The Rise of Denials
According to Fierce Healthcare, hospital denial rates were climbing prior to the COVID-19 pandemic, but they reached new heights as hospitals had to counter the new public health emergency. Harmony Healthcare conducted a study and received responses from 130 respondents. One-third of hospitals who responded to their poll said their hospitals surpassed the 10% “denials danger zone.”
The pandemic put hospitals and health systems in a state of frenzy, but as it begins to slow down, it’s a good time to start paying more attention to the denial management and prevention process. Amid an ongoing pandemic and severe nursing shortage, denial management hasn’t been a top priority for many hospitals across the nation. As we slowly transition back to normality, many hospitals will find that they have a denial backlog. As overwhelming as it may seem, there are solutions hospitals can use to manage their workload. Having a denial prevention mindset can reduce the review workload in the present and prevent this situation from happening in the future, regardless of what gets thrown their way.
If appropriately utilized, pre-bill audits will help increase claims approved the first time.
Hospitals can mitigate their risk of denials by increasing the percentage of claims approved the first time around; a complete denial management process includes many moving parts and should include pre-bill reviews. Pre-bill reviews protect an organization’s revenue integrity system proactively as it prevents back-end denials management and performs case reviews before submitting a claim. This way, there is an increased chance of submitting a clean claim, reducing the number of resources needed to submit appeals. Industry standards dictate your clean claim rate should not be less than 90%. This rate is ideal because it means the claim spends less time in accounts receivable and less time at the payer, meaning you get your payments more quickly.
Denials are costly for hospitals and health systems and are preventable. Common causes for denials are:
- Incorrect demographic information.
- Failure to validate insurance benefits.
- Absence of follow-up for supporting documents.
All of this information is confirmed or corrected with pre-bill audits before the original claim is submitted. This way, the claim has a lower chance of being denied by the payer. The more claims the payer accepts is more revenue for your organization. This strategy works particularly well with high-dollar claims where an organization could stand to lose a considerable amount of revenue. The further along the factors potentially causing a denial are allowed to progress through the care process, the more expensive the denial becomes, but clean claims are 1:1, dollar for dollar. Denied claims are not, as you spend time and money appealing these denials. The longer a denial stays in the denials/appeals system, the less valuable that payment becomes in the long run.
One of the primary reasons providers don’t get paid appropriately is because they don’t follow payer rules. Sometimes it’s something as simple as changing the level of care and forgetting to update the payer. To reclaim proper reimbursement, it’s essential to put a plan in place to secure authorization the same day as the extenuating circumstance. This plan should include the medical necessity reasoning and extensive documentation to back up the medical necessity.
Planning in advance is critical for your organization to avoid delayed reimbursement and realize your appropriate revenue more quickly.
Pre-bill reviews are helpful and important within their own right, but when used in conjunction with other strategies, i.e. root causes analysis, the benefit is even greater.
Hospital Claim Denial eBook
In a time of stress and change for the healthcare industry, it’s crucial to have the right processes and people to handle whatever comes your organization’s way. In our latest eBook, our clinical experts pull together their denial management and prevention experience to dissect the six most common denial root causes, their preventative options, and the benefits of addressing them. To learn more and download your copy, visit the page at the button below.