AAHAM Q4 '21
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
Reduce its initial denial rate from 20% to 10%, what<br />
would be the financial impact?<br />
Image Source: Change Healthcare Infographic<br />
Additionally, Change Healthcare states that 65% of<br />
denied claims are never resubmitted, which indicates<br />
that organizations are also experiencing large amounts<br />
of lost revenue due to denials. Industry sources also<br />
suggest that almost 60% of claims rebilled after a denial<br />
will deny again.<br />
Let’s take a look at an example. If the cost of denials<br />
at XYZ Healthcare is around $75 per denied claim,<br />
and they submit 20,000 claims per month, it is likely<br />
that around 4,000 of those claims will deny (based on<br />
a 20% initial denial rate).<br />
This amounts to a cost of about $300,000 every<br />
month or $3.6 million in a single year!<br />
The organization’s total denied claims per month<br />
would fall to 2,000, representing an estimated cost<br />
savings of $150,000 each month. Said another way,<br />
every additional claim that is paid upon first submission<br />
becomes first pass reimbursement.<br />
This improves the organization’s cash<br />
flow, reduces revenue leakage, shortens the payment<br />
cycle, and even boosts patient satisfaction.<br />
Implementing a Successful Denial Prevention<br />
Strategy<br />
In an effective denial prevention program, every effort<br />
is made to prevent denials prior to billing. For<br />
example, edits built into the claim scrubber can stop<br />
at-risk claims before they result in denials. While<br />
this step does require a biller to clear the edit, stopping<br />
to make the necessary changes prior to billing<br />
keeps the payment cycle short.<br />
If the claim is stopped on day 1, it can be fixed and<br />
rebilled on day 2 and paid on day 16 or 17.<br />
Another part of prevention is looking at data trends<br />
and implementing process changes, edits, or change<br />
routines:<br />
Now if your organization has chosen to focus on prevention<br />
over follow-up, there’s good news for<br />
you. 90% of denials are preventable and occur most<br />
often in categories like medical necessity, eligibility,<br />
and demographic or technical errors.<br />
Financial Impact of Denial Prevention<br />
If XYZ Healthcare from the example above can implement<br />
an effective denial prevention program and<br />
5<br />
• If a large portion of total claim denials stem<br />
from medical necessity issues, how can your<br />
organization proactively address that? Is clinician<br />
education needed to ensure clinical<br />
documentation includes all necessary details?<br />
• If denials stem from front-end errors related<br />
to demographic information or eligibility,<br />
how can processes be improved to ensure this<br />
information is captured accurately and completely?<br />
Is training needed for front-end staff?<br />
Organizations who pay close attention to this type of<br />
denial data can nimbly pivot to address the root<br />
cause of denials in any area. Then, by continuing to<br />
monitor performance, leaders can determine whether<br />
the changes made are actually resulting in fewer denials.