Overcoming Key Healthcare Claims Denial Challenges

Overcoming Key Healthcare Claims Denial Challenges

by Niharika Sharma

The COVID-19 pandemic’s impacts have been felt across industries, but none more directly than healthcare. In many parts of the world, the healthcare system has been pushed to capacity - and that doesn’t just mean the doctors and medical staff. Non-medical support staff and operations have been stretched thin as well. Whether it's in a large hospital or small practice, claims processing and denials management play a critical role in maintaining the fiscal health of any healthcare organization.

Denials management is a necessary, and often overlooked, aspect of that process. It’s important here to note the difference between rejected claims and denied claims. A claim rejection means the claim was submitted to a payer with incorrect coding or missing data. Claim denials occur when a claim is repudiated by a payer after being processed. While denials are a natural part of the healthcare billing process, they can be costly, so most hospitals seek to avoid or reduce them.

One of the main goals of the denials management process is to uncover the root cause. The aim is to reduce the risk of future claim denials by modifying the process to prevent unnecessary denials and reduce the overall denial rate. A low denial rate indicates a healthy cash flow. Organizations with a high denial rate should take a look at the causes and make necessary corrections.

Hospitals forgo thousands of dollars annually in revenue through denied healthcare claims. A significant portion of claims are denied annually - the industry average is between 5% and 10%, meaning payers deny about one in every ten submitted claims. Unfortunately, an estimated 90% of these denials could be prevented with solid denial management policies and procedures.

Challenges of Claim Denials Management 

Here are some of the most common challenges that lead to high denial rates:

  • Disconnected systems and processes - As businesses grow, new solutions are often developed or implemented as the need arises. This often leads to a broken, disjointed internal landscape made up of multiple processes, solutions, and systems that are either poorly integrated with one another or operate completely independently. This leads to massive inefficiencies, backlogs of denials, duplication of efforts, and increased costs. Bringing the entire system together into one streamlined process can significantly reduce the number of denials annually.
  • Increasing complexity of claims processing - The health insurance landscape has, in many ways, been growing even more complicated than it was just several years ago. The growth of insurance marketplaces gave birth to an increasing number and variety of insurance plans. At the same time, there’s been a marked shift toward high deductible health plans, which place more of the financial responsibility on patients. When taken together, these two trends lead to an increased number of costlier claims errors and higher rates of denial.
  • Lack of visibility - Many claims systems - particularly those built on manual processes or over a variety of disparate tools - don’t provide any insight into denials data. Without this visibility, revenue integrity teams are always playing catch-up, handling denials as they come, rather than identifying and addressing the root causes and preventing future denials.

Due to the costs associated with denied claims, many hospitals are understandably eager to minimize denials and the errors that often lead to them. Here are a few simple solutions that can help healthcare organizations reduce their claims denial rate.

Healthcare Business Automation

Manual processes always leave room for errors and often slow down the entire denials management process. Be it a small practice or a large hospital, manually entering and dealing with multiple payers is not easy.

However, nearly one third of healthcare providers still perform all of their denials management procedures manually on spreadsheets, according to a recent Healthcare Information and Management Systems Society survey.

Introducing business automation into such processes can offer transparency, reduce the chances for human error, and drastically increase the turnaround time, improving efficiency and cash flow. Automated denial management lowers the number of errors in the process while providing useful insights that can drive better decision making and more efficient allocation of resources in the future. 

Experienced and Trained Staff

Even with automated processes including automated denials management, having the right people involved makes a big difference. Missing or incorrect information is one of the leading causes of denied claims, and that can often be traced back to overworked or inexperienced staff. Staff members are often burdened by many administrative tasks and required to fill many different roles. They must also deal with constantly changing industry and regulatory trends and regulations, and not having the right staff can impact the revenue flow.

Automation and digitized processes can help ease the pressure on small teams by handling some of the more tedious and time consuming tasks. Some hospitals may also choose to partner with experienced medical coding services to bring in a supplementary workforce of qualified coders to help handle increased workloads.

Preventing Denied Claims 

As the old, appropriately medically-themed adage goes, “an ounce of prevention is worth a pound of cure.” For many organizations, the best way to bring down their annual denials-related costs is by preventing denials from occurring in the first place.

Exela’s PCH Global solution uses intelligent automation to identify “Certain to Deny” claims before they’re sent out. This allows for corrections to be made early in the process, increasing first-pass billing accuracy rates by an average of 24-31%, directly reducing the volume of denials.

PCH Global provides a complete claims cycle management solution through digitization and automation, offering greater visibility into the processes. Get in touch with us today to know more about automation in the healthcare industry