Medical claim denial is the refusal of an insurance carrier or insurance company to reimburse the cost of a medical treatment administered to an insured individual by a healthcare facility or a medical professional. In the healthcare ecosystem, the denial of medical insurance claims by the insurance companies is among the biggest concerns for patients and care providers.
For the provider, the claim approval rate has a significant bearing on the organization’s financial health. And it’s no surprise that once the revenue engine comes to a halt, the bottom line takes a hit, thus threatening the continuation of operations. Additionally, poor denial management services can make it a terrible experience for the patient and strain their relationship with the providers.
Common Reasons for Medical Claim Denials
There are a plethora of reasons why insurance companies refuse to pay to care providers for the medical services they have rendered to an insured individual. While some of the causes stem from simple problems that are easy to fix, others involve complex changes and may even be incorrigible. Among the multiple reasons for health insurance denials, here’s a list of the most common ones.
Pre-certification/ authorization not obtained when required: Some insurers need the patient and the provider to obtain pre-authorization for the treatment planned before the treatment actually begins. The insurer might not demand the pre-authorization for every kind of treatment bur for special cases or procedures. If the provider and the patient fail to comply, it can cost them the entire cost of the treatment, thus souring the experience of the patient.
Best practice: For providers, it always pays to know about the patient’s policy details and their implications. Connecting with the insurer before the treatment begins sheds light on the pre-authorization conditions.
Incorrect documentation: Any error in the insurance claim form submitted to the insurer usually leads to claim denials. The common errors include clerical mistakes like misspelling the patient’s name or mistyping their date of birth or age. Also, missing out on any critical detail of the treatment in the form, such as service codes, or filing claims for an incorrect diagnosis or procedure can prolong the revenue cycle. For claims to get approved at the first go, the diagnostic code and the procedure code entered must correspond to the actual diagnosis/procedure performed.
Best practice: Exercising caution while entering the treatment details in the form is important. Leveraging the expertise of professional denial management companies and smart medical billing systems would be of immense help to this end.
Delayed filing: Every insurer imposes different claims filing deadlines that must be met to get any claim approved. Once the submission window is closed, nothing much can be done by the provider towards getting the dues. Although certain things can be cleared quickly over a phone call or an email, the ones involving extensive paperwork can imply rejections. Duplicate claims i.e. claims resubmitted for the same encounter on the same date for the same beneficiary and service item, also cause denials and rejections.
Best practice: Once the services have been rendered to the patient, the provider must submit the claims as early as possible. They can rely on their billing software to notify them of submission deadlines and the necessary procedures to follow.
Outdated insurance plan: Expired insurance plans certainly lead to rejection of medical claims. Also, since a provider serves multiple patients with policies from different insurers, they must be careful not to send the claims to the wrong company. It must be ensured that all details mentioned in the patient’s insurance card are up-to-date and that the patient can produce the coverage documents when required.
Best practice: The provider must verify the current insurance details of the patient and ensure that the course of the treatment is covered by the policy. Some plans require the practitioner to be ‘in-network’ for coverage, and hence, necessary steps must be taken to verify it.
Insurance policy doesn’t cover the services: Every healthcare policy usually carries exclusions, implying that they don’t offer coverage for some diagnoses and procedures. But oftentimes, the provider fails to verify this prior to beginning the treatment, thus raising the chances of denials. Also, the provider must make sure that all the locations it operates in are registered with the carriers as unregistered branches or locations can be a roadblock to getting the claims approved.
Best practice: The provider must identify the out-of-network benefits from the in-network ones. For out-of-network services, most insurers need the patient to bear a greater amount of the payment responsibility, thus making it necessary to check for the providers.
Tips to Avoid Medical Claim Denials
Most healthcare claims are denied due to common reasons such as furnishing incorrect/inaccurate information, filing claims for services not covered by the patient’s insurance policy, delayed claim submissions, and others. Regardless of the reason, the bottom line is that it’s the patient and the provider who bear the brunt of the colossal medical bills.
However, to their relief, efficient denial management in the medical billing process can be of substantial help in avoiding financial losses. Here are the most effective ways of avoiding claim denials and realize an optimized revenue cycle.
Determining the cause: For care facilities already experiencing high claim denials, the first step to recovery is to ascertain the primary cause(s) of the denials. For this, a clinical analysis of the revenue cycle must be carried out to identify the process bottlenecks. Usually, the most common pain points lie in the patient appointment and registration process and also in the verification procedure of the policy coverage terms. The provider must also ensure that they have been submitting the right and complete documents without and any billing or coding errors.
Correct prioritization: Once the areas requiring improvement or transformation are identified, the provider must work out a foolproof plan to prioritize the areas as per their impact on the revenue cycle. To make it easier for the providers, denial management companies can help them with an accurate cost-benefit analysis along with the ROI estimation to decide on tightening up the weak points.
