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Best Practices to Reduce Medical Claim Denials

July 20, 2020

What’s one of the most perplexing problems in many practices today? Without a doubt, medical claim denials must be at or near the top of everyone’s list. According to the Medical Group Management Association (MGMA), the cost to rework a denied claim is $25.00 for each occurrence. Even more impactful is the fact that between 50% – 65% of denied claims go unchallenged due to a perceived lack of time and/or understanding of how to proceed— and the revenue is lost completely.

It’s not enough to rely on the status quo, practices must be proactive in developing strategies to improve operations and their Revenue Cycle Management (RCM). Complex approval processes and requirements that differ by health insurance plan make claims management a challenge for even the most well-informed practices.

A Proactive Plan for Reducing Denials

An overall review of the practice operations will be needed to identify where you’re meeting and/or exceeding financial expectations and where systems need to be improved. To ensure impartiality and to guarantee a forthright and authentic evaluation, it may serve your practice well to engage a third-party RCM vendor to perform the audit.

Collect accurate demographic and insurance information and ensure precise entry into the Electronic Medical Billing System. It is essential to ensure factual and meticulously verified patient information is collected and utilized for RCM, including:

  • Subscriber or patient’s full name correctly spelled
  • Relationships between patient and subscriber verified
  • Use of full legal names and not nicknames
  • Accurate primary and secondary insurance information
    • Subscriber/patient number
    • Group/plan number
    • Correct insurance billing address
  • Correct DOB

Insurance verification should be verified prior to each visit, including:

  • Type of Coverage
  • Eligibility dates
  • Co-pays and Co-insurance
  • Deductibles remaining
  • Out-of-pocket maximums
  • Coverage has not been terminated
  • Services that might not be covered

Obtain prior authorization approval in the most expedient manner possible and accurately document it before the patient’s visit. Under the best of circumstances, this process can take between one and three days to complete and therefore should be streamlined to the extent possible to maintain a positive patient experience as well as reduce medical billing denials.

Consider using advanced automation software that uses artificial intelligence (AI) and machine learning capabilities to proactively manage your prior authorizations in real-time.

Ensure proactive coding for the procedures performed during the patient’s visit to eliminate missing or invalid information, including:

  • Codes that are not specific enough when each diagnosis must be coded to the highest level (maximum number of digits allowed),
  • Unbundled charges being charged separately when they are designated as part of a diagnosis bundle,
  • Use of outdated superbills or coding books, either CPT, ICD-10-CM, or HCPCS, which lead to inaccurate information being submitted and rejected.

Confirm that referrals from a referring provider are in hand prior to the patient’s visit and not cause for rejection when the claim is submitted.

Guarantee that requests for documentation to support medical necessity are streamlined and available should they be necessary to respond to an insurance request, including:

  • Medical necessity for the right setting – does the diagnosis match the level of care, i.e., ICU vs. General Medicine
  • Medical necessity for the patient status – is the treatment clinically appropriate for the patient’s illness/treatment

Determine if your patient is presenting with a liability or work-related problem or injury so that you can properly guide them in their course of action. The following types of insurances may take precedence and will change your handling of the situation (and the claim). For instance, workers’ compensation is employer-based and may have pre-defined providers and procedures. Care should be taken to guide the patient in the right direction or risk non-payment.

  • Motor Vehicle
  • Worker’s Comp
  • Homeowner’s Insurance
  • Business Liability

Proper documentation should be part of the patient visit and should be completed in a timely manner by the treating provider. Narrative descriptions carry more weight than checklists with insurance companies.

Coordination of benefits can be complicated and family situations (i.e., divorce, custody) can add an additional layer of difficulty. At the very least, ensure that you have verified the following:

  • Establish which insurance plan is primary and which is secondary?
  • Avoid duplicate claims which lead to overpayments
  • Review annually to recognize changes

Timeliness in filing can cause a claim to be rejected. With most insurance carriers, the limit is 90 days or beyond. While this seems like more than adequate time, all the reasons above can cause a claim to be rejected or denied for timely filing…further evidence that a proactive plan can decrease denials and increase the bottom line.

Boost Medical Claim Acceptance Rates

Developing a multi-prong approach ensures that claims acceptance rates improve. To start, a review of rejected claims will inform the discussion and help develop steps to achieve denial prevention. There are several high-level strategic questions that should be asked as part of this review:

  • Does the practice have an accountable RCM system with strong oversight and state-of-the-art training for new and existing personnel?
  • Would the practice benefit from improving technology with precise automated denials management that would be responsible for determining the issues and path forward?
  • What bottom-line improvements could be realized utilizing a revenue cycle partner to manage the RCM, either in part or in whole?

Schedule a call today to request a Health Check for a claims denial assessment and to find out where you are leaving money on the table.

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