Approximately 90% of denials within any healthcare organization are preventable. However, medical practices struggle to keep their denial rate low, which negatively impacts their revenue collection. That is why it is important to implement a few strategies to reduce denials and ensure you are getting paid for your work.
Before you try to control your denials
Identify what’s your denial rate. It represents the percentage of claims denied by payers during a given period. This metric quantifies the effectiveness of your Revenue Cycle Management (RCM) processes. A low denial rate indicates that your cash flow is healthy, and fewer staff is needed to maintain that cash flow.
To calculate your practice’s denial rate, you need to add the total number of claims denied by payers within a given period and divide by the total number of claims submitted within the given period.
According to MGMA (Medical Group Management Association), a 5% to 10% denial rate is the industry average, but keeping the denial rate below 5% is more desirable for your practice. Health Prime’s benchmark for controllable denial percent is below 2%. Controllable denials are the denials that can be controlled by improving front-end or billing processes.
What can you do to prevent denials?
1. Understand what the true denial reasons are
You should dive deep into your denial reports and identify why your claims are denied. Based on that, you can determine where your practice has issues and then focus on correcting those.
According to an MGMA Stat poll where the association asked healthcare leaders what the root cause of claims denials/pends in their organization is, 36% answered “missing information,” 31% reported “prior authorization,” 15% said “eligibility,” 5% said “out of network,” and the other 13% responded “other.
2. Run a report of your top 10-20 denials reasons
Look closely at your reports, and you will see some trends. For example, there could be more than one related to inaccurate or missing insurance information. There may be several related to authorization or eligibility. Put these into general buckets, and you will likely be left with just a few core causes.
According to an article published on the MGMA, most practices find that 80% of their denials result from 20% of the problems.
3. Pick one of your core causes
Select one of the leading causes you found, increasing your denial rate. Maybe you will choose to focus first on missing information. Once you have that selected, you can make a plan to reduce those denials.
Work through your core issues one at a time and set a realistic goal for improvement. If your denial rate is 12%, you might start cutting that to 8 percent over the next six months.
Make sure that you set a SMART goal. SMART is an acronym that can guide your goal setting. This technique will help you create clear, attainable, and meaningful goals and develop the motivation, action plan, and support needed to achieve them.
What are some suggestions for the most common reasons for denial?
a. Always read back information to the patient or ask them to check it in person at check-in. It is easy to transpose an address number or misspell a name. Correcting many small problems by doing this can be very helpful.
b. Ideally use online appointments where patients enter their information to save you and the patient time. Many Urgent Care clinics offer the ability to get a same-day appointment online. It’s also a great way to help boost your online reputation.
c. Confirm eligibility every step of the way. If patients schedule ahead of the appointment, check eligibility at scheduling. Then, check again when they check-in. If there’s an eligibility problem, you can discuss it with the patient. This also allows you to collect copays at check-in. Your practice management system should offer instant eligibility checking.
d. If you see a pattern of wrong coding, consider talking to the providers about having someone come in to do a real coding audit and some coding training. Talking to providers about coding problems can be tricky, but it’s essential to ensuring billing accuracy. You may find that you are not only getting denials but also that they are under or over-coding, which could mean that you aren’t getting paid the right amount when you do get paid. Practicing this bad habit could also trigger an audit of your practice.
e. Use the tools and technology available to you. Run denial reason reports. Check-in on your progress regularly. Use claim tracking tools to monitor claims and quickly address the denials you have.
Health Prime’s Datalytics, a business intelligence platform that focuses on insights that other medical billing solutions neglect, can help you keep track of the reasons behind your denials so you can set an improvement plan for your medical practice. To know more about it, subscribe to our Health Prime Datalytics blog.
At Health Prime, we can help!
The important thing with denials is to understand what is causing them and then fix the problems one by one. Don’t try to tackle every problem at once. It’s tempting, but it might be too much to manage and will be less effective than working on each core reason at a time.
At Health Prime we understand the importance of reducing and controlling your denial rate so you can optimize your practice, increase revenue, and get paid for your work.
If you want more information about reducing your denial rate, feel free to email us with any questions at [email protected]. Set up a meeting with us to discuss how Health Prime can help you get your practice back in its prime.
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