Nearterm Blog

Improving Denial Management in Healthcare & Medical Billing

denial management in healthcare

When insurers deny medical claims, it takes a bite out of your revenue every year. Nationwide, this annual loss amounts to $262 billion, according to Modern Healthcare.

As a matter of fact, insurers deny an average of 9 percent of claims overall, which means that your staff is engaged in a continual process of managing and appealing to collect on patient bills. While hospitals do eventually manage to collect 63 percent of the amount of denied claims, the denial management process costs an average of $118 per claim — not to mention the loss of time from other operating tasks.

Furthermore, you stand to lose more than just the dollar amount of your medical accounts receivable due to denied claims. When your claims denial management system attempts to collect the unpaid amounts from patients, you’ll alienate those patients and affect your brand reputation. Here’s a brief overview of the medical denial management process and the best-practice steps you can take in mitigating your losses.

What Are the Most Common Reasons for Claim Denials?

Each health organization is different, and the causes for claim denials will vary depending on the situation. Here are the top reasons:

  • Invalid subscriber information: This can be due to expired policy information or errors introduced by manual entry of patient names or ID numbers.
  • Non-covered services: The list of allowed services associated with each specific diagnosis by each insurance company are in a state of near-constant flux.
  • Coding errors: These include improper use of modifiers or inaccurate reporting of bundled services.
  • Timing errors: Failure to submit claims in a timely manner, or to obtain pre-authorization.
  • Pre-existing conditions: These are any conditions present before the policy was purchased.

Steps to Managing Claim Denials

The following steps can strengthen your hospital denial management system and also reduce the number of future denied claims:

1. Teach Your Patients How to Solve the Issue

In this way, you align your hospital with patients’ financial interests, and communicate the fact that you’re on the patient’s side. Patients and their families are stressed and often have no understanding of the insurance denial system. You can be their resource while also protecting your own bottom line.

2. Track Your Denials

In a busy hospital, claims denials can get sidelined and misplaced. When you install a system that keeps track of every denied claim, you’ll be able to see where problems arise. You’ll also increase your revenue because claims revenue won’t disappear.

3. Keep Your Appeals on Schedule

The process of tracking your denials includes a clear timeline. Insurance companies set appeal deadlines for hospitals, so those dates must be integrated into your medical billing denial management process.

4. Identify Reasons for Successes and Failures

Every hospital copes with unpaid claims. When you are transparent about this process, you can use analytics to learn the reasons behind claim denials and why they are or are not successfully followed up in your system. You can also track denial trends. Armed with this information, you can predict the most effective tactics and strengthen your process in the future.

5. Consider an Outsourced Solution

It is often most cost-effective to rely on the services of denial claims experts, rather than training your staff to track and appeal each denial. Denial management professionals have the time and dedication to learn how to negotiate with insurers and to understand the context behind each individual denial. When you find an outsourced claims denial solution that also provides a high level of customer satisfaction and responsiveness, you and your staff will have more time and energy to focus on other aspects of running your hospital.

The right professional approach to managing claim denials can make the critical difference in building your long-term financial viability. Contact our expert team to learn more about how you can leverage our healthcare revenue cycle management services to reduce your claims denial losses.