Denial prevention and effective denial management strategies are key to maximizing the revenue potential for the healthcare services you provide to your patients.
While managing and resolving claim denials is an essential responsibility of your revenue cycle team, preventing claim denials requires participation across a multitude of stakeholders from physicians to administrators. Without an effective denials prevention and management program in place, your practice could be impacted financially and the cost may be steeper than you’d think.
The high cost of claim denials
A Medical Group Management Association (MGMA) poll found that 69% of organizations reported that denials increased by an average of 17% in 2021 alone.
Here are a few more staggering statistics:
- In 2021, there were over 48 million claim denials.
- On average, nearly 20% of all claims are denied and as many as 60% of denied claims are never resubmitted.
- Denial rates are as high as 80% for some payers.
- On average, 40% of denials can be overturned if appealed appropriately.
When claims are denied, it not only affects the practice’s cash flow but also increases administrative costs due to the need for rework and resubmission.
Denied claims result in delayed reimbursement, leading to increased accounts receivable and more headaches to manage while appealing claims to insurance companies. Moreover, the resources expended on appealing denials further strain a practice’s revenue cycle management resources.
Top reasons for claim denials
Claim denials occur for various reasons and addressing them effectively is crucial for financial success. Here are a few top reasons for claim denials:
- Patient registration errors inclusive of outdated insurance policies, demographic errors or non-coverage
- Physician or facility credentialing errors
- Services that were not authorized
- The maximum amount of the patient’s benefit has already been met or has been exceeded
- Missing or incorrect modifiers for the submitted procedure code
- Place of service submitted with the claim is inconsistent with the procedure
- Coding or data errors, such as mismatched totals or mutually exclusive codes
- Services bundled improperly
- Claim filing deadline has passed
You need a good denials management strategy
Many clinical and technical denials can be prevented with a robust denial prevention program; those that can’t be prevented need to be managed effectively. A comprehensive revenue cycle program includes a denials strategy focused on front-end processes, medical necessity and payer contract variations.
Implementing effective denial management strategies, such as proactive claims scrubbing, accurate documentation and physician engagement, regular staff training and leveraging technology solutions, is crucial to minimize denials, streamline the revenue cycle and optimize the financial health of a physician practice.
Your internal team likely needs outside help
Excessive claim denials can create pressure on your medical group’s bottom line, yet relying solely on your internal team to create a fully integrated plan is not always optimal. Here’s why:
- Your staff is likely already stretched thin; limited resources and time constraints may prevent thorough claim review and follow-up.
- The complexity of billing and coding requirements can lead to errors and oversights.
- Most groups lack the depth and scope of RCM expertise required to expose all the issues contributing to claim denials.
- The sheer volume of coding and regulatory changes happening each year is overwhelming.
- Many groups lack the appropriate level of technology infrastructure and automation support to customize workflows that prevent denials.
RCM partners like R1 possess specialized expertise, advanced technology and dedicated resources to efficiently handle claims and minimize errors. The best RCM solution providers are staffed with experts that stay up to date with changing regulations and payer policies, ensuring accurate billing and coding.
By leveraging an RCM provider’s extensive experience and proven denial management strategies, physician practices can experience a significant decrease in denials, leading to improved cash flow, reduced administrative costs and enhanced financial performance.
Collaborating with an RCM expert partner with deep industry experience is often the best way to achieve substantial progress in preventing and lowering denied claims, which can result in substantial financial benefits.
Start a conversation with R1 today to learn how R1 can help you reduce claim denials.
Author Bio: Lucy Zipple serves as a VP of Revenue Cycle Operations at R1, a leading provider of RCM solutions for hospitals, health systems, and medical groups. Lucy has spent more than a decade in ambulatory revenue cycle management and is considered a leading expert on revenue cycle optimization and denials management strategies. Lucy is based in Louisville, KY and holds a bachelor’s degree from Bard College at Simon’s Rock as well as a Master of Business Administration degree from Bellarmine University.
