Managing denied claims is an essential aspect of revenue cycle management for medical providers. When a claim is denied, it means that the insurance company has determined that the claim does not meet their requirements for reimbursement. A March 5, 2024, MGMA Stat poll found that 60% of medical group leaders reported an increase in their practices’ claim denial rates for the current year compared to the same period in 2023. According to the poll, respondents whose practices saw denials increase or hold steady, the reasons for their most-recent denials largely centered on:
- Payers noting insufficient documentation
- Patient eligibility or incorrect ID numbers
- Untimely filings
- Incorrect modifier usage, especially Modifier 25
- Issues associated with changing to a new EHR, causing registration errors and authorization issues.
Here are steps that medical providers can take to manage denied claims effectively:
1. Understand the Denial Reason:
Carefully review the denial notice provided by the insurance company. Understand the specific reason for the denial, whether it’s related to coding errors, incomplete information, or other issues.
2. Appeal the Denial:
Most denials can be appealed. Determine if the denial is legitimate or if it was the result of an error. If it’s an error, gather the necessary documentation and submit an appeal to the insurance company. Be sure to follow the appeal process outlined by the payer.
3. Document Everything:
Maintain thorough and organized documentation for each claim. This includes patient records, treatment plans, coding documentation, and any communication with the insurance company. Accurate and complete documentation can support your appeal.
4. Train Staff on Coding and Billing Practices:
Ensure that your staff is well-trained in coding and billing practices to minimize errors that can lead to claim denials. Regular training sessions and updates on coding changes can be beneficial.
5. Implement a Clear Billing Process:
Establish a clear and efficient billing process within your practice. This includes accurate data entry, timely claim submission, and verification of patient insurance information. A well-organized process can reduce the likelihood of denials.
6. Utilize Technology:
Invest in billing and practice management software that can help streamline the billing process and reduce errors. These systems often include features for automated coding checks and can flag potential issues before claims are submitted.
7. Monitor Key Performance Indicators (KPIs):
Regularly monitor KPIs related to billing and claims processing. Track metrics such as denial rates, days in accounts receivable, and clean claims percentage. This can help identify trends and areas for improvement.
8. Establish Clear Communication with Payers:
Maintain open communication with insurance companies. If there are recurring issues, reach out to the payer for clarification and guidance. Building a good working relationship can be beneficial when addressing claim denials.
9. Seek Professional Assistance:
If denials persist, consider consulting with a medical billing expert/auditor or hiring a third-party billing service. These professionals can help identify and address underlying issues and improve the overall revenue cycle.
10. Educate Patients:
Ensure that patients are informed about their insurance coverage and responsibilities. Collect accurate insurance information at the time of service and communicate any potential out-of-pocket costs to patients in advance.
By proactively managing denied claims and implementing strategies to prevent future denials, medical providers can optimize their revenue cycle and improve overall financial performance.