Claim denials have become a major risk to revenue cycle integrity, with denial rates now averaging a staggering 11-15% industry-wide according to recent studies. At these rates, denials can rapidly consume a significant portion of reimbursement potential.
For example, a 150-bed hospital submitting 50,000 claims annually that experiences a 5% denial rate loses $7.7 million in revenue every year. With the average cost to rework and refile denied claims ranging from $30 to $118, the expenses compound quickly.
Causes of the rise in denials include coding errors, incomplete documentation, utilization management issues, lack of medical necessity justification, and eligibility verification problems. While some denials are unavoidable, research shows 80% of denials are preventable.
To combat the financial drain and wasted resources from denials, implementing an effective denial management program is critical for healthcare organizations. This article outlines key denial management solutions to consider - boosting revenue, reduce costs, increase patient satisfaction, and drive financial stability.
Creating a Comprehensive Denial Management Program
An impactful denial management program incorporates solutions across these core areas:
- Proactively preventing denials through training, claim scrubbing, and utilization management optimizations
- Pinpointing root causes of leading denials types to address the originating issues
- Prioritizing working highest-dollar and quick-win denials first to maximize revenue recovery
- Automating tracking and follow-up workflows to improve efficiency and keep items moving
- Optimizing the appeals process through expertise and technology to overturn more denials
- Continuously monitoring metrics to benchmark performance and identify improvement opportunities
Organizations that implement even a subset of solutions in these areas see significant benefits from their denial management programs.
Top 12 Denial Management Solutions
Here are 12 of the most critical denial management solutions that healthcare organizations should look to implement:
1. Comprehensive Denial Prevention Training
Proper training helps staff avoid many common claim errors that lead to preventable denials. Key training elements include:
- Medical coding guidelines to prevent improper coding
- Documentation protocols to ensure completeness
- Claim submission checklists to validate accuracy
- Eligibility verification procedures to confirm coverage
- Updates whenever payer requirements change
Ongoing training creates knowledgeable, skilled staff and higher clean claim submission rates from the start. Facilities report clean claims rates rising from 75% to over 90% after training programs.
2. Automated Claim Scrubbing
Claim scrubbing software provides automated pre-submission screening of claims against validation rules. This identifies defects like:
- Missing or inaccurate patient/subscriber information
- Wrong dates of service or diagnosis codes
- Inconsistent procedure and diagnosis codes
- Lack of medical necessity documentation
By flagging issues upfront, staff can correct errors before claims reach payers, preventing easily avoidable denials. Payers & Providers found scrubbing reduced first-pass denial rates by 10% on average.
3. Outsourced Denial Management Services and Analytics Software
Organizations overwhelmed by growing denial workloads often turn to outsourced services or analytics software.
Outsourced services provide experienced teams to handle core denial management tasks like:
- End-to-end denial and appeal processing
- Root cause identification and workflow optimization
- Staff training on best practices
- Appeal letter writing
This expertise strengthens capabilities while reducing in-house workloads. Facilities report 15-20% increases in overturn rates after partnering with outsourced services.
Alternatively, analytics software delivers actionable data insights to optimize denial management, including:
- Identification of leading denial causes by payer, code, and other factors
- Workflow tracking to pinpoint process bottlenecks
- Productivity benchmarking to quantify staff workload capacity
- Reporting to showcase reduction progress and opportunities
Arming internal staff with analytics allows more informed decision-making when handling denials. Revenue cycle analytics also facilitates objective cost-benefit analysis if considering outsourcing.
The choice between leveraging outsourced services, investing in revenue cycle analytics software, or combining both approaches depends on the organization's specific denial profile, cost parameters, and staffing considerations. But robust data and external expertise both help strengthen denial management programs.
