Minimizing healthcare denials is vital but complex for hospitals and health systems. The increase in denials is largely due to the growing complexity of payer policies and the rising costs associated with failing to meet documentation requirements.
For healthcare providers and billing entities, the challenge of managing denials is ongoing but can be mitigated with the right strategies and technological tools.
Why Preventing Denials is Crucial
Denials not only delay payments but also burden administrative resources and negatively impact patient care.
With denial rates constantly rising since 2021, the financial and operational consequences for healthcare organizations are substantial. Proactively addressing denials can result in significant cost savings and improved patient satisfaction.
- 82% of denials are eventually overturned
- $181 is the average cost per claim to appeal
- 7%-11% of claims are underpaid
By acknowledging the scale and impact of denials, healthcare providers can focus on implementing effective prevention strategies.
Common Causes of Denials
Identifying the root causes of denials is the first step in prevention. Common reasons include:
- Prior Authorization Issues: Nearly 82% of prior authorization denials are overturned on appeal, indicating preventable administrative errors.
- Incomplete Documentation: Errors or non-compliance with payer requirements often lead to claim denials.
- Incorrect Coding: Mistakes in ICD-10 codes or mismatched procedural descriptions can result in rejections.
- Eligibility Issues: Failure to verify patient eligibility before service can lead to immediate denials.
Additionally, the surge in denials can be attributed to more aggressive strategies by payers seeking larger margins. Payers are increasingly managing care to ensure higher profits, especially as the commercial payer market approaches monopoly status. Considering the large number of uninsured, self-pay, and government program-covered patients, hospitals have limited negotiating power.
Leveraging Technology for Denial Prevention
Healthcare organizations that integrate technology into their denial prevention strategy are better equipped to address this growing issue. For example, the Clinician Assistant in Critical Care can help:
- Prevent Errors: Catch mistakes before they impact revenue.
- Enhance Accuracy: Improve claim accuracy and compliance.
With automated tracking, the Clinician Assistant in Critical Care captures and documents every procedure to prevent revenue loss. It optimizes financial performance with detailed analysis, real-time validation, and offers flexible models like CapEx or Device-as-a-Service (DaaS) to fit different budgets.
Preventing denials is a complex but essential part of healthcare revenue cycle management. By understanding common causes, applying effective strategies, and leveraging technology, healthcare providers can significantly reduce denial rates and secure timely payments.
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