Summary: How does an organization begin to reverse the downward revenue trend? What steps need to be taken?
Summary: How does an organization begin to reverse the downward revenue trend? What steps need to be taken?
What is one of the quickest ways to decrease healthcare costs in a relatively short period of time? The answer – managing and reducing medical denials. Millions of dollars are lost each year in revenue as a result of claim denials. Reducing medical denials can be a daunting task. Where does one start? What information is needed? Following is a five-step process to help you begin.
Step 1 Gather data.
Determine the best means for obtaining denied claims information. Some reports which will be required:
- # and dollar amount of denied claims in total
- # and dollar amount of denied claims by reason code
- # and dollar amount of denied claims by provider/payer source
- # and dollar amount of total claims
- List of providers/payers
- % of # and dollar amount of denied claims to total
- Benchmarks for denied claim percentages
Step 2 Analyze trends in total.
- Determine how the annual denied claims have fluctuated over the past 3-5 years both in terms of numbers and dollars.
- How do the trends compare to year-to-date figures?
- How far from the industry benchmark for denied claims are you off?
- Set goals
- What is the ultimate denied claim percentage you wish to achieve?
- Based upon year-to-date total claims and the percentage of denied claims goal, what is the ultimate number of denied claims which should be considered acceptable?
- What do these figures equate to in terms of dollars?
Step 3 Quantifying denials by reason code.
- Determine why claims are being denied.
- List reason codes in conjunction with number of denied claims.
- List reason codes in conjunction with the dollar of denied claims.
- Categorize reason codes into broader categories such as input errors, documentation, improper submitting, etc. to create areas in which to begin addressing.
- Begin prioritizing these broader categories both by numbers and by dollars to determine which areas can most easily be corrected while providing the greatest savings in lost revenue.
Step 4 Quantifying denials by provider.
- Are more claims being denied by particular provider/payer source?
- List denied claims by payer source in terms of numbers.
- List denied claims by payer source in terms of dollars.
- Determine which payer sources/providers are denying the most claims and which ones can easily be addressed and corrected, providing the greatest recoupment of revenue.
Step 5 Create an action plan.
- Where are you now? Summarize the information from step 1 as this provides a starting point.
- Set goals for overall claim denials (numbers and dollars).
- Create an action to address both the top reasons for claim denials as well as the top providers which are denying claims.
- Share the plan with your organization.
- Educate staff to constantly ask the questions “Is everything correct? Is there any reason when I review the claim why it might be denied?”
- Put in checks and balances to make sure claims are reviewed 100% of the time prior to submission.
- Make sure current reports are readily available to assess progress towards attaining goals.
- Review data often with the organization to ensure that things are on track.
- Revise action plan as changes arise (either as issues are addressed and corrected or as new issues arise).
- Celebrate milestones with the organization.
- Give credit where credit is due in a public manner.
