Medical claim denials cut right at the jugular of a practice's financial success. Today, a medical practice's operating expenses often exceed 50% of its total revenue. With thin margins defining the financial success of a group practice, an aggressive denial management strategy is critical. Adopting such a strategy may sound complex and time consuming, however, a streamlined plan can establish a more efficient billing and collections process resulting in huge dividends. Here are six easy steps to managing the process in your practice:
Put someone in charge – This will be the responsible party who knows what to look for, where to look for it, and how to address the individual issues while keeping tabs on the big picture.
Standardize the way denials are posted – Denials are often posted in a practice's Practice Management system simply as contractual adjustments, limiting opportunity to trend and correct issues. Standardized posting procedures offer specific tracking mechanisms and allow generation of meaningful management reports that assist in identifying specifics of denied items.
Create a denied claims log – Logging claim denials provides the ability to track claim numbers, dollar values, dates of resolution and corrective measures. Some practice management system software products can automate this process. Where automation is not an option, it can be done manually. Either way, the bottom line is – it should be done.
Track denial reason codes – Are claims denied due to timely filing limitations? Are patients out of network? Were services considered not medically necessary or non-covered? Tracking denial reason codes allows a practice to understand the root cause of each denial, providing the opportunity to reduce denial occurrences.
Take corrective measures ("close the loop") – Many claim denials are a result of operational oversights. Unbundling, inadequate documentation, or even a mismatched age with a procedure code are all denial types that can be remedied by educating staff in coding and billing guidelines. For example, slight changes to the office registration process could significantly reduce patient eligibility denials. Or perhaps physicians are ordering services without completing the patient's carrier requirements resulting in authorization denials. In this scenario, physician education and procedural tweaking would decrease future denials and expedite payment.
Embrace efficiency – If automation is available in the practice management system, use it. Utilizing a paperless environment offers easier tracking and enhanced accountability options while reducing overhead. Electronic tickler files can serve as an excellent denied claims log. Also, most clearinghouses offer online access that allows monitoring of claims traffic. In many cases, carriers provide electronic acknowledgement reports identifying receipt or rejection of claim batches. In addition, claim scrubbing tools are frequently made available at the clearinghouse or payer level that identify denials and corresponding denial reasons. Some clearinghouses offer "real time claims adjudication" where minor corrections can be made online (changes to an ICD-9 code or CPT code) for immediate resubmission of the rejected claim.