Denial management is the process of monitoring, evaluating and responding to patient denials. With the increasing adoption of clinical payment accounts, many hospitals have found it challenging to effectively manage their denials as they transition from fee-for-service reimbursement models. In this blog post, we’ll cover the five main types of denials that healthcare organizations face and explore some common reasons for those denials. We’ll also look at some of the most effective ways you can start implementing a more proactive denial management strategy in your organization today.
What are the most common denials in Healthcare?
When it comes to denials, there are two major categories – payment denials and coverage denials. Let’s take a look at some of the most common types of payment denials you’ll likely see in today’s healthcare system. – Payment type: Fee-for-service – This is the most common type of payment in healthcare. When the provider submits the billing claim to the insurance company, the claim is either fully or partially paid based on a set fee schedule. – Payment type: Fee-for-service – This is the most common type of payment in healthcare. When the provider submits the billing claim to the insurance company, the claim is either fully or partially paid based on a set fee schedule. – Payment type: Alternative reimbursement model – For example, a prospective payment system (PPS) or a fixed daily rate (DRG) system. – Payment type: Alternative reimbursement model – For example, a prospective payment system (PPS) or a fixed daily rate (DRG) system. – Payment type: Capitated reimbursement model – A model in which a healthcare organization receives a fixed payment for each covered patient under contract.
Why do healthcare organizations face so many denials?
When a patient is denied coverage by an insurer, this can impact your bottom line. While some denials are expected, others may result from a breakdown in the claims management process. At times, healthcare organizations may not have the right resources to manage a large volume of denials and can’t keep up with the demand. Other times, insurers may deny claims that are not thoroughly reviewed and approved by your billing department. In fact, a recent study found that more than $19 billion in claims were incorrectly denied or underpaid by insurers in 2017 alone. Like other areas in healthcare, claims management involves making sure that all pieces of the puzzle are in place and functioning correctly. This includes having the right staff members, systems, and resources to manage the workload and respond to denials.
Which payment types are subject to denial monitoring?
Some insurers and payers require providers to monitor and respond to denials for specific payment types. These are typically referred to as “managed care” plans and include commercial health plans, government-sponsored health plans, and managed care plans. These plans have very specific requirements for how providers must respond to denials. Failure to follow these requirements can lead to even more denials and payment delays. If you participate in a managed care plan and contract with a patient payment account, you’ll likely have to monitor denials for services provided to patients enrolled in those plans.
Identifying reasons for denials by type
When you receive a denial notification, you should also get a reason for the denial. This reason is called a “disallowance” and is used to describe a specific issue with the claim being submitted. It’s important to understand these reasons for the denials so you can address them and avoid receiving similar denials in the future. In order to better understand the denials in your organization, you should keep track of the types of denials you receive. This can help you create a strategy for responding to denials and identifying the root cause of denials. Most healthcare organizations are likely receiving a mix of payment and coverage denials. Some common reasons for payment denials include: – Missing or incorrect information – For example, missing or incorrect claim numbers, dates of service or procedure codes. – Incorrect fee applied – For example, the provider did not use the correct fee schedule. – Incorrect patient eligibility – The patient was not enrolled in the correct plan or the information on the claim did not match the patient’s information. – Services not covered – The provider billed for a service that was not covered by the plan. – Services already paid – The provider billed the patient for a service that was previously paid as part of an inpatient stay. – Services not provided – The patient did not receive the service billed.
Automated Denial Management Strategies
There are a variety of denial management strategies you can use to improve your organization’s current denial management process. Below are some of the most common denial management strategies you can start using today to reduce denials and make your operation more efficient. – Organize Your Denial Management Team – The best way to cut down on denials is to make sure your team members are working together to catch issues with denials before they become problems. – Use an Electronic Medical Records (EMR) System – An EMR system can automate many of the processes related to managing denials and can reduce the need for manual data entry. – Optimize Your Billing Process – Make sure your billing and claims management processes are up to date and can be easily followed by all team members. – Create a Denial Management Playbook – Create a playbook with tips and best practices for reducing and managing denials. This can be used as a training guide for new team members. – Implement a Robotic Denial Management System – There are a number of robotic denial management systems on the market that can help reduce denials and improve the effectiveness of your team members.
Collaborative Strategies for Effective Denial Management
While you’re working on implementing some of these automated denial management strategies, you should also be looking for ways to improve the process of responding to denials. – Educate Patients About What to Expect When They Receive a Denial – If patients are receiving a denial for a claim, they may not know the next steps to take. Let them know how to respond to the denial and what information they need to provide. – Set Up a Denial Hotline – Many patients don’t know who to call when they receive a denial. Set up a hotline where patients can call and talk to someone who can help resolve the issue. – Create a Denial Report – Create a report that details the most common denials received in your organization and what you can do to address them. – Create a Denial Resolution Policy – Outline a policy for how and when denials are resolved. For example, you can let patients know how long it takes to resolve a denial and what documentation they need to provide.
Final Thoughts
Healthcare organizations are facing an increasingly complex environment of denials, with an average of 18% of claims being denied. That’s why it’s important to proactively manage and monitor your denials, as well as seek feedback from patients who have received a denial to understand where the breakdown occurred. Denial management requires a team effort, so make sure to involve all stakeholders when implementing new strategies. With the right plan and team in place, you can better manage denials and improve your bottom line.
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