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Three Proactive Approaches for Improved Claims Denials Management

In order to maximize revenue with improved claims denials management, healthcare providers need to follow this advice by Benjamin Franklin: “an ounce of prevention is worth a pound of cure.” For surgery centers and healthcare providers, being proactive means preventing revenue leakage and being profitable. Building a solid strategy and doing regular checkups to maintain a healthy bottom line sets your facility up for growth.

In a traditional revenue cycle structure, departments tend to be siloed – patient access, coding, billing, etc.  Everyone is focused on their own tasks and responsibilities (i.e. account resolution). This system can work well until there are issues that need to be addressed, such as claim denials.

The revenue cycle is generally understood as the administrative, financial and clinical functions that contribute to the capture, billing, collection and management of patient service revenue. High-performance revenue cycle is not just about integrating multiple transactions, but about taking a step back and trying to prevent problems in the future. It is actively engaging and integrating these functions to ensure care is properly documented and reimbursed.

Here are three proactive approaches for improving your revenue cycle and claims denials management: 

1. Identifying which risks or challenges are present in a revenue cycle

It is not hard to find surgery centers who are “reactive” in their approach instead of being “proactive”. It's only after receiving less payment than expected (or no payment at all) for a service that they investigate the situation and make changes. With days to bill often exceeding 30 days, the service could be performed many times before anyone realizes that something is amiss.

Being proactive means evaluating your center’s practices ahead of time based on the available data and analytics and identifying the risks present in your revenue cycle. Think of it as preventive care for your revenue cycle. 

For example, your surgery center needs to have visibility into how many coded claims are denied and the financial impact those denials have on your organization. A 2018 HIMSS Analytics survey found that 76 percent of C-suite executives reported that denials are their biggest revenue cycle challenge. The need to accurately capture and record care is critical to ensuring complete reimbursement, but a large proportion of organizations are currently struggling in this area. 

With denials for example, the earlier your facility identifies them, the greater chance you have to resolve the issue. However, many healthcare providers still struggle to identify denials early enough to be effective. This could be due to lack of technology or not being familiar with coding from the payer.

2. Drill down into root causes and come up with a plan to resolve the issues

Get a sense of the current state of your revenue leakage (e.g. denials) and drill down into root causes. Root causes can range from flawed internal processes and technology errors to insurance and clearinghouse mistakes.  

A proactive approach means doing something now to prevent problems later. It's about making decisions based on data and analytics.

For example, in denials management, most teams just default to focusing their efforts on revenue recovery. To be proactive, you need to prevent denials in the first place. Preventing denials is always better for your bottom line than recovering them. It’s important to remember that while only about two-thirds of denials are recoverable, 90% of them can be prevented.

Though prevention is not easy, fixing the root cause of denials has a much larger financial impact than overturning them.

In order to find out the root causes, dig deep into the denial data and find out:

Details on denials types and typical causes

Insight on denial resolution and the effort involved to overturn denials

A breakdown of pan-revenue cycle concepts showing the value of coordination between patient access and the business / back office

Financial impact that denials have on your bottom line

Creating a dedicated team and reporting structure can also help improve denials prevention. Your center needs to engage strong leaders from across multiple departments who are affected by denials and establish a structure of finding out the root causes and resolving them (e.g. scheduling a firm monthly meeting and having each department leader share their top two denial issues).

3. Keep track of your efforts and progress

The reality of a clinical environment is that preventing revenue leakage is not the top priority every day. The average 350-bed hospital saw denial write-offs jump by 79% between 2011 and 2017, from $3.9 million to $7 million.

For example. too often, denial resolution efforts are abandoned by the hospital’s internal billing staff or primary accounts receivable (AR) management firm once the claim reaches a specific age. According to MGMA, an estimated 65% of claim denials are never corrected and re-submitted for reimbursement. Typically claims that exceed 300 days are frequently written off. 

Things you can do:

Keep track of each denial appeal to see if it is successful and then build on those successes

Know the payers you're having success with and go back and identify the accounts that are denying with that payer with that same issue

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