Introduction
Healthcare companies face many challenges when it comes to managing denials. By the end of the year, the total of denied claims and lost revenue can result in noticeable economic harm. To succeed, effective denial management is essential. Denial management is a vital part of Medical billing and revenue cycle management (RCM). To boost efficiency and financial performance, administrative and clinical processes are optimized through RCM. Within the realm of healthcare, this article investigates the importance of denial management in healthcare and develops practical solutions to streamline revenue cycle management processes.
What is denial management in medical billing and RCM?
Investigating, analyzing, and resolving denied insurance claims is part of denial management. It is an essential function for medical billing and revenue cycle management (RCM). Optimizing administrative and clinical processes, RCM improves financial performance and efficiency.
Annually, a substantial loss occurs for physicians due to healthcare claims denied despite proper denial management procedures. Although many denials are recoverable, 65% of claims go unsubmitted. Critical for managing denied claims, effective denial management is part of RCM.
The denial management process
A straightforward denial management process becomes possible when many healthcare organizations do not resubmit claims, provided it is managed accurately. Managing denials requires identifying, analyzing, categorizing, resubmitting, tracking, establishing, and monitoring, all part of a cohesive process.
Identifying denial reasons
Identifying the leading causes behind claim denials, which include coding issues, missing data, late submissions, outside care, lack of authorization, and insufficient medical necessity, marks the initial step of the denial management process. Once the root causes are identified, next comes formulating action plans to prevent future denials.
Categorizing denials
After categorizing denials, creating effective prevention plans follows. Denials can be ordered by specific causes, such as:
- Without prior authorization, a claim may be denied.
- A denial may follow misinformation and poor coding.
- Time frames exist for claim submissions among payers. Denial of the claim may occur if this deadline is missed.
- Denied status awaits claims without insurance or medical necessity determination.
Other categories to consider are the types of claim denials, such as:
- Soft denials: Temporary and without the need to appeal, such corrections may be paid.
- Hard denial: An appeal process ensues after a denied claim causes monetary loss.
- Preventable denial: Reasons such as code errors or insurance ineligibility can result in avoidable denials, which can be challenging.
- Clinical denial: Despite a brutal denial, a claim is not paid if there’s no medical necessity.
- Administrative denial: An explanation of why a claim was denied directly from the payer to your organization, a form of soft denial involved.
Upon categorizing denials, designating corrective action departments/teams is essential. Determining which denials are most pressing requires categorizing them. Limitations require this step to be used by all teams, who must prioritize resource utilization. Read More...