Once a problem is identified, the stakeholder must adopt a drill down approach to pinpoint the specific payer, service line, department, or process that’s causing the efficiency.
Accurate eligibility check: One of the initial and critical factors in revenue cycle management is to verify the insurance eligibility of the patient for the treatment being planned. The provider team must have a thorough workflow to verify the insurance benefits of the patient and must eliminate any chance of mismatching the patient with the insurance cover. Following an extensive checklist and facilitating smooth information exchange with the insurance company/network would help them get a complete picture of the patient.
Prior authorization checks: Close to 18% of the total medical claim denials in the US can be attributed to authorization and precertification issues, thus underlining the need for the provider to verify this aspect before starting the treatment. But a recent study reveals that providers spend an average of nearly 15 hours every week dealing with authorization and related tasks. As this can easily distract them from providing the best services to patients, it’s a wise move to delegate the authorization services to a competent denial management company for better outcomes.
Leverage automation for accurate claims: Most instances of claim denials can be avoided when an accurate patient access and registration workflow is established. And this can be achieved effortlessly by harnessing automation technology that works on real-time patient data and facilitates information exchange between the front and back office staff for preparing accurate claims.
Once the care facility receives a payer approval, the provider’s authorization team must identify changes with the scheduled procedure or insurance plan to avoid denials once the claim is submitted.
Constant improvement of the revenue cycle: There must be a system in place to constantly analyze the revenue cycle so that rapid and accurate measures can be taken as and when anomalies occur. Providers can decide on the key metrics and KPIs to gauge the efficiency level of their internal functions. Besides implementing the latest technologies, the staff must be well-trained to handle complex situations aptly. The management must have a holistic view of the operations so that it can make the necessary adjustments to streamline the claims workflow.
How Outsourcing Medical Billing Services Results in Higher Claims Approval Rate
For healthcare practitioners, there are two ways to manage their medical billing procedures; they can either count on their in-house staff or outsource denial management services to an external medical services firm. Owing to the operational burden on healthcare facilities today, most medical facilities are running understaffed and the doctors and support employees are dealing with extreme work pressure. When the provider’s focus on the core areas gets diluted, the patients suffer and as a consequence, revenue and reputation dwindle.
Considering the above, it’s in the best interest of providers, the small and mid-sized ones in particular, to seek the support of an expert denial management services company.
Better control over the billing process: For optimum outcomes in denial management in medical billing, outsourcing vendors follow tried and tested methodologies for accurate claims submission and faster payment collection. Such firms have the right professionals and infrastructure to fine-tune the end-to-end revenue cycle management and give the client better control over the financial aspect of the operations.
Risk mitigation: Regular cash inflow is the lifeline of any healthcare setup but the complexity in claims management raises the risk of monetary loss. The fact that the already stretched workforce finds it overwhelming to handle the massive documentation involved in the process further intensifies the risk. Thankfully, by outsourcing the denial management services to a trusty firm, providers can mitigate the payment loss risks and focus hard on their core service areas.
Regulatory compliance: The US healthcare sector is a dynamic landscape that’s characterized by complex and frequently changing regulations that are difficult for providers to comply with at all times. However, they can ensure total compliance with HIPAA and other federal guidelines by opting to outsource denial management services to a reliable medical services firm.
Low operating costs: Owing to the growing competition in the US healthcare space, most players are surviving on tight margins and can hardly bear additional overheads for managing insurance claims. Since denial management service providers deliver quality services at significantly low costs, providers get the much-needed financial cushion that’s vital to keep the facility up and running.
AR Management and patient responsibility: A professional denial management services provider identifies high-risk receivables and ensures quicker follow-ups for recovering dues on behalf of the client. The seasoned AR experts of the service providers know the claims process inside-out and maintain cordial relationships with insurance companies for faster payment processing. They also inform the patients about their share of the payment responsibility and follow-up with them to recover the same.
Improved patient data security: Safety of patient information is of utmost priority for care facilities as any loss or leakage of sensitive information can cause legal problems and ruin patient-provider relationships. Armed with the latest IT tools, medical billing service providers secure confidential medical information with robust and unbreachable data security systems. Data is encrypted digitally and selective access is granted to the stakeholders to retrieve the information.
For care providers, denial management services is a critical factor that determines the fate of the healthcare claims they submit to the insurer to get their dues for treating an insured patient. However, due to the involvement of several obstacles and manual processes, medical claims management is largely inefficient and error-prone. This leads to delayed payments or even financial losses for the provider and can also create an unhappy experience for the patient. However, the healthcare revenue cycle management ecosystem can be made highly efficient by exercising extreme caution at every step of the revenue cycle and for that, professional denial management companies can be of real help to the providers.
