Denial Management Has Costly Repercussions
Denials are bad news for your revenue cycle. And research shows that unfortunately, denials happen more frequently than you might think. About 25-30% of all healthcare claims are rejected or denied. Each time a claim is denied, it means more staff resources, more time, and more financial resources are required to fix them.
In fact, a recent study showed that the cost reworking a single rejected claim is about $25.
So, consider the numbers on a small scale: If you had only 3,000 denials over the course of the year, that means you may have lost about $75,000 in revenue.
Now let’s consider those numbers on a larger scale. Say you submitted $1.2 million worth of claims over the course of one year. If only 25% of those claims were rejected, you’d be looking at $300,000 in lost revenue. Can you afford that type of loss?
So how does denial management cut down on denials and rejected claims?
For healthcare systems with a low level of rejected claims, sometimes there’s a relatively easy fix. When denials are the result of a simple error that needs fixed, spotting the issue keeps the repeated rejections from happening over and over again. One way to spot these errors is to conduct a monthly report that looks for patterns in rejections associated with specific codes from the payers. From there, you can get a better understanding of the issue (or issues) causing these denials.
Possible causes might be:
- A neccesary modifier is being left out
- Coding personnel need additional training
- There is an issue with a payer (or payers) to be resolved
Regardless of the reason, the source of rejected claims needs to be identified and fixed right away. Without these monthly reviews, however, the same issues continue to eat away at your bottom line. Keeping both a close eye and a big-picture view on those rejected or denied claims is essential to the financial health of your organization.
Consulting services as a solution
But for healthcare providers with a larger number of denials, hiring a consulting firm can help manage denials through an all-encompassing approach. BHM uses a process that includes:
- Denial assessment: Data analysis identifies denial causation
- Implementation: A process is put into action to produce noticeable results within 60 days
- Prevention: Preventative measures are put in place to keep repeat denials at bay
With this three-pronged approach, you can rest assured that denials will stop being a source of major headaches for both you and your patients. Ongoing education is the last step in the BHM process that helps ensure everyone involved in this process has the proper knowledge and training to keep your health system working efficiently and effectively.
There’s no reason to let denial management slip through the cracks and cause disruption to your revenue cycle. Whatever resource or method you choose as a solution, the sooner you can address the issue, the sooner you can focus on other areas. Fewer denials means more time to improve your service, technology, and overall patient satisfaction.