Insurance denials for submitted medical claims can hold up the daily activities of a medical practice. Too much of this kind of shuffling around can cause the medical office to get bogged down in responses to high rates of denials that take away from everything else that doctors, administrators and clerical staff need to be doing each day. Couple this with the financial cost of re-working denied claims, which averages $ 25.00 - $ 30.00 per claim**. If the average practice files 6,200 paper claims with 22% rejected, this means $ 34, 375.00 in re-working the claims; if electronic claims are filed with a 1% rejection, this means $ 1,575.00 in re-working the claims. The average number of rejected claims for a medical practice is 30 percent. Only 50 percent of these claims are ever resubmitted**. That adds up to a lot of lost revenue!
The key to managing your revenue cycle well is to understand the challenges that you face and the ways that you can create good solutions to those challenges. Bringing a more attentive eye to in-house account handling often helps doctors come up with ways to make their daily practices more efficient.
The Ripple Effect of Denials
The problem starts when medical offices routinely bill to insurance companies and they start getting back large numbers of denials. Administrators might not know exactly why these claims are coming back denied. They may delegate to a team the task of figuring out each of these denials on a case-by-case basis, or alternately, these problems may just sit in someone’s inbox and are worked when there is time.
One of the fallout types from this outcome is that practices may scramble to institute better checks and balances to make sure patients are covered when they come to receive services. Some strategies are better than others. Trying to figure out insurance questions on the fly can hold up prompt “admittance” of these patients to the medical office and eventual delays can be costly or even inhibit the daily function of the office, causing irritated patients to jump ship.
Pre-verifying Insurance
Good preemptive responses to these problems start with the patient calling into the medical office on the phone. Some practices just ask for demographic information and a stated insurance coverage only to find out that this coverage is not in place when the patient arrives. A much better strategy is to pre-verify the insurance before the visit ever takes place, so that doctors can be secure in the knowledge that their patients are covered for selected procedures and treatments, or just regular consultation, when the patient comes in.
Another key to a successful revenue cycle is a highly trained team of in-house billers or a third-party service that specializes in correctly billing claims to insurance companies. Correct ICD and CPT codes are a necessity, and it takes a trained individual to go through and correctly apply these to the bill. Otherwise, all kinds of other holdups can ensue.
Think about what your practice is doing to streamline your revenue cycle and avoid some of the problems that have sunk other doctors.
** Based on MGMA’s statistics.