3 Key Activities to Prevent Denied Claims in 2020

April 13, 2020 - Despite relentless efforts to curb the growth in denied healthcare claims, physician practices see between five and ten percent of claims continue to be rejected by commercial and public payers each year.

When each claim costs $25 to rework, it pays to get them right the first time. For health systems, hospitals, physician groups, and pharmacies, inefficiencies in claims management not only erode revenue and crush staff productivity but also represent a source of major worry for patients, leaving consumer loyalty hanging in the balance.

Providers expect to invest up to $4.5 billion in mid-revenue cycle improvements by 2023.

Given that 90% of denied claims are preventable, they should see a decent ROI on that investment — if they focus their efforts in the right places.

Claims are commonly denied on the basis of:

• Missing, incorrect or duplicate information
• Incorrect codes
• Inclusion of a service, drug or charge that isn’t covered by the patient’s plan
• Missing pre-certifications or authorizations
• Missed filing deadline

With the right strategies and tools, providers can optimize their revenue cycle to make sure claims are right the first time.

A three-part strategy to eradicate avoidable claim denials

1. Dive into the data to find and fix the leaks

To reduce denials, providers should start by analyzing denial and audit data to pinpoint where the errors are creeping in. Tracking denials by volume, type, payer, and reason allows providers to understand the most frequent root causes. Business intelligence tools can then use these insights to help providers discover whether the vulnerabilities are attributable to people, workflows, technology, or data.

For example, is there a department or service line that seems particularly exposed to denials? Or has there been a surge in rejected claims following a change in payer policy? The goal of both retrospective audits and ongoing monitoring of claims processes is to identify those trigger points, resolve problems quickly, and prioritize solutions to prevent future denials from occurring. 

“We were driven to review our revenue cycle technologies and processes and make those more efficient to reduce costs and increase our patient experience,” says McKenzie Smith, Director of Patient Financial Services at Schneck Medical Center. “Now, we are able to have visibility into our denials in real time. No longer are we waiting 30 to 45 days to review denials. We can review them on the day of [submitting] if we choose.”

This real-time monitoring helps connect front- and back-office staff for a more efficient overall system.

“The process we’ve set up has made the denial review process much easier for our follow-up staff. Our front-end staff have immediate feedback on what happened and how it might be prevented in future,” Smith adds.

2. Assign the right work to the right specialist

The processes and criteria for submitting claims are complicated. Payer rules are changing, and as payers rely more and more on sophisticated algorithms to check for errors, they’re becoming more efficient at rooting out inaccuracies and rejecting claims. With increasingly complicated criteria and varying requirements in payer contracts, it’s becoming more challenging for providers to submit accurate claims the first time around.

To meet this challenge, providers need to ensure their own processes are similarly efficient. From patient access to patient accounting, automated workflows can help improve patient matching, reduce billing errors and free up staff to make best use of their time.

Crucially, that means assigning the right person to the job. In addition to technical and clinical denials specialists, some providers also segment claims staff by care setting or payer, which allows them to become extremely familiar with the nuances of specific types of claims. Again, data analytics can help providers determine the appropriate level of specialization.

3. Improve communication with payers

High volumes of denials are a burden for payers, too. When the same errors appear repeatedly, payers must dedicate extra administrative resources to reprocess corrections and appeals. Effective contract management with payers can help providers stay up to date with each payer’s specific requirements and formatting preferences to avoid such errors as well as monitor payer performance to check for patterns in denials.

Providers might also consider automated revenue management tools to create customized edits for each payer and audit claims before they’re submitted, which increases the chance of getting the cost of care paid in full.

“Eliminating denials really comes down to ‘clean data in, clean data out,’” explains Merideth Wilson, Senior Vice President and General Manager of Revenue Cycle Solutions at Experian Health.

“To achieve this, providers need to look at everything from improving patient matching to understanding exactly what payers are asking for in claims submissions,” she continues. “A good claims management strategy will take a holistic view of the revenue cycle to see where improvements need to happen, and implement the right processes, tools and technology to drive down denials.”

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About Experian Health

For over 25 years, Experian Health has delivered revenue cycle solutions designed to create a frictionless experience between payers and providers. We deliver the best in machine learning, AI and automation to eliminate inefficiencies, drive up productivity and provide precise data matching. With our data intelligence, we can arm providers — and in some cases consumers themselves — with accurate and timely information to create the ultimate patient collections experience.

Sixty percent of US hospitals use Experian Health’s advanced revenue cycle management software to make smarter business decisions, boost revenue and strengthen patient relationships. Discover how we can help solve for your specific patient collections challenges too.