By using denial management software, healthcare organizations can reduce or
eliminate denials. To get the most out of these solutions, healthcare organizations
must establish a revenue cycle management system that optimizes revenue cycle
results and pinpoints the primary causes of denials. Here are three ways to
implement an internal denial management system in your organization:

Data-driven solutions identify root cause of
denials

Using meaningful data from claims and payment processes can help providers
identify the root cause of denials and develop a roadmap for reducing errors and
unnecessary resource consumption. A data-driven solution will provide a unified
view of claims and payment processes, and can link front office and back office staff
to gain a better understanding of why claims are being denied. For example, by
identifying the causes of denials and creating a dashboard with the underlying
trends, back office staff will be able to give immediate feedback on the cause of the
denial.
Denial management is a constant process that requires ongoing evaluation of
internal workflows and ongoing staff training. The results of the data-driven solution
can identify trends and patterns, and allow for preventive actions to be taken before
or after a denial occurs. This approach requires an additional time commitment from
financial leaders, but it can result in dramatic savings. It’s important to note that
while denial rates will never be completely eliminated, prevention of denials can
have a significant impact on the bottom line.

solutions identify root cause of
denials

To prevent denials, organizations should implement a multidisciplinary approach
that includes key leaders from both the clinical and financial sides of an
organization. While finance teams are often responsible for collecting denial data,
many other functional areas play a key role in preventing them. Coding, for
example, must be aware of payer policies and ensure proper documentation. A
steering committee should include representatives from Patient Access, Utilization
Review, and Health Information Management (HIM), as well as clinical areas.
The goal of preventing denials is to reduce the overall volume of denials and improve
revenue visibility by identifying and resolving root causes. This approach will enable
hospitals to focus on the problems that are causing them, and prevent denials from
happening in the future. In addition to improving revenue cycle metrics, data-driven
solutions help organizations understand trends and focus on upstream
improvements. While this may seem like a daunting task, the payoff is worth the
effort.

Cost of denials

One of the biggest costs for healthcare organizations is managing denials. While
data analysis is usually done within the EHR, it is often not enough to ensure proper
denial management. Denial management solutions offer business intelligence and
other tools to track and monitor denial rates. A key component of a denial cost
project is defining the value of each data point. Defining the value of a denial can
ensure that all team members are aggregating data points in the same way.
Many organizations contract with multiple payers and are therefore subject to the
varying denial rates of these organizations. These organizations stand to lose billions
of dollars if they don’t improve their claim denial management. According to HFMA’s
Claim Integrity Task Force, almost 5% of claims are initially denied, resulting in
significant cash-flow issues in revenue cycle management. Inefficient claim denial
management technology is one of the leading causes of denials, and it’s vital to
implement a solution that can reduce these costs.

Cost of denials management

In addition to denial reduction, denial management solutions should also track the
costs associated with each denial. Quality analytics help answer the question: “Do
we have enough preventive resources to prevent denials?” Since denial costs vary
by payer type, facility, and internal process, they need to be tracked carefully.
Furthermore, denial costs change continuously. That’s why denial management
solutions should include data that is accurate and comprehensive enough to answer
the question: “Are we wasting our resources on too many bad appeals?”
For example, if XYZ Healthcare submits 20,000 claims a month, 4,000 of them will
be denied. Based on a 20% initial denial rate, this amounts to $300,000 a month and
$3.6 million a year. Considering that 90% of denials are preventable, the cost of
reworking claims is not cheap. It is important to consider the long-term cost of the
solution.

