The healthcare landscape is very complex—more than one can expect. Different components collectively contribute to maintaining the overall operability of a facility. A little distortion from one component of a facility often invites big disasters if left unnoticed. For instance, consider claim denials resulting from myriad errors caused by medical billing services. Healthcare billing services can be in-house or outsourced. However, they majorly contribute to efficient revenue cycle management and AR recovery. However, receiving a denial after all the hassle of medical billing and coding of service is not acceptable. Especially when the rate of denials is higher than the revenue collection rate.
In this blog, we’ll explore the types of medical denials and the resulting denial management approaches. Also, we will shed light on the general reasons behind these denials. Continue reading to understand the denials in medical billing in detail. Let’s get started now!
Denial Management Matters in Medical Billing: Why?
Financial setbacks and disrupted cash flow are both less favorable. Healthcare facilities expect at least this much from their medical billing companies to nip them in the bud. The medical denials play the role of buds here.
On average, 5 claims are denied for every 20 medical claims today. This means the medical billing providers have to put extra effort into the collection of this money. That’s why we first need efficient medical billing services so that we can get rid of denials. This is the best and most preferred choice for every healthcare practice. So, they prefer outsourcing medical billing mainly for this reason.
Second, mistakes are inevitable, especially when we are using a manual workforce for complex billing. That’s why we have added a little margin for the medical billing companies. If they can’t eliminate the denials, they must reduce the denials to a certain extent. Reducing the denial rate as much as possible can be an effective strategy.
So, denial management is the vital strategic process of medical billing that keeps practice safe from revenue loss. They immediately identify, analyze, and resolve the claims in minimal time. Otherwise, neglecting denials for a considerable time may cause dire problems. Above all, denials may strain provider-patient relationships. On the other hand, denial-management strategies keep the revenue cycle smooth. They actively enhance and optimize the operation of medical facilities.
Important Types of Denials in Medical Billing
Medical denials are usually of three main types. Have a look at them so that we can distinguish them clearly and adopt the right management strategy.
a. Technical Denials
As revealed by their name, they arise from typical administrative or technical errors. For instance, documentation incompleteness, missing or incorrect patient demographics, etc. Other causes of technical denials may include missing signatures, outmoded insurance coverage, and code invalidity.
b. Clinical Denials
Insurance companies analyze the medical necessity of an operation or service, which results in clinical rejections. They may believe that the therapy is not necessary or doesn’t meet their requirements for coverage. Healthcare professionals must rigorously maintain clear and thorough documentation to prevent clinical rejections.
c. Coverage Denials
Insurance services usually provide patients with an EOB at the time they apply for insurance. Afterward, they kept modifying it from time to time. The provider provides coverage for certain medical services. Therefore, patients must choose the insurance coverage plan that best fits their medical needs. As is customary, the front office staff must check the insurance coverage before treatment. However, they miss out on this essential step in emergency scenarios. And if medical billing services unnoticeably submit a bill for such services, coverage denials result.
Common Reasons Behind Different Types of Denials
Among the myriad reasons behind claim denials, the five most commonly occurring are given as follows:
- Inaccurate or missing data
- Lack of documentation supporting the medical necessity
- Different sorts of medical coding errors
- Out-of-Network Providers
- Claim filing and submission duration
Types of Denial Management in Medical Billing: Ways to Deal with Denials
Denial management in medical billing comprises two primary approaches: proactive and reactive.
Proactive denial management involves averting denials before they occur. This strategy encompasses meticulous documentation to ensure the accuracy of claims. Medical billing services must have strict adherence to coding guidelines to prevent errors. Also, they must perform regular audits to identify and rectify potential issues. Apart from this, thorough staff training maintains compliance with industry regulations.
On the other hand, reactive denial management comes into play when denials do happen. In this phase, providers conduct a detailed analysis of denial patterns. They investigate the root causes and implement corrective actions. Then, they pursue appeals to challenge denials and establish effective lines of communication with payers to expedite issue resolution.
Hence, effective denial management is one of the vital characteristics of good medical billing. The healthcare providers may attain their reverence improvement goals and set new financial goals. Above all, the denial management strategies provide ample providers with a seamless claims experience. As a result, they get their money for rendered services on time.