Escalating claim denials are severely destabilizing the financial footing of healthcare providers.
According to Kodiak's analysis, the healthcare industry incurred a staggering revenue loss of nearly $1.2 billion between 2021 and 2023, driven by a 51% surge in the final inpatient claim denial rate. Moreover, the denial rates for prior authorization and precertification claims also saw a 22% increase, rising from 1.35% in 2021 to 1.65% in 2023.
Claim denials can deplete your resources, draining valuable time, effort, and financial assets that could be invested in delivering high-quality patient care and enhancing operational efficiency. It's high time we address this issue proactively and implement effective solutions to minimize the impact of claim denials on our organization.
Claim denials have been a persistent thorn in the side of healthcare providers, and their recent rise has only deepened the wound, intensifying the financial strain and administrative burden on the entire healthcare system.
Here's what's driving this change:
Escalating healthcare costs are impacting all stakeholders in the sector. In response to this challenge, payers are adopting more stringent approaches to scrutinizing claims compared to previous practices.
Payers are meticulously evaluating the medical necessity of surgical procedures and treatments, particularly scrutinizing the appropriateness of elective services to curb unnecessary healthcare expenses. Additionally, inpatient admissions are under heightened scrutiny with the two-midnight rule for Medicare Advantage plans starting January 2024. Medicare-managed care payors are meticulously reviewing claims to ensure alignment with established guidelines for hospitalization.
Furthermore, payors conduct concurrent and retrospective audits, real-time assessments, and post-payment reviews to enhance claims processing accuracy and ensure compliance with policies and regulations.
Insurance companies are integrating advanced technologies such as machine learning (ML) and analytics to enhance claim processing capabilities. ML algorithms can analyze vast amounts of data and identify patterns and trends, enabling payors to flag claims that may be non-compliant with their policies.
Additionally, sophisticated analytics techniques allow payors to identify anomalies or irregularities in provider billing patterns, potentially signaling noncompliance or fraudulent activity.
Rising healthcare costs and inflation are already squeezing revenue streams; the last thing any healthcare organization wants is to lose additional revenue due to claim denials.
Denials don't just disrupt cash flow; they also compound financial strains due to the resource-intensive appeal process and diminished profit margins. Healthcare organizations must adopt proactive strategies and best practices to minimize denials, optimize revenue cycle management, and ensure financial stability. Here's how:
Denials can stem from various reasons. As a result, the approach to handling each case may also differ. For instance, a soft denial may be resolved with *efficient follow-up actions, potentially avoiding the need for an appeal. Conversely, addressing a hard denial might involve a more time-consuming appeal process. Therefore, it's crucial for your team to clearly define denials so that everyone shares a unified perspective and comprehends the full financial impact of clinical denials.
Different interpretations of denials can lead to confusion and impede the denial management and reporting process. With everyone aligned, denial management operates with greater efficiency and cohesion.
Insurance companies have embraced machine learning (ML) and analytics to uncover even minute errors within claims. It's high time healthcare providers followed suit, leveraging predictive analytics to foresee potential denials and proactively address them.
Advanced technology allows for real-time claim scrubbing, identifying and rectifying issues early in the claims process, thus decreasing the chances of denials. Furthermore, automating tasks like eligibility verification and prior authorization enables healthcare organizations to accelerate approvals and minimize denials linked to authorization issues.
In-depth denial assessment requires a meticulous examination of denied claims, aiming to unravel the root causes and patterns behind the denials. This process empowers your practice to pinpoint the root causes and take necessary corrective actions, ensuring a smoother claim management process.
But how do you deal with changes in payor behavior? That calls for a proactive approach.
Start by analyzing the incidence rate of clinical denials to uncover emerging trends and areas for improvement. Keep a close eye on the volume and frequency of accounts denied for clinical reasons. Additionally, assess the speed at which denied claims are addressed and appealed. This comprehensive strategy ensures your practice stays ahead of the curve, identifying opportunities for enhancement and optimizing claim resolution processes.
Integrating denial insights with financial impacts is essential to optimize your practice's revenue cycle management. By quantifying the direct and indirect monetary losses linked to claim denials, such as added expenses from appeals, redoing work, and covering administrative costs, organizations can develop specific strategies to reduce revenue loss, streamline operations, and enhance overall financial well-being.
In addition, segmenting denial data based on factors such as payer, service type, and denial reason allows providers to identify high-impact areas and tailor their responses accordingly.
Addressing a denied claim demands extra resources. However, this task can seem particularly challenging as we grapple with workforce shortages.
To tackle this, healthcare providers must ensure they have the right people in the right places and concentrate on high-value accounts to maximize revenue capture. On the other hand, outsourcing claims with lower margins or overturn rates is an effective strategy to ensure all accounts receive the necessary attention and are resolved faster.
At Glenwood, our commitment is to achieve over 99% collections by meticulously monitoring and appealing denied claims. We ensure private practices dedicate more time to patient care by securing their rightful compensation.
Leveraging advanced technology (GlaceRCM and GlaceScribe) we streamline the claim submission process by offering multiple charge capture points like GlaceEMR, third-party EMRs, and mobile devices. Our software meticulously identifies potential coverage and coding errors to prevent denials. Moreover, we have a proven track record of recovering denied claims and consolidating outstanding claims for resubmission by analyzing specific elements, leading to successful payments.
Let's partner and remove the thorn of claim denials to pave the way for smoother revenue cycles. Book a demo today!
Schedule a Free Consultation!
