The Denial Management process identifies and rectifies the reasons resulting in claim denials and shortens the accounts receivable cycle. Many laboratory practices lose thousands of dollars annually due to medical claim denial.
Claim denials may happen for many reasons. However, here are some most common cause for claim denials including;
- Incorrect or missing patient information.
- Duplicate billing
- Outdated or improper ICD-10 or CPT codes.
- Lack of prior authorization or documentation.
- Failure to file a claim in a timely manner.
- Out-of-network care.
- Failure to meet medical necessity requirements.
- Failure to meet credentialing requirements.
However, these claim denials most of the time occur due to a lack of strong denial prevention policies and procedures in place. Lab technicians might not realize how much revenue they are leaving behind by not paying enough attention to the denial management procedures.
That’s why they need to reduce the number of denials by identifying the root cause behind a claim denial. Also, every instance, where lower than expected payment or no payment occurs must be investigated. Because it will help to improve a lab’s revenue cycle process.
While receiving a denial is a challenge in itself, lab practices face a number of problems with implementing an efficient medical claims denial management process.
However, the common claim denial management challenges for lab practitioners include using manual processes, quantifying denial rates, and appealing denials. Without overcoming these challenges, lab practitioners can lose their revenue, which negatively impacts the sustainability of their lab.
Let’s have a look at some of these challenges in more detail.
Many lab practitioners in the US healthcare industry still use paper-based, manual billing systems. That is not as efficient and organized as modern solutions.
According to the latest research, conducted by HIMSS professionals, about ⅓ of lab practitioners still use manual claim denials management processes.
Apart from being time-consuming and far less efficient, such outdated processes leave room for discrepancies, errors and offer less transparency.
Transition to value-based care:
The change from fee-for-service to value-based care results in challenges for many lab technicians.
Insurance companies are integrating more complex requirements into their plans/contracts, and patient payment responsibility is also increasing.
However, constantly changing coding regulations, federal policies, and payer requirements add another layer to their payment collection process.
Lack of standardization:
Each insurance provider sets its own rules for denying medical claims and communicating denials to laboratory practitioners.
That leads to the healthcare industry lacking a standardized procedure for insurance companies and lab technicians. Federal bodies need to set a standardized procedure for all insurance companies (both Government and Private).
That’s why they are facing challenges to identify, track denials and unpaid claims as well as their reasons. Which makes it challenging to avoid future denials.
Incorrect patient data:
One of the common reasons for claim denial is missing or incorrect patient information. Omitting even the smallest piece of information can result in costly denials.
Particularly true in the case of personal data i.e, patient name, phone number, current address, date of birth, policy number, or even patient demographic.
However, these errors can be easily preventable by using advanced claim scrubbing tools and clearinghouses. That will help to catch and rectify coding and billing errors on the spot.
Keeping track of claim denials:
The biggest challenge is tracking denied claims and justification for these medical denials. Although, it’s very challenging for lab technicians to gain access to claims denial data from insurance companies.
Every insurance company has its own time limit to file a medical claim. Untimely filing of an insurance claim usually leads to denial and healthcare providers lose compensation. However, most of the time occurs when a lab practitioner misses filing a claim on time due to a lost or incomplete medical bill.
Improve Denial Management System
According to an “Advisory Board” report, 90% of denials are preventable. It can be achieved through the minimization of human error.
Using advanced billing solutions and practice management tools is the perfect way to do this. These solutions help labs to reduce denial claims, save time, ensure fast claim processing, and more reliability.
However, adding more employees to the claims management department would not necessarily help prevent denials unless they know what to focus on.
If lab technicians want to improve their laboratory billing services, the following should be part of their denials management process:
- Quantify and categorize claim denials by tracking, measuring, and reporting.
- Identify which types of denials your lab is receiving most.
- Create a task force to identify denial trends.
- Improve patient data quality which is the major source of many errors.
- Avoid incorrect assumptions and identify the true reasons for medical claim denials.
- Automate screening processes for prior and pre-authorization.
- Pay close attention and confirm patients’ insurance eligibility and healthcare coverage beforehand.
- Develop a denials prevention strategy in all parts of the revenue cycle.
- Optimize/update claims management tools.
- Constantly monitor clean claims ratio and provide feedback.
- Use automated claim management tools.
- Conduct analytical and financial reports to flag potential denials.
- Work with insurance providers to improve contracts and support negotiation.
- File and appeal denied the claim within the given time period of the payers.
Denial management is a key component of a healthy cash flow and successful RCM process. But many laboratories lack the proper technology and staff capacity to manage denials effectively in-house. Especially in light of constantly changing billing and coding regulations and federal policies.
Outsourcing denial management services to a professional laboratory billing services provider is one of the best solutions. It will help to maximize a lab’s productivity and profitability while ensuring hassle-free reimbursements.
Medcare MSO has a fully-trained and experienced denial management team. That can help lab practitioners establish medical billing benchmarks, identify the root cause of denials, and reduce backlogs.
They offer customized denial solutions that help you to capture payments being lost due to the claim denials. And identify your denial management challenges with an efficient denial management plan.