Overcoming the Top Challenges of Claims Denial Management Audits

Increasing efficiency and improving revenue are top priorities for health care providers with a big focus on improving prior authorizations and eligibility before an episode of care. However, leveraging data and consulting expertise to improve denials management can be something that most providers often overlook.

Denial of a claim is the refusal of an insurance company or carrier to honor a request by an individual or provider to pay for healthcare services obtained from a healthcare professional. The costs associated with not following up on a denial claim can impact bottom lines and cause severe inefficiencies within a provider’s claims management revenue cycle.

Here are three tips for realizing the benefits of an effective denial management audit to improve financial outcomes.

1. Most providers are shocked at the total amount of revenue being denied on initial claim submissions

Most providers are unaware of the number of denied initial claims. In an audit, this is one of the first topics evaluated and discussed, and providers are stunned to discover that initial denials represent about 10 to 15 percent of a hospital’s total revenue.

Medical necessity and missing authorizations are the most common reasons for denied claims, with many hospitals also getting pushback from doctors on checking for medical necessity. Providers can add software that allows for medical necessity checking, as well as authorizations and eligibility at time of registration and scheduling.

Software that specifically examines medical necessity, for example, is sometimes built into health care information systems (HCIS), such as MEDITECH and Epic, but providers must develop the back end and put it into practice. Eligibility and authorization software are also available and are often presented as interfaces that are added into an HCIS with support services through a third-party vendor.

2. In a standard engagement, most providers had no idea a standard feature, such as claim validation, was part of their EHR system

The most common reason providers are not aware of a system feature or functionality is that most of these features are not necessarily called out in a standard implementation or software upgrade. Additionally, many providers rely too heavily on a "back-end" clearinghouse to validate claim data instead of leveraging the editing capability MEDITECH has available out-of-the-box.

The clearinghouse's data lives outside the walls of MEDITECH, and when heavily used and without efforts by the provider to try and validate payer requirements within MEDITECH, MEDITECH loses integrity. This creates discrepancies between what payers have and what lives in their core EMR.

By incorporating an audit of their systems, providers are often surprised by RevSpring’s expert knowledge of MEDITECH's revenue cycle applications and our ability to validate data in MEDITECH much closer to the date of service than offered by the clearinghouse. Plus, when MEDITECH is used to scrub a provider’s data, automated and seamless features are available to the provider, such as delegating accounts automatically to the department responsible for the missing or invalid data.  

3. On average, denied claims are wasting about two weeks in accounts receivables days for every encounter denied

Providers are surprised to discover how a denial impacts their "Days in AR". For example, it is RevSpring’s standard practice during an audit to examine the average number of days to pay for each payer. What is uncovered is that the number of days is much higher than expected. In fact, denials are the root cause for when a provider’s revenue cycle comes to a screeching halt. 

When a claim is denied, it must be manually reviewed, fixed, then resubmitted before it has another chance to be adjudicated. Any denial adds at least 14 days to the average number of days to pay. If a provider has a high denial percentage (12 to 20%) that percentage of revenue is stretched across multiple months before it is paid.

Denials are especially painful because of the manual nature of resubmission, monitoring the status, fixing additional errors if the claim is denied again, etc. There is an immense amount of manual labor focused on denials before any adjudication is possible. It becomes a vicious cycle for providers with more denials piling up while they try to manually work resubmissions — billers end up spending most of their time resubmitting denials than they do following up on aging accounts.

Conclusion: You don’t have to go it alone

Having the right partner is critical to clear these roadblocks and clearly seeing your way out of the denial management fog. Denied claims not only impact the revenue cycle but also affect the patient experience.

RevSpring’s claims denial management professionals proactively and strategically follow up on claims that are denied or put on hold, helping to ensure your claims are paid in full. We also have specialized knowledge of the regulations in healthcare revenue cycle management to execute every component of your patient communication strategy in compliance with PCI, SOC 2 Type II, HIPAA, HITECH, and HITRUST. For more information, email [email protected] or visit us at revspringinc.com.