Avoiding Denied Claims is Crucial to Good Hospital Revenue Cycle Management

According to a report by Relay Health Financial, large hospitals in the Northern Plains have higher average claim denial rates compared to other areas in the country at a surprising 10.58%. The report defines large hospitals as facilities that host 250 to 400 beds. The percentage was derived by comparing the claims dollars that were denied relative to revenue successfully billed on the claim.

The South Central region, meanwhile, topped the list among mid-sized hospitals (100-250 beds), with a denial rate of 8.82%. The region also ranks second among large hospitals, registering a denial percentage of 8.8%.

Of course, as any healthcare executive knows, denial rates are simply part of business. After all, insurers closely scrutinize each claim to see if they should indeed pick up the tab for the patient. However, keeping denial rates to a minimum is a crucial part of hospital revenue cycle management. After all, when claims are denied, unpaid bills have a higher chance of becoming potential bad debt.

Fortunately, hospital operators have many ways to prevent claims from being denied. Following are just some tips that healthcare facilities should keep in mind.

Lower Your Claim Denials to Improve Hospital Revenue Cycle Management

Proper Registration Means Cleaner Processing

Did you know that 15.5% of all denied claims are attributed to registration-related processes? Of those, 8.5% are the result of registration errors and eligibility issues, while 7% are from authorization and pre-certification problems.

What can healthcare facilities do about this? First off, make sure to conduct comprehensive checks on the registration data to see if there are gaps in the way your hospital on-boards patients. Also check for eligibility early on and throughout the entire billing process. Then confirm the pre-authorization requirements diligently.

Hire an Eligibility Expert

To ensure good revenue cycle management, healthcare facilities must try to limit the out-of-pocket costs that a patient pays out. Luckily, government-sponsored programs such as Medicaid can subsidize a considerable portion of healthcare costs for indigent patients.

The problem is that many such patients are not aware that they qualify for such programs, or they refrain from applying because they do not understand the process. This is where hiring an eligibility expert for your facility becomes helpful. These professionals will guide a qualified patient through the paperwork required for Medicaid registration, thereby lowering the out-of-pocket costs they need to shoulder.

Rely on Data and Insight

Some specialized medical treatments are more likely to get denied than others. For instance, orthopedic surgeries have a 7% claims denial rate, while pediatric cases account for 11.75% of all Medicaid denials.

Take a look at your claims denial data and identify which areas and cases are most commonly denied. Then, be sure to double down on the registration procedures and eligibility checks to lower the chances of denials. In other words, the answers are already in your records—you just have to dig in and find the insights.

Create a Task Force for This Initiative

Yes, the steps mentioned above are all good plans. However, without an implementing body to ensure that these plans will indeed be carried out, your denial rates will remain high. As such, create a task force to develop an implementation guideline that ushers these plans into reality. You are free to choose which members of your facility shall sit on the task force, but try to attain a cross-section of your team so that all views are represented.

While denied claims are a part of operating a hospital, there are many steps you can take to avoid them. By keeping these tips in mind, you will be better able to provide excellent healthcare for your patients while keeping your own bottom line healthy. 

Sources
Focusing on these 3 things can help providers prevent claims denials, RevenueCycleInsights.com
Medical Billing Denials Are Avoidable: How to Help Prevent the Top 5, McKesson.com

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Categories: Hospital Revenue Cycle Management