What is Denial Management Process in Medical Billing

When it comes to dealing with denials in medical billing, the hurdles that healthcare companies face are enormous. At the end of the year, the amount of time, effort, and money spent resubmitting refused claims and losing revenue mounts up, which can substantially damage the revenue cycle of your healthcare business. 

Because of this, effective denial management in healthcare is essential to your firm’s success. This guide will discuss the denial management process in medical billing, its significance in the healthcare industry, and offer recommendations for best practices for improving revenue cycle management (RCM). 

What is Denial Management in Medical Billing?  

Denial management is a strategic approach to uncovering and resolving the issues contributing to medical claim denials.  

However, this is only some of what the procedure should do; it should also reduce the likelihood of claims being denied. This will ensure that practices are paid more quickly and have a healthy cash flow.   

Establishing a trend between repeated denial codes and other types of claims is one of the tasks that the denial management team must perform to improve the process of denial management. 

By monitoring trends, the objective is to identify problems with patient registration, billing, and medical coding, so that these issues can be addressed and future claims can be successfully appealed.  

Additionally, the team examines individual payers’ payment patterns to make it simple and easy to see any deviation from the typical trend.   

What are the Different Types of Claim Denials in Medical Billing? 

Claim denials may have anything to do with the clinical aspects of care, such as a procedure being found not to be essential from a medical standpoint or being performed by a non-qualified physician. 

Besides, they may also start in the business office, coming from any of the various departments engaged in producing, managing, and filing claims. 

There are potentially hundreds of different types of technical reasons that could result in a denied claim; nevertheless, the following are some of the most prevalent types of denials in medical billing: 

  • Patient information that is either lacking or erroneous, such as date of birth or date of care 
  • Errors in billing and coding, such as billing for a procedure intended for infants even though the patient was an adult 
  • Inaccurate or non-timely filing, also known as missing a payer’s deadline for submitting a claim 
  • Inability to obtain prior authorization 
  • Duplicate claims 
  • Concerns about dual coverage, such as those that arise when a patient possesses both primary insurance and worker’s compensation coverage 

Importance of Denial Management in Healthcare 

The denial of claims is a direct impediment to revenue. They cause a delay in incoming funds, squander labor hours, and, in the worst-case scenario, result in care that is not compensated for.   

In recent times, there has been a surge in the number of denials, which has increased by 20% across the business over the past five years. 

A proactive denial management approach is necessary when reserving a financially sustainable position. It is especially true in the ongoing aftermath of the COVID-19 pandemic.  

An effective denial management strategy can uncover the underlying reason why a claim was rejected. It allows companies to take corrective actions that may eliminate the need for such activities in the future. 

Denial Management Best Practices 

You can apply many best practices to stay organized and informed about underlying causes and implications. Some of these are discussed below: 

Stay Organized 

If the organization cannot track denied claims, it will see a decrease in revenue. Besides, if the rate of refused claims rises, your practice will face increasingly difficult administrative challenges.  

Therefore, it is necessary to put in place an organized denial management process that uses HIPAA-compliant tools and technology to handle insurance claim denials. 

Understand the Stats  

Acquiring an awareness of the factors contributing to high initial denial rates will help you learn about the root cause of the high denial rate and provide you with opportunities to enhance procedures, reducing or eliminating revenue cycle challenges. 

Take Prompt Action  

Follow a proven procedure to get denials fixed, preferably within a week, which is a goal that is attainable when an established workflow is in place to trace claims as they enter and leave the system. 

Identify Trends 

Identifying trends involves quantifying and classifying denials through tracking, analyzing, and recording trends. It is important to emphasize data and analytics to help identify and correct the issues that are creating denials in the first place.  

When necessary, it is also important to reach out to physicians and payers for assistance and leverage the expertise of professional denial management services to help reduce denials and enhance compliance. 

Have a Team in Place 

Identify the available resources from all departments and harness their knowledge to implement medical billing solutions to track and report advancements. This will, in turn, help set up benchmarks, minimize backlogs, and assist in determining the fundamental causes of the problem.  

This powerful team of experts would consist of key individuals from the following departments: admitting and registration, case management, patient financial services, nursing, health information management (HIM), information technology (IT), finance, compliance, and, of course, the physicians. 

Leverage Automation 

It would be best if you automated the processes involved in denial management using robotic process automation (RPA). This will free up more time for you to revise the denied claims. 

Collaborate with Payers 

Payers also gain from resolving denial issues; therefore, a payer-provider partnership can aid in addressing them more efficiently, which will also help achieve system efficiency more quickly. 

Track Progress 

Keeping tabs on progress can help you identify which aspects of the denial management process are working and which are not.  

Besides, it provides the opportunity for analysis and increases the overall effectiveness of the system.  

Because of this, your business can better understand which areas are succeeding and which require work. 

Focus on Quality Over Quantity 

The best way to make the most of limited resources and time is to follow up on claims that have already been answered.   

It will facilitate more quality claims instead of a larger number of lower-quality claims that return nothing.   

Regular Audits 

Carry out performance audits, including checks on remittance advice reviews, write-off adjustments, zero payment claims, registration, and the quality of insurance verification. 

Learn from Mistakes 

Utilize the information in electronic health records (EHRs), such as insurance company and payer ID lists, to your advantage. Improperly constructed data might be a cause for claim rejection.  

Therefore, it is important to learn from previous denials. Tracking and analyzing trends of rejection and denial helps differentiate between them, making it simpler to identify where problems arose and rapidly repair them. 

Patient Information Verification 

Use patient portals that automatically update patient information and take the time to verify patient information and their insurance coverage. Moreover, keep the medical billing team informed of policy changes and train staff members to improve data quality. 

Meet Deadlines  

A failure to adhere to the deadlines that the insurance company’s policies have imposed can affect the filing of a claim. 

Be Familiar with the Clearinghouse 

Knowing the clearinghouse is important because establishing a solid relationship with it can enhance processes and benefit both organizations. For example, the clearinghouse can assist insurance companies by offering thorough reasoning for denials. 

Follow up Regularly 

Track every claim so that any denied or rejected claims can be amended and resubmitted on a planned appeal, preventing revenue loss. 

Bottom Line 

The claim denial rate places a significant strain on healthcare providers and organizations. Thus, practices must focus on effective denial management practices to overcome financial stress and maintain a steady cash flow. 

However, if the entire process and strategies discussed in this blog seem like too much work, you can outsource your denial management and medical billing to CareCloud. 

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