How to Manage Denials in Medical Billing

September 3, 2019

An optimized medical billing process streamlines payments for all parties. Of course, even the most well-oiled machines quickly grind to a halt when denials occur. And they will occur. Insurance companies don’t make money by paying out claims efficiently and without making problems.

What Are Denials?

Denials occur when the services listed on a medical bill don’t match up with a client’s insurance claim. As a result, the insurance company will not make the payment so as to avoid any issues with their bookkeeping. Several circumstances can cause denials.

  • Timely Filing: Missing a deadline is one of the most easily avoidable denials. Be sure to get your claims filed with a client’s policyholder as soon as he or she has filled out the forms. Keep in mind initial submission and appeals timeliness are two different timeframes typically.

  • Medical Necessity: “Medical Policies” drive “medical necessity” in the eyes of insurance companies. Adhering to medical guidelines is vital in order to avoid such scenarios. They key is, as a physician, your treatment plan and what is necessary is not “medical necessity.” The “Policy” is. Physicians are trying to help patients. Insurance carriers are trying to alleviate financial liability.

  • Lack of Authorization: Not every medical procedure is created equal. Procedures involving surgery on the brain or heart require significantly greater risk than skin grafts, for example. As arbiters of risk assessment”, insurance companies take extra measures to prepare for potential consequences with riskier surgeries. Failure to clear such procedures with an insurance company will lead to a rejected claim. On the “cosmetic” end of medicine, everything is scrutinized. Know what the carrier needs and drive your documentation to address their bullet point list. Get the approval and THEN move forward.

How to Prevent Denials

The simplest way to avoid denials is to maintain accurate coding/billing records as well as knowing the patterns of denial and how to avoid them. Here are some tips to consider:

  • Timely Submissions: The sooner you can get the necessary information to the insurance company, the better. If your physician has a lag, extrapolate lost revenue for them. Put a dollar amount to the loss.

  • Prior Authorization: Know what to authorize and how to authorize. Schedule your procedures with enough time to get a response a day before surgery. You may not always get approval, but working on behalf of your patient and getting a denial can still lead to a sale on the self-pay track. Staying communicative and on top of the process displays effort and builds trust. That is a win in and of itself

  • Pre-claim Submission Scrubbing: Even if you submit your claim within the allowable timeframe, it won’t amount to anything should the claim is not clean. The norm for first pass resolution rates (FPRR) is no less than 90 percent; however, at The Auctus Group we strive for 99 percent to ensure any claim faults are kept to a minimum. You can achieve a high FPRR by empowering your billers to scrub themselves and take responsibility rather than relying 100% on tools and software alone.

How to Handle Existing Denials

No matter how much you prepare, denials can and will still occur. Sometimes, the error occurs because the patient or their insurance holder (e.g., coordination of benefits, maximum medical improvement, playing games in general, etc.). Knowing the expected denial trends and having a plan to address each denial track is the key.

  • Timely Workflow: Touch every claim every month. This is your goal. It may not happen, but it is the ideal. Clearinghouse denials, written denials, bulk EOB denials, all should be addressed in 24 to 48 hours, not put in a pile to hit at the end of the day/week/month.

  • Escalation Process: When a denials crops up, insurance companies will do their best to put the onus on you. Banging your head on the same spot on the wall is the best way you can delay your cashflow. Keep in mind, the insurance company reps are not in charge. This isn’t their game. These aren’t their rules. If you don’t like what you’re hearing or it doesn’t make sense…get a manager. Remember they measure speed of call, number of calls, and lack of escalations as positive figures. Ask for a manager. Call the corporate office. Be the squeaky wheel. Have an internal escalation process as well. Claims over $X or X number of denials automatically go to an internal manager etc.

Cash Flow and Revenue Cycle Management

Denials directly impact your profit margins, so it’s important to manage them efficiently. The longer they fester, the longer it will take to receive compensation if you can obtain it at all. A quick and accurate resolution is in everyone’s best interests…except your friendly neighborhood insurance company.

This information provides a foundation to improve denial management, but any clinic can benefit from an occasional helping hand. The Auctus Group’s medical billing services are designed to optimize your revenue streams with clean claims protected by accurate coding. This is where billing companies prove their worth. Have questions? We can help. We offer a free scope for all specialties.

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