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Thirty Percent Of Denials Result From Healthcare Registration Mistakes

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How Do Healthcare Systems Empower Denial Prevention and Management?

Preventing payor denials before they occur can save your practice precious dollars and improve cash flow. That may seem an obvious statement, but it might surprise you to learn how much physician practice revenue is lost to registration mistakes including inaccurate claims and denials that are never appealed.

Industry estimates indicate that one in every five claims is denied. That one fact is costing physician practices an average of three percent of their revenue. On top of that, twenty percent of overall revenue cycle operating costs come from claims rework because it costs $25 to rework a claim. It’s a costly double-whammy.

Some of the most common reasons for these claim denials include:

  • 30 – 40%: Registration errors including triage and intake notes not signed correctly, incorrect date of birth, incorrect insurance ID number
  • 15%: Service not covered
  • 7%: Missing or invalid claim data
  • 8%: Lack of preauthorization
  • 1%: Untimely filing

Claims success begins when your patient walks in the door

Most of the problems that cause denials can be addressed by a revenue cycle management (RCM) system that automatically conducts insurance verification and preauthorization at the time your patient schedules an appointment and/or at your patient’s initial visit. When you look at your RCM system do you see one that is built for accuracy and maximum revenue from the moment your patient schedules an appointment? The fact is that capturing your patient’s information accurately from the initial point of contact builds the roadmap that revenue will follow. On the other hand, inaccurate or missing data will lead your revenue stream into a swamp of costly denials.

When your patient schedules an appointment, your reception staff should immediately capture insurance information. From there, an automated verification and preauthorization process should begin. The right patient access platform will incorporate medical insurance verification solutions that confirm patient coverage details in seconds. Not only are you verifying insurance coverage, you are preventing your practice from incurring losses due to denied claims when coverage lapses or a service isn’t covered.

Preauthorization for treatments is just as important, especially during emerging or stat needs. You don’t want to delay care, or risk losing a reimbursement because your RCM system can’t process preauthorizations rapidly. Best practices in RCM now deliver preauthorizations in two hours for emerging needs and 20 minutes for STAT scheduling and treatment. This saves you and your team time and money.

Managing preauthorizations can save money. One industry analysis showed that preauthorizations can cost providers as much as $35 to $105 per preauthorization. An RCM system that incorporates new preauthorization requirements is essential to protect revenue. For example, many third-party payors across the country now require preauthorization for genetic and molecular testing. The onus for this preauthorization lies with physicians; without it reimbursement is lost.

Embed prevention of denials in practice workflow

Only when denial prevention strategies are embedded in office workflow can your practice eliminate practices that lead to denials. For example, does your RCM system capture medical necessity information that is essential to accurate coding? Are evidence-based notes from the provider captured and correctly noted? Without this information, claims may denied and valuable time will be spent interviewing physicians after the fact in order to appeal the denial. All this can be costly for your practice, since you’re forced to focus on administrative tasks instead seeing additional patients and providing quality care.

A recent report showed the five most common denials experienced by patients:

  1. Formulary exclusion (payors list specific treatments they will not cover): 37 percent
  2. Medically unnecessary: 24 percent
  3. Prior authorization (payors require physicians obtain approval before the insurer will cover a medication or procedure): 12 percent
  4. Step therapy (payors require patients use a preferred treatment before using a different medication): 9 percent
  5. Nonmedical switching (payors switch patient’s medication to another treatment in the same therapeutic class): 5 percent

Many of these can be prevented by conducting proper insurance verification and preauthorization. It all comes back to the efficient capture of accurate information at the point of care that results in a complete, accurate claim with validated information.

The burden of obtaining both verifications and preauthorizations is on the provider because patients don’t know CPT codes and whether their insurance company requires preauthorization for a service recommended by their physicians. Double checking up front whether preauthorization is required may take some extra time for your staff, but it can save you significant time later trying to chase down claims and payments and prevent having to absorb costs for procedures that weren’t preauthorized.

Denial Management Reaps Hard Earned Revenue

The inevitable will happen — claims will be denied. For the majority of practices, 50 to 60 percent of claims denials go unworked and that can result in 35 percent of revenue languishing in unappealed denials. What practice can afford to lose 35 percent of its revenue? The one strategy that can reclaim those hard earned dollars is an efficient denial management system.

Best practices in denial management begin with the denied claim and end with the paid bill. In between is a complex process woven from fine details that begins the timely scheduling of the appeal, correcting coding errors, investigating any other claim errors, correcting and resubmitting the claim. But it doesn’t end there. Denial management must include appeal tracking, payment posting and audits to analyze success rates. Only a comprehensive function with a holistic view of the process can manage and reduce denials.

Successful claims are the pillar of practice revenue. Since HIPAA formalized the use of ICD codes for diagnosis and CPT and HCPCS codes for procedural reporting, practices must use these codes every day in medical billing to create error-free claims. Relying on your own staff for all your coding needs may actually be part of a claims denials problem. Your best strategy may be to implement HIPAA-compliant technology specifically designed to capture accurate claims data and ensure that care provided is care reimbursed.

InfinxThirty Percent Of Denials Result From Healthcare Registration Mistakes

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