Health care providers are focused on providing the best possible quality of care to patients and maximizing reimbursement for said care. While advances in technology and techniques have made the former much easier to achieve, maximizing reimbursements is still difficult for some organizations to attain in a timely manner.
The integration and alignment between registration, clinical, and financial systems play a major role in the efficiency with which organizations can collect payments. If a system is not operating at peak performance, it can cause significant financial woes, disrupting the revenue cycle. Claim denials are a resulting outcome of poor integration and alignment. With the right analytics and dashboards in place, hundreds of data points previously unconnected can be pulled together for one view, giving you more visibility into the root cause for denials.
The denial rate is a key indicator of the effectiveness of an organization’s revenue cycle management process. According to HFMA and The Crow report, initial denial rates among five national payers ranged from 7.5% to 11.1% of net patient service revenue (NPSR), with final denial rates — uncollectible claims — ranging from 0.8% to 2.4% of NPSR.1 These denied claims end up costing organizations around 3% of their net revenue stream — even though 90% of denials are preventable.2
To minimize this impact, it’s essential to have processes in place to identify the root causes of these problems and implement changes to combat them. However, putting these processes in place is not a one-time fix. It requires everyone in your organization to commit to constantly improving, prioritizing and incentivizing users to take the correct action, even when it takes longer.
Here we will take a look at common contributors to denials and how an effective root cause investigation can ensure that these problems are fixed for the future, creating more efficiency in your revenue cycle.
While it is almost impossible to get denial rates down to 0%, it is possible to get close. In order to achieve this, the causes of denials must be understood.
According to the MGMA health insurer report card, these are the top reasons why claims get denied:3
These causes may be preventable, but a lot of effort is needed to ensure they don’t occur if the cause isn’t identified and processes put in place to fix it either before or after submission.
Take for example a non-covered payor service — number four on the list above. The individual scheduling the service would need to know the right insurance plan the patient is using prior to scheduling a specific procedure to be able to confirm what is or is not covered by the payor. This prep work requires communication between multiple groups such as the payor, registration at the organization, the provider ordering the service to confirm the procedures, and the provider performing to confirm the procedure.
In addition to being reactive to denials, organizations should aim to proactively seek out the causes and audit their systems and processes to identify gaps. Being reactive has the potential to cost organizations even more money due to the rushed response to receiving a denied claim and individuals’ not having sufficient time to properly take corrective action.
The Advisory Board found that two-thirds of denials are recoverable.2 However, according to the MGMA, only 35% of claim denials are corrected and re-submitted to payers for reimbursement. This is due in part to certain denials costing more to appeal than simply write-off, but also not having processes in place to catch recoverable denials. Leveraging root cause analysis to identify the key contributors in claim denials, in combination with analytics to proactively catch errors, will greatly increase the collection rate organizations have.
Conducting a root cause analysis entails taking a deep dive into the systems and processes in place in order to find the causes of these denied claims. Root cause analyses, combined with data analytics, create a powerful duo that is capable of auditing entire systems and catching errors that lead to revenue loss. According to Healthcare Finance, a publication of HIMSS Media, “there is no single root cause for denials, nor is there one single trouble area. Rather, problems that lead to a denied claim occur throughout the revenue cycle.”2
Real-time analytics can detect errors before the claim is submitted. The most common reasons for denials are also able to be identified, allowing the processes in place to be improved, leading to a more effective revenue cycle. Expanding on the previous payor non-covered service example, with analytics you are able to quantify how many procedures have been scheduled and the insurance that has not been verified. This could be a list an organization staff works to ensure a procedure doesn’t occur where the patient isn’t aware of the impact of receiving a non-covered service.
Diagnostic reporting, key performance indicator (KPI) tracking, and trend projections are also best practices for organizations. These tools create a framework that enables organizations to take control of their data and predict what will happen in the future, leaving them better prepared.
Denial dashboards utilizing the real-time analytics give you visibility into identifying these problems. With the right healthcare advisor, you are able to leverage their system and business knowledge to effect change — both systematically and operationally — throughout your entire organization to address the problems. You can then return to these dashboards to see the effectiveness of these changes.
Root cause analyses and analytics help decrease the amount of denied claims, but they also provide more than that as they can be used throughout the organization. Systems and processes in place are dissected and revamped to operate at peak efficiency and maximize an organization’s revenue. Errors are also caught faster, preventing them from circulating throughout the revenue cycle and causing more disruption.
Are you tired of having too many claims denied and having disconnected and sub-par systems and processes in place? Our Strategic Advisors combine data with action to develop strategies that deliver results.
“We only had one advisor during the months that we worked with Prominence. Our advisor was so good that we didn’t need anybody else.” June 2018 KLAS Review.
Contact us today to see how we can help you understand and map out your path ahead and move forward to achieve your goals.
And don’t forget to take our free questionnaire to gauge how your revenue cycle performs against other healthcare organizations we work with and receive a free personalized score and white paper.