5 Down-and-Dirty Denials Prevention Strategies

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It’s no surprise denials top the list[1] of revenue cycle management challenges for hospitals. One out of every 10 healthcare claims is denied, an Advisory Board report[2] found, with denial write-offs averaging $7 million for the typical 350-bed hospital. 

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What is surprising is the huge variation in denials rates among payers—from 1 to 45 percent[3] among ACA marketplaces alone. Perhaps worse, 50 to 65 percent[4] of denials are never worked due to lack of time or knowledge. 

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Denied claims are expensive to rework and time consuming to keep up with. And with more payers relying on automated review to flag claims for lack of medical necessity, coding and billing compliance, and more, denials are increasing at a faster rate than ever. Now more than ever, moving from denials management to denials prevention—stopping denials before they start—is critical.

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How can healthcare organizations adopt a denials prevention mindset? Here are five strategies to consider.

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Tip No. 1:  Look for gaps in your patient registration process. For example, does your organization use an automated tool to verify and correct patient demographic information at the point of registration? Errors in manual data entry or patient-reported information at the time of registration—such as a patient birthdate or street address that is off by a single number—can come back to haunt an organization after service is delivered, when the claim is denied. Technologies that verify patient demographic and eligibility information at the point of registration ensure the organization has the correct information from the start of the care encounter are the first line of defense in denials prevention.

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Tip No. 2:  Use claim-scrubbing tools to spot missing information before claims are submitted. Claim-scrubbing software boosts clean claim rates by ensuring claims are complete and accurate before they are submitted. Such software also applies payer-specific edits—including edits that have not yet been published—to ensure claims are error-free when they leave your organization.

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Tip No. 3:  Hire a coder to review claims for specialty care. Sometimes, a patient’s qualifying diagnosis may be left off a claim—and that can lead to automatic denials of claims for specialty care, such as chemotherapy and infusion treatment. Careful review of specialty care claims by coders prior to submission can help ensure a qualifying diagnosis code is both present and appropriate. 

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Tip No. 4:  Re-check eligibility before the claim is submitted. Sometimes, a patient who has coverage with a specific carrier at the time of registration may not have the same coverage when the claim is filed. Taking the time to verify coverage one more time before the claim is submitted can help avoid preventable denials—and improve days in accounts receivable.

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Tip No. 5:  Proactively follow up on prior authorization denials. For complex treatments like oncology care, each payer has its own process for authorization and precertification—leaving providers vulnerable to denials. In addition, payers often misapply authorization to claims. That’s why it’s critical that providers proactively appeal prior authorization denials. For example, providers can successfully appeal for medical necessity when extenuating circumstances prevent proper preauthorization.

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[1] https://www.dimins.com/press-releases/revenue-cycle-management-himss-survey/

[2] https://www.advisory.com/research/revenue-cycle-advancement-center/at-the-margins/2017/12/revenue-cycle-benchmarks

[3] https://www.kff.org/private-insurance/press-release/analysis-marketplace-plans-denied-average-of-nearly-one-in-five-claims-in-2017-with-wide-variations-across-insurers/

[4] https://www.mgma.com/resources/revenue-cycle/you-might-be-losing-thousands-of-dollars-per-month