Part Two: Managing Medical Billing Claim Denials Improves Revenue-Cycle Management

Implementing a denials management strategy, leveraging data, and mitigating operations

The complexities of medical billing can be burdensome to healthcare providers. Despite all the time and attention given to documentation, coding and billing, the factors that contribute to denials exacerbate the frustrations of physicians, practices, hospitals, and other providers.

Our first article in this two-part series on denial management addressed the financial impact of denials and the need for operational mitigation. This second article discusses creating a strategy and using analytics to mitigate denials.

Strategy for Medical Billing Denial Management

Claim denials have financial implications for both patients and providers. Patients face unexpected financial strain and the refusal of or postponement of necessary medical treatment, while providers are confronted with delayed payment and increased time.

Denial management in medical billing is a crucial process aimed at handling provider claim denials effectively to ensure timely payment from insurance companies or patients. The old adage that “the best defense is a good offense” is applicable here, where key aspects and strategies can be developed to prevent denials before they occur. The first step is to identify and categorize the types of denials received. Common reasons include incorrect patient information, coding errors, lack of prior authorization, timely filing issues, and non-covered services. Once a denial reason is identified, it's important to conduct a root cause analysis. This involves investigating why the denial occurred, whether it's due to internal errors (like coding mistakes) or external factors (such as insurance policy changes). Continuous training of revenue cycle staff and healthcare providers is essential to reduce common errors that lead to denials. This includes staying updated on coding guidelines, insurance policies, and regulatory changes.

Leveraging Medical Billing Data Analytics

Technology is finding stability in healthcare. A 2020 study estimated that the automated processing of claims saves U.S. insurers more than $11 billion annually. And, accurate data extracted from systems, provides insights into patterns, trends, and potential areas for improvement.

• Automation and Technology: Utilizing billing software and tools that automate claim submission and denial tracking can streamline the denial management process. These systems can flag potential issues before claims are even submitted, reducing the likelihood of denials.
• Monitoring and Metrics: Establishing practices such as key performance indicators (KPIs) and regularly monitoring denial rates, turnaround times for appeals, and other metrics can help identify trends and areas needing improvement.
• Insights and Benchmarking: Assembling and reviewing data regularly to historical claims data can help to identify common reasons for denials, such as specific coding errors, missing information, or non-covered services. Look for patterns in denial codes or types of services that are frequently denied. Actionable insights can be undertaken by assessing analytics and determining resolutions. For example, if you identify a high rate of denials due to coding errors, targeted training for staff can be implemented.
• Collaboration with Payers: Building a collaborative relationship with insurance companies through regular communication can help in understanding their denial trends and resolving issues more effectively.
• Documentation and Record-keeping: Maintaining thorough documentation of all communications, appeals, and actions taken regarding denials is crucial for tracking progress and for future reference.
• Patient Communication: In cases where patient responsibility contributes to denials (e.g., lack of prior authorization), clear communication about financial responsibilities and requirements can prevent future issues.
• Process Improvement: Implementing feedback loops and process improvements based on identified root causes can help prevent recurring denials and improve overall billing efficiency.

Our Healthcare Consulting Expertise

Effective denial management not only reduces revenue cycle inefficiencies but also ensures timely reimbursement for healthcare services provided, ultimately supporting the financial health of healthcare providers and facilities.

Schedule a complimentary discussion with a member of our Healthcare Consulting Practice to discuss efficient management of claims to help minimize medical billing denials and ensure timely reimbursement. Please contact Kimberly Massanova at Kimberly.Massanova@FreedMaxick.com or 716-332-2729 or Ryan Burnside, Ryan.Burnside@FreedMaxick.com or 716-362-6204.