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Strategies to Reduce Medical Claims Denials

Ways to improve denial management.

By Cynthia A. Raymond, RN,BSN, OCN,  RN Clinical Manager

When a health insurance company refuses to pay for something, it is known as a medical claim denial.  These claim denials present problems for successful revenue cycle management.  Starting and monitoring the appeals process requires additional resources, and ultimately results in delays in payment for services rendered.  Most medical claim denials are preventable, and many of these denials can be recoverable. Prevention and management of these medical claim denials and the appeals process will be discussed in this article.

There are several factors that go into successful denial management.  It is important to measure the number of claims being denied to gain insight when analyzing performance. The important metrics to track are the number of claims filed (number and total amount), the number and dollar value of denied line items, and the percentage denied.  These metrics should be calculated in totality for the hospital, practice or specific area being analyzed.  These denials should be categorized by payer, reason, provider, specialty, and location.

Medical claims denials management

The most important step is grouping denials by reason.  Effectively tracking denials by reason involves determining the categories to be used in tracking all claim denials.  Having detailed information about claim denials allows for focusing of resources to reduce the denials and improve performance.  Some of the pieces of information to be gathered and tracked are registration (e.g., insurance verification, identification of patient, etc.), charge entry (e.g., invalid procedure or diagnosis code), referrals and pre-authorization, duplicates, medical necessity, documentation, bundled/non-covered services, and credentialing.

In general, we have seen that the most common reasons for billing denials are missing information, duplicate claims or service, service already adjudicated, service not covered by payer, and expired filing limit.

To have a successful appeal, it is important to be prepared by understanding the process and knowing the facts. First, know the reason for denial.  Use the explanation of benefits as a guide, or call the insurer for clarification if the explanation is unclear.  Next, know the policy or criteria that was used.  Read the printed or online version of the policy to have a clear understanding of what was used in the review of the claim.  When writing the appeal letter, make sure it is filed within the filing deadline and utilize as much documentation as possible to make the case.  If denied the first time, send a second appeal and try again if your organization believes that it is a valid claim.  Your organization should have a formalized process in evaluating which denials to pursue.

CBIZ offers services regarding utilization management, such as appeals and denial management and medical necessity reviews for the inpatient and observation settings.

If you would like more information, please contact Cynthia Raymond at 609-918-0990 or cynthia.raymond@cbiz.com.

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