The healthcare industry in the United States is facing a severe crisis. A silent parasite that is putting a strain on both healthcare providers and patients. Both small practices and large hospitals are suffering from it and losing billions of dollars every year. You might be wondering what it is? Well, Insurance Claim Denials.
Denials have reached alarming levels, creating administrative burdens that consume valuable resources and delay essential treatments. Recent industry data reveals that providers are spending over $25.7 billion annually just to fight claim denials. However, preventing and resolving the denials is relatively easy if done correctly.
In this guide, we will discuss exactly how you can tackle the denials and improve your practice’s revenue. So, let’s start.
Current Stats Behind Claim Denials
Like we said above, the healthcare industry is experiencing tons of denials that are not easy to deal with. To give you an idea, let’s look at some data.
According to Experian Health’s report published in 2024, 38% of healthcare providers, including both small practices and large hospitals, report that at least one in ten claims is denied. While some of them are experiencing denial rates exceeding 15%.
These are not just denials on paper. It is actual money that you are losing! Imagine 15% revenue just lost because of small mistakes. And guess what? The denials are increasing every year. Recently, 77% of providers reported that denials are increasing compared to just 42% in 2022.
Medicare Advantage plans present particular challenges, with research from Health Affairs showing an initial claim denial rate of 17%, though 57% of these denials are ultimately reversed. The financial impact is substantial – providers lose approximately 7% of total dollars initially billed due to claim denials that remain unresolved.
Primary Causes of Medical Claim Denials
There can be many causes for denials. Human coding error, filing the claims after the deadline, using the wrong modifiers, or just a simple mistake like writing the wrong spellings. So, what can you do about it? Well, before you can resolve the denials, it’s necessary to understand the causes of denials. Understanding why claims are denied is the first step toward prevention.
Even though there are tens of reasons for denials, all of them can be categorized into the following two categories:
- Data Quality Issues
- Missing or inaccurate patient information
- Incomplete documentation
- Incorrect coding or billing errors
- Authorization Issues
- Missing prior authorization
- Expired authorizations
- Services deemed not medically necessary
Failing to get prior authorization is one of the biggest challenges. Physicians spend an average of 13 hours per week completing prior authorizations, with 93% reporting that this process delays necessary care. All of this work and hassle can be avoided by implementing the strategies that we are going to discuss in the next section.
Proven Strategies to Reduce Claim Denials
Eligibility Verification
One of the most effective strategies is verifying patient eligibility and benefits before every appointment. This prevents denials due to coverage lapses, plan changes, or incorrect patient information. Automated eligibility verification tools can streamline this process and catch issues before services are rendered.
Prior Authorization Workflows
We already know that pre-authorization is a headache. To counter it, you can create workflows and checklists. Wondering what to include in your workflows? Here’s what we suggest:
- Creating standardized checklists for different types of services
- Training staff on payer-specific requirements
- Implementing automated prior authorization software
- Establishing clear timelines for submission and follow-up
Claims Scrubbing Technology
You might not know this yet, but claim scrubbing is an actual thing. And you don’t have to do that yourself. There are automated software programs in the market that can do it for you. Automated claims scrubbing tools can identify and correct errors before submission. These systems check for common issues such as missing information, coding errors, and payer-specific requirements.
So, even if your billing teams make any errors while filing the claims, the software can detect it and correct them before submitting them to the insurance company.
Get RCM Services
The simplest and also the most money-friendly way of reducing the claims is to just outsource your billing operations to specialized RCM service providers.
Why? These companies have decades of experience in filing claims and managing denials. They charge a minimal amount and deliver amazing results. However, you need to ensure one essential thing before outsourcing.
Not all billing companies are good, and generalized billing companies can’t help you if you have a specific specialty practice. So, select a billing partner that has expertise in your specific domain. For example. If your healthcare practice deals in gastroenterology, get help from gastroenterology billing service providers, not ENT billers.
Wrapping Up
That’s it! We have tried our best to provide all the information you need to avoid claim denials and prevent them from ever happening. Unfortunately, even with all the precautionary measures, denials will happen. They are simply inevitable.
But what you can do is outsource the entire billing operations to specialized billing companies, so you don’t have to go through the hassle.
