Medical billing denial is the rejection of a claim by an insurance company made by an individual or by the provider, to pay for the rendered health care services. If you are a financial administrator in a hospital or any other healthcare facility, you would have an idea about the complications involved in medical billing claims. The denial of claims proves to be a continuous headache as it affects the credibility, cash flow, and overall efficiency of a healthcare provider.
Studies suggest that the annual claim denials for hospitals stand at 2 percent, whereas, for medical practices, the percentage increases up to 10 percent. It makes medical practices less profitable by comparison.
The Situation of Faulty Medical Billing Services Leading to Denials
Recent studies suggest that over a third of hospital execs report claim denial rates standing near 10%. Average claim denial rates are between 6% and 13%, but some hospitals are nearing a “danger zone” after COVID-19.
Some healthcare organizations even undergo denial rates of 15 to 20 percent, which is considered extremely high. It means that providers facing this kind of denial rate have one out of five medical billing claims denied.
In addition, the providers have to spend a net amount of $25 for every denied medical billing claim.
What Causes Claim Denials in Medical Billing and Coding Industry?
Human errors, input omissions, and late submissions can result in more frequent denial than you might think.
Just be careful and keep an eye on the reasons for the insurance denial issues to check which kinds of errors you should avoid to secure your billing approach and reduce the medical billing denial rates.
Categories of Claim Denials As Specified by the Medical Billers
Denials fall into two main categories: soft and hard.
Stern denials are the denials that can never be corrected and result in lost revenue.
Soft denials refer to mistakes with the potential to be reimbursed only if the provider amends the claims or sends further information.
Common Reasons that Becomes Makes Claims Faulty & Require Denial Management Services
Here are the five reasons for medical billing denial.
Leaving behind just one enforced field on a claim from a bank can evoke a denial.
It can be technical or demographic errors, which can be a missing modifier, no Social Security number, or maybe the wrong plan code.
The initial denials of medical billing account for 61% of the total, which explains the 42% write-offs.
Faulty Billing of Services Not Included in the Health Plan
This issue occurs when the claim has a service documented not included in the patient’s healthcare plan.
Duplication of Services
It refers to the entitlements resubmitted for a single encounter by the same provider on the same date for the same beneficiary. It is among the leading reasons for Medicare Part B claim denials.
Expiration of Claim Filing Limit
Most payers require medical claims to be submitted within a certain number of days of service. When not submitted on the designated days, an insurance claim may reject the claim.
However, you can avoid most of your medical billing denials by taking simple precautionary measures. They might not vanish completely, but the steps below assist in minimizing them. The underlying fact is that reducing them even by 1% has a massive impact on lowering provider’s accounts receivable.
Let’s go through the measures we need to take to reduce medical billing claim denials.
Categorizing and Quantifying Medical Billing Denials
Providers can reduce receivable claims by properly analyzing, calculating, and reporting patterns of different healthcare providers, departments, and payers. These analytical measures are essential to running an efficient medical billing management system.
Create a Professional Taskforce
Put together a task force to analyze and rectify medical billing trends. It is also important to find out which trends are worth looking into and which are not. Well educated and trained team of professionals can quickly streamline the medical billing process for the provider.
Organized Data Portals
Organized patient data portals handle information in a more structured manner. Make sure to design a smooth registration process. Otherwise, it may lead to errors resulting in medical billing denials.
Find Out Reasons behind Denials
You need to find the root cause of denial. For this purpose, you have to go beyond any coding clarifications and design different analytical techniques.
Use Updated Claim Management Software
It is important to ensure that all the edits made are functional, and recent and contribute to a continuous improvement cycle. This improves the overall claim recovery rate. Pick up a vendor that can provide you with better claim recovery rates.
Automated Predictive Analytics
It is crucial to flag potential medical billing denials and rectifies any errors before claiming the medical bill. The automated predictive analytics help quickly identifies incomplete medical billing claims.
Work Alongside Payers
Providers need to work with payers to eliminate the specific contract requirement which may lead to medical billing denial. Data analytics can help determine the trouble spots and falsely navigated support systems.
The best way to reduce your accounts receivable is to identify the reasons leading to medical billing claim denials. Medical billing and coding play a vital role in the acceptance or rejection of claims. Staying alert and always on the lookout for billing mistakes, removing them, and taking measures so that they don’t happen in the future increases a provider’s credibility.
P3 comes up with medical billing services for clinicians across various specialties. It is not always the technical skills that matter but the will to complete a certain task. We have a passion to deliver results on behalf of doctors when it comes to billing or the Quality Payment Program.