Claim denials can be a major source of frustration for physicians and their practice managers, and can have a real impact on cash flow and the financial performance of a practice. If office procedures are good in gathering correct information and submitting clean claims, you can still expect to see at least 5% of denials for claims. So, how can you conquer the issue? Read on.
Set A Goal For Perfection
The goal should be for your practice to have its claims accepted on the first submission. But, this requires taking steps much earlier in the revenue cycle.
To begin the process, identify and record the exact reason for every claim denial. This can be done quickly and easily by using a denial management module that’s built into the overall practice management system. A variety of reasons will come up: The payer may insist that the stated diagnosis doesn’t support the medical necessity of the services, or there may be missing paperwork in the documentation for the claim. The claim may be denied if the patient isn’t a covered beneficiary of the payer to whom the claim was submitted.
The various reasons that emerge should guide your practice to take two actions: 1) Make immediate efforts to correct the errors and reverse the denial, and 2) modify your practice processes to prevent the errors from occurring in the future.
Don’t Ignore Denials
There are several possible responses to a claim denial. For example, once the root cause of the denial is established, try to correct and resubmit the claim. First, find any missing paperwork and add it to the claim. Change inaccurate codes to the right ones, or determine the patient’s correct insurer and submit the claim to it.
If the practice can’t fix the reason for the denial, or the payer refuses to accept the correction, it may make sense to drop the matter and write off the charge. A write-off is necessary if the practice can’t locate the documentation to support the claimed service or if it turns out that the service was really part of a bundle that already has been paid separately and never should have been claimed in the first place. Nonetheless, this should be the last resort.
In the event that your practice makes what it believes to be appropriate corrections, but the payer still rejects them, the last option is to appeal the decision. You’ll need to contact the payer to learn its reasoning on the matter. Then, you must prepare persuasive arguments in support of the claim. As appropriate, gather additional relevant documentation, or obtain more expansive statements of medical necessity from your clinicians. Finally, file the appeal and follow up with the payer every two weeks until the matter is resolved.
Make Needed Changes
Your practice’s goal should be to avoid claim denials, so you’ll need to make systemic changes for the future. For instance, problems with incomplete documentation or improper coding may require retraining staff and clinicians. The people may be fine, but the processes they perform may need to be re-engineered. In that case, make sure your practice is getting all the right patient information before or during registration and you’re capturing and entering the correct charge codes in a timely manner.
Last, correct preadjudication edits returned by the claims clearinghouse on a daily basis. By following the above objectives, your practice will be well on its way to clean claims. As stated before, it’s critical that your practice stay on top of your billing and collections process. © 2016
Contact Mary P. Williams to help you get on track.
Mary P. Williams, CPA, CMPE
Johnson Price Sprinkle
Vice President of Healthcare Services & Shareholder
NC Certificate #20976
JPS is a leading tax, business advisory and assurance accounting firm in Western North Carolina providing innovative financial solutions created specifically for small to mid-sized, closely-held and family-owned businesses, with a specialty in the health care industry. Everything we do is about improving the lives of clients, people, community and profession. Our Mission: Be Greater by improving the financial lives of our clients while strengthening our community.
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