Claim Denials

Imagine putting all your money in a bag with a hole! Most of us would wince at such indiscretion, wouldn’t we? But denials, the proverbial holes in the coffers of healthcare businesses are mostly left unmanaged. An average hospital faces a loss of around $5 million in denials every year. And surprisingly, nearly 65% of those denied claims are not resubmitted again! Why do hospitals and healthcare services choose to close their eyes to this gaping drain in their revenues? Well, studies and interviews reveal that most health organizations are deterred by the time, labor, and cost that denial management calls for!

So the question that naturally follows is how hospitals can manage their denials without stretching their resources? The recourse we feel lies in a thorough and holistic approach that looks at denial management from every facet and works at it from the base to the top. We need to devise strategies that address the root causes and work at eliminating them. Here are some helpful strategies for healthcare businesses to get a better grip on their denial management process.

1. Keep Track Of Your Numbers

“What is not measured is not managed,” says management guru Peter Drucker. This is true of Denials too. Metrics like Initial denial rate, claims, and dollar rates give you the exact picture of the problem. Knowing and studying these numbers can be immensely helpful in the diagnostics of denials. Not only would they enable you in identifying problem areas in your revenue cycle but also in gauging the intensity of the corrective measures needed. Not all denials are worth fighting. Bad appeals can cost you more money that could be better spent on prevention efforts. An ideal percentage of appeals to denials can range from 85 – 88%.

2. Identify and rectify issues at the beginning of the cycle

Sometimes problems that crop up later in the cycle are manifestations of issues that start at the beginning of the cycle. In other words, if you don’t pay attention to inefficiencies in the early stages of your revenue cycle, they may lead to different problems in the latter part of the cycle. These can be quite hard to trace back to the root cause or address effectively. So it makes more sense to focus your denial prevention efforts on the initial stages of the cycle.

3. Leverage Data And Analytics

Data and analytics are tools that no business can stay away from today, especially one in a cost-intensive domain like healthcare. They have taken the stress out of decision-making. Data helps uncover trends in real-time and these trends can shine the light on your problem areas.

4. Involve all departments in the Process

When denials are the concerns of only the finance and accounting department, managing them becomes exceptionally tough! It gets more manageable if all the departments are involved. Since the root causes of denials can be buried in the processes and practices of any department, effective denial management demands concerted efforts and shared accountability from all departments and staff. Create teams with adequate representation for every department and allow them to comfortably express their concerns and ideas on reducing denials

5. Communicate clearly and constructively

While all departments must be involved in the conversation on denials, and reports must be communicated to them, care must be taken to ensure that these communications are free of criticism and blame. If they are not constructive, you run the risk of losing the trust and cooperation of staff to rectify the root causes of denials.

6. Build co-operative payor relationships

The collaborative approach to denial management must not only be limited to internal stakeholders but external ones like Payors too. Payors are an integral part of the system and need to be included in the strategies framed to tackle the problems in it. Use Payor-Joint Operational Committee meetings to address denials and implement the resolutions that arise out of such meetings

7. Focus on Productivity Instead of Quantity of Denials Addressed

When it comes to denials management, it is not just the quantity that matters but the quality too. The objective of denials management must be to achieve an overall recovery rate that factors in the time, cost and win rates of the denials resubmissions and not just on the number of denials addressed. The value of the recoveries indicates effectiveness better than the number of claims resubmitted.

8. Identify Problem Areas that May Be Root Causes for Denials

The problem areas as discussed earlier can stem from root causes in any part of the revenue cycle. Build an exhaustive list of areas within your revenue cycle based on which you can classify your denied claims. Narrowing the causes down to specific processes can help you be laser-sharp in your solutions.

Denial Management at the outset may seem like a daunting challenge. But like every other challenge, if broken down to easier-to-handle bits that are dealt with separately and collectively, it becomes an opportunity for revenue growth. At Rannsolve, we have honed our strategies and streamlined our processes through extensive experience to deliver measurable outcomes in lowering denial rates for our healthcare clients. Reach out to us today for a reliable partnership that brings precision and professionalism to your denial management process!


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