5 Best Practices for Your Healthcare Denial Management Process
Submitting medical claims is an important part of the healthcare revenue cycle. In order for facilities and providers to receive payments, claims must be approved by insurers so that services can be reimbursed. However, it’s becoming increasingly common for claims to be denied. Without a proper denial management process, this can lead to less revenue and more frustration among patients, providers, and administrators.
If you’re managing a facility, you may be looking for effective ways to appeal denials so that you aren’t losing out on payments. To help you with this process, we’ll walk you through best practices for managing, addressing, and preventing insurance claim denials.
What Is Denial Management in Healthcare?
Managing denials involves a systematic process for reviewing and resolving denied insurance claims. Claims can be denied for a number of reasons, including:
- Out-of-network providers
- Human or technological errors
- Incorrect or missing information
- Duplicate claim submissions
- Lack of coordination of benefits
Depending on the reason for denial, facilities can make a case for appeal and recover payments. This entire process can typically be broken down into the following three steps:
- Identifying why a claim was denied
- Completing appeal paperwork
- Resubmitting the claim to the insurance company
Why Is It Important to Manage Denials?
Incorporating denial management in medical billing ensures that facilities aren’t missing opportunities to recover funds, which helps them increase their revenue. There are many instances where denied claims can be successfully appealed but are never reviewed to begin with.
In fact, roughly 20% of all claims are denied across the healthcare industry, but only 40% are resubmitted to insurance companies. Through effectively managing denials, facilities can:
- Identify shortcomings in claim submissions and prevent future denials
- Pinpoint root causes of denials to find long-term solutions
- Increase revenue through higher payment collections
- Prevent patient dissatisfaction resulting from denied claims
5 Best Practices for Facilities
Now that we’ve gone over why it’s important to manage denials, you may be wondering how you can implement an effective process. Here are five best practices you can follow to ensure your claim denials are properly addressed.
1. Review Denials in a Timely Manner
To facilitate the denial management process, it’s important that denials are promptly sent to the right parties for review. Denials can be reviewed either internally by the insurance company or externally through your local health department. For internal review, facilities have up to 180 days to submit all paperwork required by a health insurer.
To ensure that this deadline is met, all necessary documentation and supplementary information should be completed as soon as possible. If there is a queue of denials, make sure they’re immediately rerouted to staff assigned to review and initiate paperwork as they come in.
2. Standardize the Appeals Process
Many different staff are involved in the billing process. Providers must accurately document ICD and CPT codes so that administrative staff and medical billers can generate claims. Without standardizing a process for appeals, it’s often unclear as to who is responsible for reviewing and gathering necessary paperwork.
Provide guidelines on how each part of the appeals process should move through the administrative system. For example, you may want to designate the initial review of a denial to your receptionists, who then gather and send off paperwork to be completed by medical billers.
3. Create an Appeals Checklist
In order for an insurance company to review an appeal, they must have all relevant paperwork that explains why they should approve the resubmission. Missing or incorrect information can lead to a second denial or slow down the process altogether.
To guide your staff, provide an accessible appeals checklist that outlines all required paperwork and documents that must be submitted. This may include:
- Any specific forms required by a given insurance company
- The original explanation of benefits describing why a claim was denied
- A letter outlining reasons a denial should be re-reviewed and appealed
- Any service documents with additional information that may facilitate review
- Notes from any phone conversations or email exchanges with the insurer
4. Track and Analyze Denials
Beyond resubmitting claims, it’s important to keep track of and analyze all past and current denials to prevent similar cases. Ensure that your staff are keeping a copy of all denial letters and documents that are used to make appeals.
It can also be helpful to maintain a log that tracks reasons leading to denials and whether or not appeals are successful. This allows you to not only prevent avoidable denials, but identify ways to improve documentation used to support future claim resubmissions.
5. Implement Prevention Measures
The best way to deal with denied claims is to try and prevent them in the first place. While some denials are inevitable, it’s important to ensure that each step of the billing process is optimized to minimize preventable cases. Put your denial data to good use by acting on common patterns that you gather from your analysis.
For example, if you find that your denials are commonly caused by incorrect CPT codes, consider streamlining your provider’s charting process. This may involve automating linkages between services and codes through your facility’s electronic health record (EHR) system.
Looking to Streamline Your Billing Process?
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