4. Analytics for High-Value Denial Targeting
Predictive analytics helps prioritize working denials delivering the biggest financial return. Key strategies include:
- Resolve high-dollar denials first - big hits impact revenue most
- Pursue “quick wins” easily overturned on appeal
- Leverage high appeal success payers first
Analyzing and segmenting inventory this way generates faster revenue recovery. Healthcare revenue cycle analytics also provides visibility into denial trends and opportunities.
5. Patient Eligibility Verification Systems
Many denials trace back to outdated insurance information on file. Automated eligibility verification systems help prevent this through upfront confirmation of:
- Active coverage status with the insurer
- Specific policy details like copays and deductibles
- Changes to eligibility status since last verification
Upfront confirmation prevents denials after rendering services. Some payers even penalize providers for failure to verify eligibility beforehand.
6. Root Cause Analysis
While denying fire drills are important, preventing recurrence is ideal. Conducting root cause analysis uncovers process gaps causing common denials. This involves:
- Using denial reports to reveal leading denial reasons
- Investigating the core factors generating each type of denial
- Identifying needs like staff training, policy updates, or improved documentation protocols
- Implementing changes to address root causes
Driving to root issues provides systemic denial reductions.
7. Automated Denial Tracking Software
Tracking denials through spreadsheets and notes becomes unmanageable at scale. Purpose-built tracking software centralizes all denial data and workflows for simplicity:
- Dashboards to monitor volumes, aging, and metrics
- Routing rules to assign denials to appropriate staff
- Notifications and reminders on pending actions
- Reporting for insights and benchmarking
Revenue cycle automation through tracking raises productivity and keeps items from falling through the cracks.
8. Utilization Management Optimization
Strengthening utilization review workflows to justify medical necessity preemptively prevents related denials. Key areas to optimize include:
- Pre-authorization protocols to align with payer requirements
- Concurrent review to monitor progress and need
- Discharge planning to facilitate proper outpatient support
- Case management to document complexity justifying services
Refined utilization review prevents medically unnecessary denials before submission.
9. Denial Tracking Software
Robust tracking software centralizes all denial data and workflows for efficiency. Essential features include:
- Consolidated dashboards displaying volumes, trends, aging metrics
- Automated routing and assignment to appropriate staff
- Status updates, reminders, notifications on next steps
- Storage of related documents and correspondence
- Reporting for insights into opportunities
Tracking software organizes critical denial management processes.
10. Specialized Clinical Appeals Team
Overturning complex clinical necessity denials requires dedicated experts. Key skills include:
- Constructing persuasive medical necessity justification narratives
- Compiling comprehensive clinical documentation and records
- Understanding payer policy guidelines and requirements
- Obtaining physician statements backing treatment decisions
In-house or outsourced clinical appeals teams drive higher overturn rates for clinical denials.
11. Payer Policy and Contract Analysis
Analyzing historic denial reasons by payer uncovers areas to address through improved contracts and policy clarification. Key steps include:
- Review denial types and frequency related to each payer
- Identify ambiguous policies leading to improper denials
- Renegotiate problematic clauses enabling denial overuse
- Require reasonable turnaround times for appeal decisions
Tightened payer contracts close loopholes enabling unjustified denials.
12. Denial Management Metrics Monitoring
Ongoing metrics measurement provides visibility into performance improvement opportunities. Key performance indicators (KPIs) include:
- Denial rate - percentage of claims denied
- Average time to resolution - meeting payer appeal deadlines
- Appeal overturn rate - successfully disputing denials
- First-pass denial rate - preventing denials proactively
Comparing metrics quarterly highlights progress in optimizing denial management.
The Time to Get Control of Denials is Now
Left unmanaged, claim denials represent lost revenue and wasted resources. But the solutions outlined here offer a roadmap to get denials under control. Evaluating which options make the most sense for your organization is an investment that generates significant returns.
While denials will likely continue rising, building a comprehensive denial management program fortifies your organization against this threat. Start assessing current gaps and identifying quick wins. With robust denial management, you can minimize revenue loss, increase efficiency, and set your organization up for long-term financial stability.