3 Steps to Lower Your Hospital’s Claim Denials
In today’s healthcare landscape, every penny counts for hospitals around the country. But for most hospitals, pennies are not the concern when there are millions of dollars in revenue left on the table in claim denials. Not only are hospitals fighting with internal pricing pressures (whether it be increasing labor costs or sicker patients in need of more critical care), but they are facing massive health insurance plans that are fighting tooth and nail to pay for as little coverage as possible.
As all health systems know, medical coding can be subjective in nature which leads to payment denials in the future. In reports we’ve read, 5-10% of claims are denied which translates to an average of $4.9 million of lost revenue per hospital.
Because of these denials, it’s imperative for hospitals and health systems to have a strong denial management department to help overturn payer denials that are not warranted.
What is Denial Management?
Denial Management involves a proactive approach to determine the cause of claim denials and manage the process to lower denial rates. Claim denials consist of several reasons such as HIM/Coding/Charge Capture/Medical Necessity, Incorrect or Missing Information, Pre-Authorization, Billing, Registration, etc. This is why it’s important to identify the root cause, assign accountability, and determine how it can be prevented.
How to Lower Your Claim Denials Rate
The answer is a combination of different solutions.
- Hospitals should track denials and begin to understand the exact type of claims they see as repeat offenders. That’s the process of determining the cause as mentioned above in the denial management definition.
- Hospitals should put together a team of skilled resources that can help overturn those claims that were denied for a “simple” reason. For example, some denials – such as a claim containing an incorrect beneficiary policy number – are preventable. If the hospital doesn’t have a team to review these types of denials, they mostly go unnoticed and is a significant loss of revenue simply due to a lack of resources.
- Hospitals should create a claim denial management system for each payer. Over time, it will become apparent which payer denies the most claim submissions and these payers should be at the top of mind for the hospital. Each payer has their own clinical guidelines and understanding why that payer is denying more claims than others can lead to fewer denials down the road.
In summary, most hospitals will agree that at least 90% of claim denials are preventable. Tracking and understanding why these “simple” denials are happening is the most crucial step to a quick win. For a long-term solution, hospitals need to understand which claims seem to get tagged as“denied” and which payers are tagging these claims. Once a hospital’s revenue cycle knows where they need to spend their attention, a revenue impacting issue can be resolved in a timely manner.
Shearwater Health supports hospitals and health systems by deploying a team of highly skilled nurses to support denial management. All Shearwater nurses have a background in bedside nursing with an active American coding credential or real-time experience in hospital/payer utilization management.
Shearwater nurses analyze which denials they believe have a high possibility of being appealed and create an appeal letter that will be sent to the payer for final review. Shearwater tracks and reports the most common denials as well as the success rate per nurse per payer denial. The most common items reviewed during the process include: medical necessity, Medicare/Medicaid state rules and regulation, pre-authorization of insurance, insurance eligibility, and explanation of benefits.
Contact us now to see how Shearwater Health can be part of your denial management.