Seven steps to boost cash flow for your health care practice

Kristin Van Natta: ©RCM360

Successfully managing cash flow is a primary concern for physicians as they monitor the financial wellbeing of their practice. Healthy cash flow contributes to peace of mind, supports smooth business operations, allows for expansion of services and technology, and ultimately has a positive impact on patient care. The financial health of a practice revolves around claims management. Yet with an estimated average of 15% of private payer claims denied on the first pass — and close to 17% denied for Medicare claims — practices are at risk for cash flow disruption.

In this environment, it's imperative for physicians to place a heavy emphasis on claims submissions, putting processes in place to maximize first-time clean claims.

Common reasons for claims denial and how to address them

In general, claims are typically denied due to inaccurate or missing information. This can trace back to the patient record itself, information entered during the patient encounter, or coding errors. In addition, workflows and processes the practice follows (or lacks) when it comes to claims submissions and timely follow up also contribute to claims denials.

Below are seven primary reasons that claims are denied, along with steps practices can take to avoid them:

Diagnosis mismatch to CPTs billed. This occurs when a diagnosis, the ICD code, submitted on the claim does not support the procedure or service that was billed to the insurance company. In most cases, this results from a data entry error.

Solution: Stay up to date on the latest coding protocols, and ensure data entry is clean and correct before a claim is submitted. Consider leveraging newly released AI features that may be available in your EHR. eClinicalWorks V12.0.3, for example, includes an AI assistant that can notify the physician or other clinicians involved in patient care of suspected coding errors.

Insurance rules for claim coding not followed. Insurance companies may implement specific billing guidelines that practices must adhere to when submitting a claim. Many have requirements for prior authorization, specific documentation, or specific codes for services.

Solution: Ensure that billing staff are trained on current requirements from common payers. This could involve a review of past denials and standardizing claims submission procedures for each payer based on corrected and clean claims. Or leverage your EHR to automate this function, creating rules for identifying and correcting claims before submission.

Missing referral from primary care physician. This can be confusing to navigate, as not all insurance companies require a referral to a specialist. Plus, requirements may not be consistent in terms of which specialists require a referral or not.

Solution: To avoid the risk of not receiving payment, some practices make it a rule to always require a referral. While this seems a logical stop-gap, it results in extra paperwork for the practice and headache for the patient. The better route is to rely on your EHR. Leading EHRs can prompt the physician whether a referral is needed through decision support systems, algorithms, pre-defined rules and alerts based on the patient data that’s entered into the system.

Credentialing. In order to successfully submit a claim to a payer, the physicians and other clinicians must be credentialed to ensure they meet the standards to provide care and are eligible to receive reimbursement. Without proper credentialing, claims will be denied with payments delayed.

Solution: Rely on your EHR to support the credentialing process. Most EHRs include features to automate credentialing application submission, monitor for re-credentialing timelines, and integrate with clearinghouses to streamline the process.

Lack of insurance verification. Without proper verification of a patient’s most current insurance coverage, the practice is at risk of a denied claim. A patient may have changed or terminated insurance providers leading you to bill the wrong company. A change in the patient’s coverage may also impact whether a service is eligible for reimbursement. Or a patient may have fallen behind on premiums causing insurance to lapse and resulting in a denial.

Solution: Insurance must be verified upon booking and admission for every patient. This helps ensure insurance payment for services to the practice and clarifies responsibility for the patient to avoid unexpected bills. Major EHR systems have features to automate this process, including real-time eligibility checks and integration with payer systems. If you don’t already leverage this functionality, explore the technical aspects of implementing it into your practice, along with the workflows required for successful rollout and execution.

Timely management of denied claims. Each insurance company has a very specific window of time for a practice to resubmit a denied claim. While this timeframe varies, denied claims may generally be resubmitted within six months of the original denial. Many practices lose track of denied claims (especially when they are dealing with a significant volume), which means payment for services will never be received.

Solution: Your EHR contains the power to create rules, gain visibility through financial dashboards, and set alerts for this important function. This can help keep track of denied claims and correct the errors for successful resubmission. As you work through this process, you’ll start to uncover trends in why claims are being denied. This will help you develop new procedures to avoid it on future claims. Some practices do not rework and resubmit denied claims altogether, often due to staffing strain. Always make this a priority. Remember, the goal is to minimize denied claims and reach a 90% or higher first-pass clean claims rate.

Ineffective workflows for billing and follow up. Practices experiencing a higher-than-normal denial rate typically have improper workflows for billing, which also means that following up on denied claims is difficult. That’s because of challenges accessing the necessary information to pinpoint the problem, leading to payment delays and lack of insight into the finances of the practice.

Solution: Solid workflows are critical to the financial success of your practice. They guide how your EHR is used for billing and practice management, which is responsible for key tasks, goals, and expectations for your operations. Consider the process from start to finish, beginning with the patient check-in and encounter with the physician through insurance verification, coding, and claims submission. Discover how your EHR can automate manual processes to avoid mistakes, and create a system of checks and balances to help ensure clean claims submission.

Ultimately, with these seven recommendations for RCM processes and an EHR that’s configured for financial success, practices can improve claims success rates and ensure timely payment for services rendered. 

Kristin Van Natta is revenue cycle management business development executive for RCM360. She has 20 years of experience working with single provider practices, large physician groups and multi-specialty practices, and FQHC/RCH clinics, among others. She focuses her work on helping healthcare organizations identify gaps in revenue cycle, even those that are most challenging, and successfully address them to enable the organization to maximize their collections, increase cash flow and improve profitability. Kristin has helped hundreds of organizations identify and collect millions of dollars and believes that through this work, practices are able to keep their doors open, achieve financial wellness, and expand the availability of patient care.