Because of the way revenue flows in a medical practice, its financial health and stability greatly depends on having claims accepted. A claim denial is an avoidable error that disrupts the billing process, taking it two steps backward for every step forward.
How to Avoid Denials
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. Use a denial management module built into your overall practice management system to do this quickly and easily. A variety of reasons for denial will come up, such as:
- The payer may insist that the stated diagnosis doesn’t support the medical necessity of the services.
- There may be missing paperwork in the documentation for the claim.
- The patient may not be a covered beneficiary of the payer to whom the claim was submitted.
The various reasons that emerge should guide your practice to take two types of 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.
How to Respond
There are several possible responses to a claim denial. For instance, once the root cause of the denial is established, try to correct and resubmit the claim. Make sure you locate any missing paperwork and then add it to the claim. You can 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, a write-off should be the last resort to a denial.
But you might want to appeal the claim first. In the event that your practice makes what it believes to be appropriate corrections, but the payer still rejects them, the best option may be to file an appeal. 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.
How to Change Your System
Of course, you want to avoid claim denials, so you may need to make systemic changes for the future. You might encounter problems with incomplete documentation or improper coding that 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, your focus should be on getting all the right patient information before or during registration, capturing and entering the correct charge codes in a timely manner and correcting preadjudication edits returned by the claims clearinghouse on a daily basis.
Following these steps will help your practice be well on its way to clean claims. It’s important to fully understand the causes of claim denials. This starts with reporting denials at the claim level and on a line-item basis, and then projecting trends over time.
Contact Kathy Walsh at email@example.com or a member of your service team for further discussion.
Cohen & Company is not rendering legal, accounting or other professional advice. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts and circumstances.