Strategies to Minimize Denials and Maximize Revenue for Healthcare Practices

In healthcare practices, one of the most pressing concerns is managing claim denials. Denials not only reduce revenue but also burden staff with additional administrative tasks. For many practices, this challenge is compounded by the increasing number of denial codes and complex reasons for denials. According to industry experts, denials can range from 8% to 35% of claims depending on the efficiency of the practice’s processes. The good news is that a structured denial management strategy can prevent many of these issues.

What Are Denials?

Denials occur when a healthcare claim that was correctly formatted and submitted to the insurance plan is denied. While the insurance plan may acknowledge the patient and the service, it denies the claim for a variety of reasons. There are over 350 different denial codes that insurance companies use, with common reasons being patient ineligibility, coding mismatches, or lack of proper authorization.

Left unaddressed, denied claims can cost practices significant revenue, and correcting them is time-sensitive. If practices don’t act quickly, they risk missing the window for resubmission, effectively losing money for services already provided.

Steps to Effective Denial Management

1. Real-Time Eligibility Checks

One of the leading causes of denials is patient ineligibility. This can easily be mitigated by conducting real-time eligibility checks not only at the time of scheduling but also two days before the patient’s appointment. Double-checking eligibility ensures that claims are submitted to the correct insurance provider, reducing the likelihood of denials due to outdated or incorrect insurance information.

2. Coding Accuracy

Another major contributor to denials is mismatched or outdated coding. Practices need to ensure that their EHR and practice management software are up-to-date with the latest CPT and ICD-10 codes. Inaccurate codes can lead to rejected claims, even if the service was legitimate. Using an advanced scrubber in the RCM software can help to automatically check for coding errors before claims are submitted.

3. Timely Filing

A common issue, especially in hospital settings, is the late submission of claims. Many practices lose revenue simply because they don’t file claims on time. By implementing a timely filing policy and automating the submission process, practices can drastically reduce this risk.

4. Advanced Denial Management Systems

While basic practice management systems may alert you to a denial, advanced denial management systems offer far more comprehensive solutions. These systems track denials over time, analyze trends, and allow practices to address the root causes of denials. For example, if a practice notices a consistent pattern of denials from a particular insurer due to coding issues, it can adjust its processes to prevent future rejections.

The Cost of Inaction

For practices that are projected, off billed claims, to receive $100,000 in monthly revenue, the cost of handling denials incorrectly can be around $22,000 per month (22% denial rate). That is just denied claim revenue this does not include the labor of working all these denied claims. Let’s put the numbers together for a year, 22% is $264,000 a year plus the labor!   With enhanced denial management, these losses can be reduced dramatically, giving the practice the revenue they expected to support things like cash flow, operational budgets and the ability to invest in new technologies or hire staff.  Also giving staff more time on other important items like patient care.

Enhancing Efficiency with RCM Solutions

Modern RCM systems don’t just notify practices about denials; they proactively help avoid them. Advanced systems track denials by reason and insurance provider, allowing practices to identify patterns and adjust their processes accordingly. For example, if a certain insurer frequently denies claims due to missing authorization codes, the system can flag this requirement before submitting the claim.

Moreover, these systems can automatically correct claims once a recurring issue is identified. Instead of manually correcting each denied claim one by one, an advanced system can update all affected claims at once, drastically reducing the time spent on denials and improving the practice’s cash flow.

The challenge of denial management in healthcare practices is a significant one, but with the right tools and strategies, it can be effectively managed. From real-time eligibility checks to implementing advanced RCM solutions, practices can reduce their denial rates, recover lost revenue, and ultimately focus more on patient care.

To learn more about how Svast Healthcare Technologies can help your practice improve its denial management and maximize revenue, contact Svast Healthcare Technologies.