In any healthcare facility, revenue is the force that keeps the medical office or hospital running smoothly. Medical billers and coders play a crucial role in ensuring a healthcare facility stays financially solvent. Denial management is an important component of medical billing that helps maximize revenue optimization and minimize losses.
What is Denial Management in Healthcare?
Denial management in medical billing is the blanket term for processes a healthcare provider takes to prevent claim denials by a payer, such as health insurance companies or Medicare.
Claims denial management involves mitigating potential denials, taking the necessary actions if claim is denied, and if a claim is rejected by a payer, submitting an appeal.
The processes in denial management include analyzing billing and payers, looking at trends in claim denials and healthcare trends, identifying the underlying causes for denials, workflow improvement, and improving processes for medical billing to prevent claim denials.
Claim denials have an adverse effect on the revenue cycle, causing delays in the healthcare provider getting paid. The average cost to rework a claim at $25 per denial so it’s vital to mitigate potentially rejected claims.
How Does Denial Management in Healthcare Work?
Denial management is centered around actions that help healthcare providers assess claim submissions and prevent claim denials. These tasks can include:
· Tracking trends across medical billing workflows
· Identifying areas of concern that can trigger denials
· Improving workflows
· Planning for process improvements
Claims that are denied by the payer can be resubmitted as a claims appeal, but ideally, the claims are sent with the correct information and no flags, so the chance of denial is low from the beginning.
What Are the Types of Denials?
Claim denials can happen for several reasons. Some are clinical, such as a procedure being deemed medically unnecessary or performed by an out-of-network physician. The reasons can also be on the billing end, such as duplicate claim submissions, or not filling out the claim correctly.
The process of denial management helps eliminate potential issues before the claim is submitted, and fixing issues during the appeal process.
Here are some of the most common issues that cause claim denials during the medical billing process.
Missing or Incorrect Information
Any type of incorrect or missing information may cause a claim denial. Some things that may cause this are a missing Social Security number, demographic information left blank, incorrect birthdate, a misspelled first or last name, or no date listed for a condition onset.
Other things that cause a denial are missing claim numbers, incorrect insurance payer details, group numbers, diagnosis codes, or medical codes.
Coding and Modifier Errors
Medical coders convert the details of a patient visit into a set of universally understood medical codes, which are part of the claim. These codes document the entirety of the patient appointment, from admission, to diagnosis, to treatment, to release. If medical coding specialists use the wrong codes, or match the wrong diagnosis code to the procedure, the claim may be denied.
Non-timely Filing / Missed Deadlines
Payers have time frames for submitting claims, and if you miss the time window, claims may be denied, even if the claim is otherwise valid.
Prior Authorization not Received
When prior authorization is required for services or prescriptions, claims may be denied. If guidelines are not followed, it can cause denials. According a survey by the AMA, 64% of physicians report that prior authorization can lead to ineffective initial treatments due to step therapy.
Eligibility Issues
Eligibility issues can occur when the patient’s coverage is not confirmed. It can be as simple as a misspelled name, or a wrong policy number. This can cause the payer to look up a different patient, resulting in a claim denial.
Uncovered Services and Medical Necessity
Medical necessity means the payer determines the procedure can be covered by insurance. If a claim is submitted that is not on the list of covered procedures and treatments for that patient and their coverage, the claim may be denied.
Duplicate Claims
If the claim is submitted by different departments or inadvertently submitted twice at the same time, it may be denied.
Dual Coverage Issues
A claim may be denied if it is submitted under two different insurance plans like a patient’s primary insurance and worker’s compensation.
Failure to Resubmit on Time
Appeals are when a claim are initially denied and resubmitted, but these also have a time window in which they must be submitted.
Other Types of Denials
These are other categories of claim denials.
- Soft denials: A temporary denial which does not require an appeal. These may be paid if the medical office corrects the issue.
- Hard denial: A denial that is not paid and requires an appeal.
- Preventable denial: A hard denial caused by avoidable reasons. Common reasons include coding errors or patient ineligibility.
- Clinical denial: A hard denial of a claim due to lack of medical necessity.
- Administrative denial: A soft denial where the medical facility is told the exact reason(s) for the denial.
Impact of Effective Denial Management
When claim denials are mitigated, the workflow is streamlined, and revenue is less of an issue. There is a better customer experience and the medical office is more sustainable.
What is the Appeal Process in Medial Billing?
After a denial, the medical billing staff need to start an appeal according to the insurance payer’s guidelines. These steps often include:
- Contacting the payer for clarification around denial codes
- Getting the reference numbers for the claims
- Gathering the necessary patient information
- Completing requires forms
- Sending an appeals letter to fix an invalid code, incorrect name, or modifier
- Resending any previous appeals that failed to include required documentation or information
After the appeal has been submitted, the medical billing team will continue to monitor for updates, often having to contact the payer.
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