Claim Denial Management in Hospitals – What Can Be Done?

by | Last updated Nov 15, 2023 | Published on Aug 22, 2018 | Medical Billing

Claim Denial Management Hospitals
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Reducing claim denials is among the top challenges hospitals and health systems face and this is the major reason why providers opt for the service of medical billing companies to receive timely and proper payment for services. Claim denials generally happen either due to administrative reasons such as membership not on file, or when medical bills are not sent in a timely manner.

According to a report from Crowe Horwath, delayed payments that arise from claim denials are significantly impacting hospital revenue cycles, taking an average of 16.4 more days to pay compared to claims that have not been denied. The claims which the payer never reimburses the provider represent a 1.9 percent decrease to an average hospital’s annual net revenue.

While the payment time for a clinical claim denial with a request for information ranged from 76.43 days to 121.66 days across five major payers, the same for an administrative claim denial for a coverage or eligibility issue ranged from 42.2 days to 137.48 days.

The changes in the insurance company’s policy can also be a factor that causes claim denials. For instance, a report in Fierce Healthcare highlights that Emergency Room (ER) claim denials increased sharply last year following Anthem’s changes to their policy. This American health insurance company has announced that it would restrict coverage for what it deemed to be non-emergent visits. Based on this report, Anthem has denied more than 12,000 ER claims in Missouri, Kentucky and Georgia between July 2017 and December 2017, representing 5.8% of ER claims.

Big Data Analytics

According to reports, hospitals are already using AI applications and big data analysis in the areas of insurance pre-certifications, denial prediction, and ICD-10 billing code verification.

Big data analytics can

  • simplify and improve accuracy in the medical billing process by identifying medically necessary and completed procedures
  • find data patterns such as causes of insurance claim rejections as well as strategies to follow
  • help reduce incorrect insurance claims filed and increase practice revenue
  • reduce medical errors and eliminate duplication of tests or procedures, leading to reduced claim rejections

Data analytics can also be used in revenue cycle management, help identify margins for ancillary services, help the provider make and execute better, data-driven decisions, and analyze which value-based contracts will yield the best returns.

Appeal Denials

When a claim is denied, make sure to find the real reason for the denial. The claims appeal process provides an opportunity for providers to get back lost revenue. For appealing claim denials, it is critical for the healthcare provider to know the payer contracts as well as patient’s coverage-benefit plan design.

All necessary information should be provided early enough to save your practice from the hassle of sending additional information or having your appeal denied. To appeal a denial, your letter to the insurance carrier should be clear and thorough enough to ensure a speedy appeal process. Appeal letters should clearly identify the patient, claim number, date of service, member ID and the provider number. The letter should also support the attached documentation.

Also, track appeals to ensure payment. Make sure that your billing team follows up on each claim at least once every month. It is ideal for the team to set reminders about when each claim is due for a follow-up. This process can also be time consuming.

To avoid such concerns regarding denials, the only option is to focus on submitting cleaner claims. Partnering with experienced medical billing and coding companies help to work on your claim denials. Advanced claim denials management processes of such companies help to settle outstanding claims and dues.

Rajeev Rajagopal

Rajeev Rajagopal, the President of OSI, has a wealth of experience as a healthcare business consultant in the United States. He has a keen understanding of current medical billing and coding standards.

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