Exploring the Relationship Between Denied Claims and Healthcare Practices

  • Written by Yash Rajan
  • Monday 5th September 2022
Exploring the Relationship Between Denied Claims and Healthcare Practices VLMS Healthcare

Revenue generation for healthcare service providers is solely based on reimbursements from insurance companies. The healthcare provider files a claim to the patient's insurance company for the medical care they provided. Because of this, the claim you are filing must get approved to get paid as soon as possible. On-time claim approval ensures a healthy flow of revenue for a medical care provider. However, in reality, only 70-80% of the filed claims get approved, and more than 25% of the filed claims get denied. Often a claim gets rejected because of the lack of patient information, improper medical codes, irregularities in documentation, etc. The ideal rate of claim approval should be above 95%. But, most healthcare organizations struggle even to come close to this number. It is because many organizations still lack the expert teams to handle an insurance claim. It often results in miscommunication, thus causing irregular documentation. Many organizations ignore follow-ups. Follow-ups are necessary for understanding the flaws in your billing system. Analyzing the failed claims is a must to understand the areas prone to cause errors. Based on the perspective, the denied claim can either be a blessing or a curse. Generally, a denied claim means additional financial expenses. As a claim gets rejected, it is the liability of the healthcare organization to file an appeal against it. To file an appeal, one has to understand the reason behind the claim denial and irradicate it. It creates additional stress on the healthcare providers.

Denied claims also stress the patient, as now they have to provide additional time to help the appeal process. It creates distrust towards the organization, resulting in a lower retention rate. Sometimes due to lack of interaction, many healthcare providers fail to discuss crucial things such as copayments, coinsurance, self-pay, the status of insurance, etc., with the patient. Many times, this leads to pending payments from the patient side. But as they were not informed at the start of the care, the patient feels excluded from the care process. Such practices directly impact the patient-physician relationship.

From a positive perspective, denied claims can also serve as helping hands. Denied claims serve as the learning grounds for filing technically sound insurance claims. One can use the denied claims in the past month or quarter as a learning material for insurance claim filing. Analyzing the rejected claims and understanding the reasons for denial can guide the organization towards achieving the ideal approval percentage above 95%.

Many industry experts, hence, suggest conducting frequent monthly or quarterly audits. Audits help in inspecting the medical billing system of any healthcare organization. It highlights the strengths, weaknesses, flaws, and potential areas for improving the medical billing system. It also helps track down medical frauds and keep the employees in check.

Along with the audits, one can quickly improve their medical billing system by following the points mentioned below,

Verify the patient details and benefits
Patients' eligibility and benefits are based on their insurance type. The physician should check these details before 48 hours of the appointment. It gives enough time to plan the points to be covered during the interaction with the patient. It highlights whether the patient is eligible to receive the proposed care under their insurance. The verification process also highlights the payment liabilities of the patient, such as copayments.

Coding audits
A coding audit helps in understanding the organization's medical coding system's status. Medical coding is necessary for explaining the necessity and expense of medical care to the insurance provider. The insurance provider must update the medical codes used in practice. It ensures that the medical coding system is up to date. Coding audits assist in the timely evaluation.

Sticking to the deadlines
The insurance filling process follows a strict timeline. Every stage of the insurance filing must be completed within a given time frame. Hence, along with maintaining precision, timely filing of the insurance claim and denial appeal is just as important.

Implementing such practices can significantly reduce your organization's denied claims. One can also outsource the handling of medical billing to reduce the burden on healthcare providers. Audits can also be outsourced to third parties to improve the efficiency and clarity of inspection.