Americans spend close to $10,000 annually on healthcare, and in the business of medicine, providers must find ways to recover treatment expenses quickly and effectively from insurance carriers to be successful. Because healthcare providers rely on these insurance claims as a primary revenue source, they are additionally tasked with the issues of delayed payments and denials.

What is behind the increasing denial rates?

The claims process involves many steps before the bill is submitted to the payer, each of which can delay or expedite the revenue cycle for a practice. Some practices continue to keep paper medical records, which can slow processes. A high attrition rate and a shortage of skilled labor creates backlogs for practices that are fully converted to EHR. By identifying which issues are affecting payments and denials, not only can complete reimbursement be assured, but patient satisfaction can also be improved.

90% of most healthcare systems’ revenue losses are due to denials. Denials account for less than 20 percent of claims on average, but their financial impact on healthcare systems is significant. Nearly $300 billion is denied for payment in healthcare organizations every year, with individual providers losing an average of $5 million.

Because denial rates have steadily increased by 20%, practices that thrive have a system in place to prevent denials before they occur.

The continuing increase in claim denials was made even worse due to the pandemic. Approximately one-third of providers now report denial rates exceeding 10%. Billing backlogs caused by changes to healthcare regulations, an overworked staff, an onslaught of patients, and remote technology has created a lack of resources. Coupled with a lack of qualified employees and substandard technology, an increase in denials is understandable, but must be managed.

The growing problem of complicated claims processing.

Health care organizations lose approximately $210 billion each year due to claims processing inefficiencies. To collect revenue, more organizations are outsourcing complex claims.

Every practice must send claims to its revenue cycle management system, a clearinghouse, or a Chargemaster who verifies that claims are correctly formatted, delivered to the right place, re-bundled, and optimized to ensure the highest reimbursement possible. Claims are then sent to the payer, who reprices them, edits them, and sometimes negotiates out-of-network rates. Denied claims can be bundled or unbundled, in full or in part. This process can take months for a provider to get paid.

Healthcare claims require streamlined processes.

Healthcare spends $350 billion on outdated manual processes, annually. Automation on the front end can prevent denials, and automating the revenue cycle to modernize the claims process can be the key to solving many claims challenges. Innovative automation solutions streamline workflows, automate the tracking, corrections, and the resubmission of denied claims to save time and money while increasing speed and accuracy.

There is a lack of basic visibility into denial data in healthcare systems. Complete denial prevention is nearly impossible because of this inability to diagnose the cause. Most denials occur at the beginning of the revenue cycle. Practices can prevent denials by improving and enforcing patient pre-registration, and verifying information is accurate. To gain control and stop cash flow leaks caused by unpaid claims, it is important to identify the exact cause of the denial and to immediately refile. An estimated 60 percent of returned claims are never resubmitted and remain unpaid. 

HIPAA requires all claims to be processed electronically. However, there remains certain aspects that must be handled manually. Before manual claims can be submitted, they generally pass through time-consuming multiple departments. Consolidating workflows across departments for medical claims processing can overcome this problem. Work to have a single system that consolidates claims data and provides accurate analysis for more efficient claims processing.

Increasing efficiency by improving the information technology system.

A claims adjudication is how insurance agencies determine whether to pay a claim in full, in part, or to deny it completely. Even though the process falls under the carrier’s jurisdiction, a prior understanding of what to expect increases financial forecasting abilities and allows a practice to prepare patients for out-of-pocket expenses.

By integrating an auto adjudication tool into the claims processing workflow, providers can simplify submissions and have a more transparent reimbursement process. The claims will be processed faster, the healthcare provider will be reimbursed in a timely manner, and as a result, revenue will increase, along with more positive patient experiences.

Comprehensive knowledge of coverage policies, coding changes, filing limits, and global policies is essential in healthcare claims management. Things change rapidly in the medical industry, largely due to regulatory and technological updates. These changes can cause incorrectly processed bills.

Many practices choose to outsource pre-authorizations and billing to reduce denial rates, increase revenue and allow time for staff to focus on patients and the practice. Outsourcing can also reduce costs by eliminating training, prior authorization work, and clarification of patient financial questions.

Artificial Intelligence and denied claims.

As a result of AI, healthcare billing will continuously transform. AI not only provides automation, but also has predictive capabilities and insights that can prevent claims from being denied before they are even submitted. AI can speed up and prioritize work while leveraging advanced analytics and actionable insights. As a result, claims management can be optimized throughout the revenue cycle.

Although it is impossible to eliminate denials for healthcare organizations, steps can be taken to prevent them. Automation and AI can ease the burden on staff, reduce errors, and bolster the financial stability of the practice.

Reduce your 2023 denial rates. Are outsourced medical billing solutions something you’re interested in learning more about? If so, Virtual OfficeWare is dedicated to helping physician practices improve patient care and be more successful both clinically as well as financially. Simplify the business of healthcare by providing exceptional service, coupled with technological solutions that increase the efficiency of medical practices. Contact us to learn more about how we can help your practice reduce denials and keep more of the revenue you earn.