Top 5 Effective Claim Denial Management Strategies In Healthcare

Claim denials are a significant source of income loss and administrative hardship for healthcare providers. According to a recent survey, claim denial rates have risen by 23% in the last five years, and over 90% of hospitals reported an increase in payment denials during the same period. Furthermore, the average cost of redoing a denied claim is $118, and up to 60% of rejected claims are never resubmitted.

To avoid these negative consequences, healthcare providers must use efficient claim denial management strategies that decrease the number and severity of rejections while improving recovery rates and appeal efficiency. Here are five proven strategies that can assist you reach your goals:

1. Address Denial Before It Happens.

The best method to handle claim denials is to prevent them in the first place. It requires a proactive strategy for identifying and addressing the fundamental reasons for denials, such as lack of prior authorization or eligibility verification, missing or incorrect information on claims, coding errors or non-compliance with payer policies, services not covered by payer or out-of-network, duplicate claims or coordination of benefits issues. 

To avoid these typical mistakes, you should conduct quality checks and audits throughout the revenue cycle, from patient registration and scheduling to coding and billing, claim submission, and follow-up. You must also train and educate your employees on the most recent coding and billing rules, payer needs, and best practices. Additionally, you should use technology and automation to speed up and simplify business procedures, decrease human error, and improve data integrity and security.

2. Track And Analyze Your Denials.

To correctly manage your denials management, you must have a clear and complete understanding of their patterns and trends. An intense monitoring and reporting system must record and categorize your denials by source, kind, reason, payer, provider, and other pertinent parameters. You should also examine your denial data to determine the leading causes, effects, and areas for improvement.

By tracking and analyzing your denials, you can gain valuable insights into your denial performance, such as:

• What are the most typical causes of denials?
• What payers or providers have the greatest or lowest denial rates?
• How much income is lost or recovered due to denials?
• How long does it take to settle or appeal denials?
• What are the best practices or standards for denial management?

With these insights, you can create and implement data-driven strategies to minimize denials, improve recovery rates, and boost revenue cycle efficiency and effectiveness.

3. Appeal To Your Denials Quickly And Adequately.

Despite your best efforts to avoid denials, some are unavoidable. However, this does not imply you should abandon them. If you appeal denied claims correctly and on time, you can recover up to two-thirds of the amount. You must follow a systematic and regulated strategy to appeal your denials effectively. 

Review the denial notice to understand the cause and appeal alternatives, then gather the relevant documents and evidence to support your appeal. Write a concise and clear appeal letter explaining why the claim should be returned. Submit the appeal by the date and in the format given by the payer. Track the status and outcome of the appeal and follow up as needed. You may improve your chances of being paid, minimize your accounts receivable days, and build your payer relationships by appealing rejections quickly and adequately.

4. Educate And Engage Your Patients.

Patient education and engagement is a sometimes ignored element of claim denial management. Patients are critical to the medical claim process because they provide information and pay for services. As a result, you must inform and engage your patients on their financial duties and rights, such as:

• Verifying their insurance coverage and eligibility before the service
• Providing accurate and complete information for the medical claim
• Understanding their benefits and co-pays
• Reviewing their explanation of benefits and bills
• Paying their balances on time or requesting financial assistance
• Communicating with their provider and payer if they have any questions or concerns

By educating and engaging your patients, you can reduce the possibility of denials due to patient-related concerns such as a lack of authorization, incorrect data, or nonpayment. You may also increase patient happiness, loyalty, cash flow, and collection.

5. Collaborate And Communicate With Your Stakeholders.

Claim denial management is a team effort. It involves several internal and external parties with tasks and obligations in the claims process. As a result, working together and communicating with your stakeholders is critical. 

Your employees must be taught, motivated, and enabled to complete their responsibilities efficiently and successfully. Your payers must be notified, negotiated, and collaborated with to guarantee fair and timely payment. Your vendors must be analyzed, integrated, and leveraged to deliver the best solutions and services. Your peers must be benchmarked, learned, and shared with to embrace best practices and standards.

By collaborating and communicating with your stakeholders, you can foster a culture of teamwork, accountability, and continuous improvement. You can also optimize your workflows, processes, and systems and achieve better results and outcomes.

Final Thought

Claim denial management is a complicated undertaking, but it is also meaningful and rewarding. Implementing these five successful tactics will allow you to turn claim denial management from a reactive and costly process to a proactive and profitable one. You may also boost your revenue cycle performance, the patient experience, and competitive advantage.