According to recent estimates, gross charges denied by payers has grown to an alarming 15 to 20 percent of all claims submitted.” This statistic, and more, were cited in Becker’s Hospital Review from CPA and business advisory firm, Eide Bailly LLP.
Other key points:
- Claims cost an average of $25 to rework.
- Up to 65% of denied claims are never worked — which translates to an estimated 3% loss of net revenue.
- About 67 percent of all denials are appealable.
For vendors, streamlining denial management also marks a massive opportunity. According to HIMSS Analytics, as of 2016, more than half of providers surveyed were using manual processes, in-house solutions, or they were unsure of their approach to denial management.
Current Denial Management Challenges
The transition away from fee-for-service arrangements means that hospitals are bracing for the impact of reduced admissions, higher deductibles from health plans, and the introduction of alternative visit methods — all of which mean increased chance for growing bad debt, denied claims and a potential drop in revenue. Any hospital or health system that isn’t leveraging their denials to the fullest by reviewing, tracking, and extracting as much data as possible may fall victim to incremental lost revenue and wasted labor.
A core fundamental for a complete denial management solution involves data aggregation. Many times, it is very difficult with complex RCM workflows to move data from one processor to another due to silos within the process. Take for example even a lockbox environment. Is the lockbox processor able to extract all denied claim data from paper/PDF items and effectively route it to the hospital information system or practice management system? When that doesn’t happen, providers must create ad hoc processes which involve a lot of manual intervention.
Providers will need to look deeper into top denial trends like claims lacking information, non-covered charges, and precertification/authorization issues to maximize reimbursement and identify missed revenue. Tracking trends based on accurate data, sorting soft from hard denials, and performing accurate root cause analysis will be critical as providers build effective denial prevention programs that educate their clinicians and staff and enable better decisions. To solve this issue, more sophisticated business intelligence, or denial intelligence, is needed.
The Importance of a Strategic View Toward Denials Management
In the perfect world of cash posting and denials management, 100% electronification of healthcare remittance and payment information is used. Native EDI 835 data would flow seamlessly, including all denied claim information, into 3rd party reporting and BI solutions with potentially predictive analytics. This is the ultimate strategic deployment.
When strategic denials management isn’t employed, valuable remittance and payment data from EOBs and correspondence letters is omitted from these downstream applications, leaving providers in the dark on denials.
A better solution starts with a strategic approach to denials management and one that prioritizes AI-enabled straight-through-processing.
AI allows providers to extract denial codes pulled from all sources, including paper and PDF-generated remits and correspondence letters to act as the initial data consolidater. Not only would this streaming cash and correspondence posting, but accuracy levels increase substantially!
Achieving the Ultimate Denials Management Solution
There are many variables which impact the data, flow and process around denials management. Software functionality from vendors is a critical consideration for the analysts working these claims. However, the software is only as good as the data which feeds the system. We think the most critical issue facing the market today involves proper data aggregation and electronification. Solving this problem will break down silos and solve many of the denied claim challenges the industry is facing!
A proven approach to automating the lockbox function is to apply AI technology to automate the posting process of paper and PDF-originated remittances along with checks and correspondence letters. This data is then streamed into medical account receivables and denied claim processing seamlessly, fully leveraged without manual intervention.
Does this sound achievable? Let us know your comments.