We must manage denials to boost reimbursement.
In the past, many practices didn't give much thought to their revenue cycle. They assumed that low A/R days and a high net collection percentage accurately reflected a healthy billing process. And if a denied claim fell below a specific dollar threshold, they simply wrote it off.
But as reimbursements continue to decrease and payer regulations multiply, practices are finding themselves scrambling to adapt to an increasingly harsh economic environment. In today's market, only those practices that take every available step to ensure they're being paid fully and promptly for services rendered can hope to prosper in the long run. - Pro-Active Denial Management - Revenue leakage stemming from a below average or outdated process can average between 3 - 5 percent of total collections for many practices. According to industry experts, 30 percent of total claims filed are denied, although any rate over 10 percent should be reviewed closely.
- Demographic Information - Effective denial management starts with detailed, accurate demographic information. Patient data provided by the hospital information system must be carefully organized in the billing system so individual patient accounts can be sorted and accessed both by payer and plan.
- Dictated Reports - Prompt and accurate dictated reports received from the hospital likewise are a critical element in accurate claims submissions, because appropriate medical histories and medical necessity documentation are the lifeblood of proper coding. A mechanism should therefore be in place that allows coders to exchange feedback to the physician any documentation that is inaccurate or incomplete.
- Payer Specific Guidelines - Populating the billing system with continually updated, payer-specific guidelines helps prevent the submission of claims that will be denied for lack of medical necessity. In addition, payer and plan specific billing parameters - which define submission requirements and timelines for initial claims, re-filed claims, patient statements and pre-collection letters - should be inputted according to payer class.
- Clearinghouse Reports - Once the claim is submitted to the carrier, the next line of defense aimed at mitigating the impact of denials involves daily or weekly reports provided by a claims clearinghouse. In the past, physician groups often had to wait weeks before learning that a carrier had denied a particular claim, which slowed cash flow and often made remediation difficult or impractical.
- Pending Insurance Claims - All claims, whether submitted electronically or not, should be monitored closely until payment is made. Thus, the practice's billing system should be set up to generate regular reports on the status of all outstanding claims. The system should allow for the inclusion of denial codes, denial appeal codes and detailed notes to ensure the status of all claims and/or denials is understood and tracked.
- Back-end Processes - By mapping patient accounts and claims to specific plans and carriers and incorporating detailed notes, denial codes and denial appeal codes in the system, practice managers are able to access a wealth of information about denial occurrences and trends.
- Payment Verification - Another key automation component involves confirming that payments made for specific procedures are consistent with the terms contracted with the payer. Carriers typically are more likely to respond to a report showing numerous deviations from the fee schedule than they would if the erroneous payments are presented to them individually.
- In-house or Outsource? - Developing an end-to-end denial management system is not a simple task. It requires commitment, resources and cooperation across the physician practice. Practices must therefore carefully weigh the costs and benefits of establishing a denial management system internally vs. contracting with a billing vendor capable of providing a complete array of denial management services.
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