Denials Management Isn’t Just Your Billing Department’s Concern

According to the Medical Group Management A­s­sociation, only 35% of providers appeal denied claims. Often, we think of denials as issues of medical necessity, but denials often occur for a variety of reasons: incorrect information, correct information but in the wrong format, missed filing deadlines, or information sent to the wrong payer altogether.

Billing offices that do not pay close attention to the details of the claims processing system may spend a lot of money correcting claim errors. Correcting simple mistakes like these and refiling a claim costs approximately $15 per claim. Over time, these expenses add up and distract staff members from performing their intended roles. And offices risk losing considerable revenue if they assume that denials-based nonpayment means they will never get paid.

Where and when do these claim errors originate? Determining their source is the first line of defense against denials.

Claim submission errors often originate from the time the patient is first registered in the practice database. Collecting all of the patient’s information and verifying that it is accurately put into the system seems like a simple task, but it can be complex and cumbersome. Taking time to ensure staff members understand and follow processes and policies pays off.

Claim denials can also originate with the clinical staff, including physicians. Incorrect diagnosis and procedural coding can lead to errors that billing staff members have to appeal based on their clinical knowledge. This means they must be educated on the procedure, the documentation that supports the procedure, and whether the documentation will support the service. In some cases, the billing staff must reach out to clinical staff for this information; once everyone’s salaries are factored in, this potentially increases the cost of an appeal.

Here are a few common reasons for a claim denial:

  • Patient registration errors. These include outdated demographic or insurance information. A periodic review of pa­tient information can reduce the risk.
  • Lack of referral/authorization. More insurance payers are requiring preauthorization than in the past. Not understanding the requirements of each payer or neglecting to screen every patient for these requirements can lead to costly denials.
  • Incorrect diagnosis codes. Claims may be denied because a payer required a more specific diagnosis code. Some payers will deny all claims with a diagnosis ending in “.9,” meaning unspecified. In addition, if the diagnosis code is not consistent with the current treatment course but instead applies to a past problem or issue, the claim may be denied.
  • Correct coding edits. Edits are important to understand. Not applying a modifier to a service that edits another service will lead to a denial. If staff members do not understand code edits, they might mistakenly attach modifiers to every code. This is termed “hard coding.” While it may solve a problem temporarily, it may also catch the attention of claim reviewers. Con­tinuing to process claims with services that will not be paid due to edits creates additional, costly work on the back end.
  • Duplicate billing. This common error may be a result of staff not paying attention to detail or not understanding how to submit claims to secondary payers. When a duplicate claim is submitted, it potentially increases overall accounts receivable and incurs increased costs to bill correctly.
  • Timely filing. Staff members must be aware of timely filing deadlines for all payers, specifically the top payers. Missing deadlines will result in a loss of payment and the inability to recoup money owed.
  • Changes to payers’ organizations. A payer may make changes to its system (eg, requiring preauthorization for payment) without alerting participating practices. Staff members must stay informed: subscribe to and read all payer notifications and correspondence to ensure your office takes proper action to amend current processes and ensure preauthorization is obtained.

When billing offices receive numerous denials, staff may be overwhelmed by the appeals procedure. Without organized tracking processes in place and the ability to educate staff members who provided incorrect information in the first place, significant progress will not be made. A sizeable number of denials can mean an increase in accounts receivable and potentially lead to blanket appeals; that is, appealing all incoming denials without first understanding the root cause of the denial. Without understanding the root cause of a claim’s denial, it could likely be denied again, creating even more work. And loose write-off policies are not the answer, either; writing off revenue owed to the practice because of simple clerical errors can be very frustrating.

How can a practice determine where errors are coming from? Most billing software is able to append denial reason codes to each nonpayment received. When nonpayment is posted to a patient’s account, a denial reason code should also be added so formal reports can indicate where the issues are occurring. Denial codes should be set up by the system administrator and the reports tracked by billing office management.
Denials management is the process of tracking claims denials and their reasons, working the appeals, and educating the staff who submit incorrect information. Claims denials can adversely affect an office’s financial health, but if addressed properly, can be mitigated. What’s important to remember is that all staff members—not just those in charge of billing claims—must be involved in denials management.

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