Time-consuming processes

While revenue cycle management is ripe for innovation, it is still hampered by the
slow pace of denials and the inability to measure the impact of the process on a
business’ bottom line. Many organizations struggle to implement the necessary tools
and processes to effectively manage denials and their costs. In fact, 31 percent of
hospitals still manage denials manually. To be effective in reducing costs, revenue
cycle management must be a top priority.
Creating a centralized team of denial specialists ensures accountability and allows
organizations to focus on claims management and prevention rather than
overturning denials. Denials have a much greater financial impact if the cause is
avoided, rather than simply overturning them. For example, employees often wear
many hats and must manage phone calls, financial counseling, and patient
demographics while simultaneously submitting insurance applications.
Even if denials are inevitable, preventing them from happening in the first place is
vital. Often, a 30% to 40% portion of denied claims are the result of registration
challenges. In addition, staff members in physician practices are busy handling a
plethora of administrative tasks, juggling multiple roles, and dealing with changing
industry regulations. According to the Healthcare Information and Management
Systems Society (HIMSS), approximately one-third of healthcare providers still
perform denial management processes manually. However, this is not an ideal
option as it leaves room for human error, offers less transparency, and slows down
the claims-processing process.

Time-consuming processes saving

Developing a holistic strategy to prevent denials requires a collaborative approach
from all team members. By analyzing data, healthcare teams can find underlying
issues and create strategies to eliminate them. Whether a practice has a complex
patient-centric approach or a purely reactive approach, there is a way to prevent
denials and improve the quality of care. Ultimately, successful denial management is
all about using the right tools and leveraging the power of data to reduce costs and
improve patient satisfaction.
Claims denials are a huge drain on the revenue cycle of physicians. The costs of
reworking and resubmitting initial denials alone are enough to make a practice’s
operational costs nearly nine billion dollars a year. That is not to mention the
additional expense of attempting to appeal rejected claims. Therefore, a practice
should strive to submit clean claims from the very beginning to avoid denials and
maximize revenue.

Impact on revenue cycle

Implementing denial management solutions is an excellent first step to improving
the hospital revenue cycle. Denials can be a major drain on a hospital’s resources, as
the costs of write-offs can reach millions of dollars each year. Even though denials
are often avoidable, providers can’t afford to work for free, which seriously hampers
their financial viability. By implementing effective denial management solutions,
hospitals can reduce the time it takes to get reimbursement and increase their
bottom line.
Hospitals have plenty of opportunities for analyzing and preventing lost revenue. By
analyzing Discharge Not Final Billed metrics, Accounts Receivable (A/R) days, and
Aged Trial Balance, they can identify where lost revenue occurs. But despite all
these new opportunities, denials management remains an opportunity for many
organizations. Despite the recent shift from volume to value, denials management
remains an important revenue cycle tool, supporting a robust revenue stream under
existing fee-for-service payment models, and managing a full range of VBP
contracts.

Impact on revenue cycle management

A denial management solution identifies and corrects a range of denial reasons.
Typically, these reasons fall into seven categories. Denial management tools also
flag data entry errors, coding errors, and billing mistakes. By monitoring denials,
these tools can prevent errors from reaching payer adjudication systems. These
solutions act as gatekeepers to identify errors and improve denial rates. Ultimately,
these solutions improve the revenue cycle by improving the likelihood of payer
acceptance and increasing patient satisfaction.
A comprehensive patient collection and payment process is crucial to achieving
stability. Patients expect to receive accurate estimates and multiple payment
methods. By leveraging the retail industry’s experience in patient experience,
providers can improve their revenue cycle with a comprehensive patient payment
process. By implementing a comprehensive patient payment process, providers can
improve the customer experience, minimize bad debt, and increase collections. With
a comprehensive suite of revenue cycle management services, ParaRev offers a
complete suite of healthcare revenue cycle management solutions. Working with
hospital billing and financial staff, this revenue cycle management solution enables
hospitals to optimize collections and revenues.
An intelligent automation solution can solve the denial dilemma. By tracking denials,
organizations can identify causes of denials and improve their processes. They can
eliminate delays in accounts receivable and develop a zero-tolerance approach to
denials. This mindset can be developed by tracking denials and educating staff.
Then, denial management processes can begin to work for themselves. In addition,
healthcare organizations can shift to denial prevention to eliminate the problem
altogether