A high first pass “clean claim” insurance approval rate is what every practitioner wants. Clean claim rates are like a credit report for medical practices. But what is more important for the stability of your healthcare organization? Clean claims, or low denials?
Clean Claims Rates vs. Rejection Rates
When a practitioner submits claims to a healthcare insurance company for reimbursement of provided medical services, each claim must include accurate medical patient demographics, pristine coding, and savvy bundling to receive a “no questions asked” automatic reimbursement of delivered healthcare services.
When the claim is paid with no further requests or delays, the request for payment is considered a “clean claim” or “first pass claim.” A practice’s clean claim rate can be defined as the percentage of medical insurance claim requests submitted for payment, divided by the total number of claims paid, on time, in full. Several factors can influence the clean claim rate, including data accuracy, payer requirements, claim documentation, coding, and technical issues. Accuracy is imperative when looking to improve a clean rate. Errors in patient information, coding, and billing details will always contribute to claim rejections.
Physician practices with a record of maintaining high claim rates can be an indicator of an effective practice administration. However, denial rates can be a better predictor of future practice health.
Within the healthcare revenue cycle management (RCM), the term “clean claim rate” has great influence in determining the financial health of a practice. A high clean claim rate is a good indicator of practice efficiency and financial stability, while a low rate signals potential issues that can lead to revenue losses and increased operational costs. Providers and practices should strive for a clean claim ratio of 90% or higher. But how do the claims that aren’t granted first pass affect your bottom line?
Why Work to Improve your Claims Denial Rate?
Claim denial delays payments disrupt cash flow and create unnecessary financial strain. High claims denials result in increased administrative costs and a slow revenue cycle.
Appealing a denied claim requires additional staff time and resources, the costs associated with reworking claims is not insignificant. Still, only about 40% of denied medical claims are reworked and resubmitted for payment. The average cost to resubmit a denied claim can reach more than $100. Resubmission success is not guaranteed. The numbers prove that most practices do not place emphasis on reworking claims.
Even in practices with admirable billing departments denials cause an average loss of $5 million annually, or 5% of net patient revenue. High denial rates save insurance companies millions. Low claims denial rates generate increased, steady cash flow and reduced high collection costs that are a win for your practice.
In 2024, squeezing an additional 5% of revenue out of the budget to cover denials is not feasible for most practices. Healthcare providers must reduce claim rejections and denials. Revenue cycle management (RCM) depends on smart submissions. At Virtual Officeware Software Solutions we have a suite of options customized for the right fit, right now.
Avoid Audits
If your practice has a history of medical billing errors, lost revenue is not your sole RCM issue. Your practice can become a target for a billing audit. The Centers for Medicare and Medicaid (CMS), and private insurance companies closely watch practices with a high billing error rate. Fraud prevention and audit programs are used to take a hard look at your compliance, potentially costing your organization even more time, stress, potential fines and program exclusion.
Medical claims denials have risen by 20% in just five years, that’s about 20% of all claims. Partnering with a successful billing company can have a substantial and positive financial impact using new solutions designed to avoid the most common denial errors. Provided you maintain a solid patient base and establish good practices, maintaining a low denial rate boosts financial health for your practice. Efficient claims processing means healthcare providers are promptly paid.
In today’s medical climate, automated software solutions that scrub claims prior to submission for processing is critical for a healthy RCM. Low claims denial rates reduce administrative costs. When fewer claims are rejected or denied, less time and fewer resources are required for reworking and resubmitting.
A high rate of first pass payment enhances the patient experience by making claim processing more efficient. This reduces patient stress and increases client retention. Fewer billing issues can boost a patient’s trust in their healthcare provider’s competence.
Tips for Reducing Denial Rates:
Watch for Changing Payer Requirements
Every insurance payer has specific requirements for claim submissions. Failure to comply with these moving targets can result in rejections. Insurance companies change requirements frequently.
Provide Regular Training and Communication
Work to provide your staff with updated coding standards, payer requirements, and regulatory changes. Scheduled training updates can help keep your team on track and proficient in accurate claim submission.Everyone involved in billing must understand the latest rules, regulations, and codes.
Right Technology Reduces the Cost of Doing Business
Electronic health records (EHR) systems or claims submission software issues are a fast track to a low denial rate. Virtual OfficeWare Healthcare Solutions helps our clients automate RCM. Work to allow your office to establish an individual approach to each patient, providing them with maximum support. To optimize the clean claim rate, healthcare providers can implement several strategies.
Available and advanced medical billing and coding software can automate most requirements of the claims submission process to reduce the likelihood of claim rejection. Software that integrates with EHR systems streamlines data entry and ensures consistency across records and industry standards. A proven and complete billing system that automates the claims process while seamlessly integrating with an EHR helps fight against denials.
EHR and RCM Working Together
Incomplete or inaccurate patient EHR documentation will trigger a claim denial or delay. Using outdated medical coding and incorrect bundling will end in claim rejections or a higher claim denial rate that requires rework and frustrates patients.
Ensuring that all patient visits and treatments are accurately documented can increase first pass claims. Capture detailed diagnostic information supportive documentation required by payers. Accurate patient data reduces the risk of losing important details for successful claim submission. Cloud-based practice management software from
Virtual OfficeWare Healthcare Solutions can secure valuable data and automate the claim process.
A regular auditing sample of submitted claims can identify trends in errors, areas for improvement. Implementation of quality control measures, including peer reviews or checklists, to ensure that claims are accurate before submission.
Solutions for Every Practice
Small medical practices with limited resources may incur challenges to maintain a low denial rate due to a lack of time and staff. By outsourcing their claims management to a third-party billing service, you’ll gain access to expert coders and advanced technology that can rapidly and significantly improves your denial rate.
Virtual OfficeWare, helps practices at every stage and budget to find the right solutions that reduce administrative burdens, allowing practices to focus on patient care.
Receiving accurate, timely payment is a financial game changer for practices. Regularly review denied claims to see where improvements can be made and follow the RCM steps that designed to make your practice thrive. Visit our professional billing services or contact one of our specialists today to learn more about quickly lowering denial rates for your practice.
