This is a critical time to examine your revenue cycle management (RCM) process. The way in which your healthcare practice submits and manages healthcare claims can make or break your revenue growth.
Unless your healthcare practice is small, there can be many parties accessing and making changes to a patient’s account, increasing the chance for errors during the revenue cycle. Medical practice billers bear the responsibility for identifying errors and correcting them before the claims are sent to a payer or insurance company.
Claim denials are often the result of failure to enter accurate information regarding a physician’s order or the patient’s medical history and medical necessity. Check for incomplete information and be sure to add detailed information to the physician’s notes. Even with electronic health records (EHR), overscheduled medical practitioners simply won’t have the time to provide the level of detail required. Just one missing word can throw your claim into the denial stack, so be sure you understand an insurance company’s billing guidelines. Make sure that diagnoses, services and procedures match the documentation in the medical record.
Failure to apply the correct modifiers to procedural codes or neglecting to include a diagnostic code are among the greatest culprits for claims getting delayed or altogether rejected as “no medical necessity” or “procedure does not match authorization.” Foolproof coding includes details about an illness, such as specific symptoms or injuries rather than only including the administered services and treatment.
Anyone on your team responsible for coding must receive ongoing education to remain updated, and they must have access to coding resources, such as Evaluation and Management (E&M) guidelines. While HIPAA and ACA regulations codified many procedures, you still need to take extra care in sending a claim to the right payer or health plan.
Given the medical industry’s increasing rates of insurance denials, practice owners often stop pursuing claims for delivered services of lower value to focus resources on the reconciliation of higher-price denials. However, the collective loss of these funds can weigh heavily on the health of your practice. Limited staffing is often at the root of the problem.
Medical Billing Audits Are Essential
Establish an internal billing audit process to identify problems and further opportunities for reimbursement. An audit will recognize bad bundling habits, the overuse of certain codes and undercoding that results in lost revenue. When this occurs consistently, it could have a substantial financial impact on the practice. An audit also verifies that third-party payers are reimbursing in accordance with their agreements.
Technology to the Rescue
Medical software systems can help automate billing processes, such as suggesting medical codes and checking medical claims against common insurance payer reimbursement rules. Automation and data mining technologies can streamline A/R recovery and management.
A/R automation reduces the burden on your staff during revenue cycles and can help you identify causes of underpayment, denials and delayed payment. Other advantages of automating A/R include:
- Ability to detect potential denials, before your practice files claims
- Reduction in errors
- Fewer delayed and denied claims means better cash flow
- Opportunity to invest cost savings back into the practice
- Ability to reduce patient frustration and provide better services
Further, automation can make it easier for patients to make payment by including self-service apps, such as credit card payment, portal functionality and e-statements and digital communications. Be sure your practice management system includes accurate payer information—build in Medicare, Medicaid and fee-for-service contract fee schedules to help you accurately monitor payments.
The average cost to rework one claim is $25, though 50-60% of denials are left unworked. (Medical Group Management Association)
As software becomes more intelligent, watch for healthcare practices to overcome A/R challenges and fine-tune the provider/patient dynamic.
Managing Denials Effectively
Closely examine the reason for denial and any gaps in your denials process. Some denials come in the form of outright denials, while many others will be a reduction in reimbursement amounts. To draw meaningful conclusions about denials, it’s important to know the distinction between non-controllable and controllable denials. Non-controllable denials most often are contractual allowances—i.e., those things that are not allowed to be billed based on payer contracts and must be written off. As we touched on above, the reasons can range from incomplete and inaccurate information to the failure to receive preauthorization or precertification. Sometimes you may simply not have established a case of medical necessity.
Third-party payers have specific processes for appealing denials. The last thing you want to do is get denied again because you did not follow these procedures. Assign staff members to be responsible for managing denials. Communicate! There’s also something to be said for establishing positive relationships with provider representatives at top-volume payers.
Is your claims denials rate excessive? Are the denials traceable to your front-end process? Is there a coding issue? It is essential to your RCM process to keep a record to spot trends, communicate them and correct problems. Adopting technology and using it correctly can be extremely helpful in improving your denial process.
Our new e-book, “Healthcare Revenue Cycle Management,” is meant to help you review aspects of your RCM process through a critical lens and make any necessary changes to produce greater cash flow. We seek to provide you with insightful industry knowledge to help you grow your healthcare business to its full potential.
You may download our new e-book by completing a brief form.
The healthcare accountants and advisors at Goldin Peiser & Peiser have decades of advising medical practices, hospitals and senior living facilities. They have helped their clients understand ways to maximize RCM by suggesting best practices and technology that can boost operational efficiencies and outcomes. Our Revenue Cycle Management Group specializes in driving system-wide efficiencies for medical offices, hospitals, surgical centers and long-term care facilities.
For more information, please contact Erick Cuter, CPA, or Alita Stratton, CPA, at (972) 818-5300.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.