Impacts of claim denial on medical billing cycle

  • Written by Yash Rajan
  • Monday 5th September 2022
Impacts of claim denial on medical billing cycle VLMS Healthcare

The medical billing cycle is an important term in revenue collection for healthcare providers. Through the billing cycle, the healthcare provider gets paid for the services they provide to the patient. Hence, any delay further delays the revenue or profit generation for the organization. Claim denials also exert an additional burden of denial review and appealing the denial. It takes extra human and financial resources to clear the claim rejections. It also hampers the organization's credibility and hinders its relationship with patients. Denied claims reflect the problems with an organization's existing billing cycle and claims management system. A thorough analysis of the denied claims can direct the organization toward such flaws. But besides this advantage, denial claims are always seen as dents on the organization's reputation. The percentage of successful claims should be equal to or above 95%. But in actuality, only three-quarters of the filled insurance claims get approved. Denial of an insurance claim can be due to many reasons. The most common reason for an insurance denial is improper medical coding. Medical coding and charge entry decide the validity of any insurance claims. Medical codes represent the services provided to the patient by the healthcare provider. These codes serve as the basis for the charge entry and assigning the amount to the patient's account for an insurance claim. Using wrong codes or posting incorrect charges for any healthcare service leads to the immediate denial of any insurance claim.

Frequent audits can provide significant help in handling rejected claims. Coding audits can help identify the problems with medical coding. The healthcare service provider must conduct a coding audit every month or quarter. Frequent audits can help the organization in:

  • Identification of issues in the medical billing cycle.
  • Increasing the awareness in healthcare staff in handling the patient data and records entry.
  • Decreasing the frequency of claim denials and improving the organization's reputation.
  • Solidifying the patient-staff relationship with quick reimbursement.
  • Identifying the compromised medical billing cycle and eliminating insurance frauds.
  • Maintaining a healthy revenue or profit flow to ensure the organization's growth.

To avoid claim denials, one should remember all steps. The healthcare professional should always clear out the patient's insurance status before operating them. Understanding the condition of a patient's health insurance clarifies the services covered under the insurance. It also helps in informing the patient about co-pay.

It is also vital that the medical database of an organization is up to date as per the federal regulations. Interacting with patients ensures the proper application of the medical codes to the services provided to patients.

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