Denial management in healthcare is a process by which healthcare organizations and providers identify the reasons for claim denials and take steps to prevent them. Reimbursements are providers’ biggest source of revenue; denials or rejections of claims can hurt revenue cycles. Solutions for denial management in medical billing help to know why payers have denied certain claims, enabling providers to address that problem and increase their incomes. Denial management solutions have become extremely important since the loss of reimbursements costs the healthcare industry billions every year.
It should come as no surprise that denial management software has become a must-have for healthcare organizations of all sizes. The reasons for denials can vary from patient to patient, but it costs providers all the same. The healthcare denial management solution that OSP can build is an investment that pays off in the long run by preventing delays or losses in reimbursements. In other words, this type of software provides sizeable returns on investment.
OSP can develop a suite of claims denial management to cater to the needs of all types of healthcare organizations. These include dental clinics, physiotherapy centers, psychiatric care institutions, outpatient care centers, in addition to large hospitals. We customize the features of healthcare denial management software to suit the needs of the respective organizations. Our solutions will enable all providers to improve their revenue cycles and better serve their patients.
Managing the denials of reimbursement claims involves assessing the claims themselves and addressing their problems. In other words, the claims need to be scrubbed to fix any problems that would cause payers to deny or reject them. The denials management software we can offer automates many processes in claims scrubbing and other denial management activities. As a result, providers can experience greater productivity at lower overhead.
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Denial management analyzes the reasons for medical claim denials to prevent them from happening again. Ultimately, denial management seeks to curb losses for healthcare providers due to revenue loss caused by claim denials.
RCM stands for revenue cycle management in healthcare. Claim denials from insurance payers affect providers’ revenues, prompting denial management’s rise. The process of denial management involves the following:
In other words, denial management forms an important part of RCM activities since it prevents loss of revenues due to claim denials.
There are two types of denials –
Hard Denials: hard denials cannot be appealed again; they are irreversible and most often result in revenue loss for providers.
Soft Denials: Soft denials can be appealed and even reversed if the provider makes corrections to the claim or provides the required information.
This is one of the first activities providers must do to prevent possible claim denials. They need to check if the patients they are treating are enrolled in health plans that will cover the medical services. Failure to do so invites risk and the possibility of providing services not covered, resulting in denials.
Acquaintance with Payer Policies
The policies surrounding reimbursements, prior authorizations, referrals, medical necessity, and others might vary from payer to payer. So, providers must be well aware of this before providing medical services. Otherwise, payers are likely to deny or reject claims.
Coding and Documentation Accuracy
With changing ICD codes and regulations around medical coding, it is important to know the requirements and manage workflows around them. The staff at clinics and hospitals needs to be aware of these necessities.
Investing in Technology
Implementing reliable revenue cycle management (RCM) software or a denial management solution will go a long way in preventing denials. Such software platforms streamline medical billing and coding activities while simplifying payment processing. Most importantly, good RCM solutions will help scrub claims and verify them before submitting them to payers.
Learning From Previous Denials
This, too, is one of the most important aspects of denial management. There are several reasons a payer might deny a claim. So, providers need to understand each of them and take steps to prevent future denials.
This step takes the patient’s demographic information as part of the intake process. It is the first thing patients do when they walk into a clinic or hospital.
This is where the providers’ staff verifies if the patient’s health plan covers the medical services needed.
This involves compiling a report on the patients’ clinical encounters with their providers.
This is one of the most important processes in the RCM process flow. The transcribed clinical encounter is converted into standardized ICD codes to summarize the medical services rendered. This is used to generate the claims, which will be sent to payers.
The charges for the medical services will be mentioned in the claims sent to the payer. This needs to be accurate, or it might result in a denial or rejection.
Transmitting the claims through electronic data interchange (EDI) to the payers is called charge transmission. Only the claims with accurate coding will be transmitted.
This process kicks in when the payer has denied a claim. It involves examining the claims and the reasons for denial by the payer. Later, the claim is modified and re-sent to payers with the corrections. It depends on the reasons for the denial. Some denied claims cannot be appealed and become losses for providers.
This is the last step in mainstream medical RCM. It involves entering the payments into the billing software and provides a view on the explanation of benefits, out-of-pocket payments from patients, and others.
One of denial management’s central activities is knowing the difference between rejected and denied claims. A denied claim has been adjudicated and disapproved by the payer. On the other hand, a rejected claim has been submitted with incomplete information or coding errors.
This is the first step involved in the denial management process. As the name suggests, it involves identifying the reason for the claim to be denied. When a claim has been denied, the payer will state the reason in the EOB statement.
This happens after the providers receive a claim denial. This step involves an elaborate workflow that examines the reasons for the denial and goes about rectifying them. Incorrect information, incomplete data, and coding errors are common reasons for claim denials. The staff of the provider organization must sort this out and transmit the claim before the stipulated deadline.
It is important to monitor and track the whole workflow around denial management. The larger a hospital gets, the more the volume of claims it would send and hence, the greater the number of denials it needs to manage. This is why it becomes necessary to monitor the performance of the entire denial management efforts.
This step involves implementing preventive measures to minimize or stop future claim denials. Needless to point out, it requires detailed insight into the main causes of denials in the first place, after which a provider organization can go about preventing it.
A denied claim costs the providers precious revenues and their time. Repeated denials that need to be addressed will adversely affect a provider’s revenue cycle. This is why hospitals need to implement efficient denial management measures. Large hospitals would handle large quantities of claims and, so, would face greater chances of denials. Managing them is vital for the overall revenue cycle management.
Claim denial management examines each claim to know the reasons for denial by payers. This process helps providers rectify denied claims and re-send them for their reimbursement. Additionally, claim denial management also seeks to learn from the reasons for the mistakes that caused denials and enable providers to take steps to prevent them in the future.