn’t get the middle initial or get the patient registration right. Those are denials we know how to handle,” he says.
Denials in this group then go through another (but not the last) round of sorting so they are addressed by the correct department: front office; billing office; or clinical staff, including physicians, notes Waress.
“But there’s a whole other category of denials for reasons that we may not understand or appreciate. It may be a denial for bundling of services in a surgical procedure that is payer-specific and not supported by Medicare rules,” he says. “Those types of denials we like to be able to build them back into our contracting efforts, but it’s exceedingly difficult to call those out and have them addressed specifically in our contract.”
Another complicating factor in this process is lack of consistency in the terminology payers use to describe their reasons for denial. “So getting them translated, cross-referenced, and put into actionable information for those three sections is very difficult and manual,” he says.
This process is cumbersome for large systems like Tenet and small practices alike, but is too important to overlook, says Woodcock. “Even though it’s frustrating, we’re in a battle, and this battle is fought every single day. If we give up, we’re going to give up money as well.”