Claims denials are common in the healthcare industry and cost providers time and money. Simple mistakes in the claims process can lead to a denial that costs additional labor to refile and delays reimbursement crucial for the business’ cash flows. The average denial rate is between five and ten percent. Although having no denial rate is unrealistic, the lower the claim denial rate, the better.
Understanding denials, submitting corrected claims, and ultimately preventing the denials requires a different knowledge base for different payors. Time is critical to ensure payment is received on the denials. Timely identification, efficient isolation of the issue, and appropriate submission of a corrected claim will protect reimbursement while minimizing additional costs.
Below are some of the top reasons why managed care claims are denied:
Authorizations
Denial: Authorizations are required by many managed care payors and many denials originate from a problem with the authorization. In some cases, the provider never obtains the required authorization for the care provided. Another authorization issue is not supplying the authorization information on the submitted claim so there is no proof it was obtained. Additionally, providers unknowingly make the mistake of exceeding the limit of the services authorized.
Solution: To overcome denials based on authorization issues, agencies must understand the requirements of each payor. Once that occurs, intake staff should ensure that the authorizations are obtained, scheduling staff should ensure that authorization limits are not exceeded, and billing staff should verify authorization information is included in the submitted claims. This is an area where using a healthcare management software can be extremely helpful. Software solutions can provide alerts and warnings during the claim lifecycle, including scheduling, eligibility verification and claim submission that could lead to a possible claim denial.
Coding
Denial: All payors require specific coding to process claims, and incorrectly billing any combination of codes could result in a denial. Incorrect usage of HCPCS Codes (Healthcare Common Procedure Coding System) is a common reason for payment denials across all payors. Each payor provides billing procedures that can use different coding requirements and create costly denials.
Solution: Attention to detail matters when setting up payors and processing billing to avoid coding denials. It is important to make sure the codes are used according to the payor’s requirements, and correctly billed according to billing manuals or contracts. Commercial payors may use different codes or combination of codes to initiate payment. Reviewing denial reasons is a good way to perfect your managed care coding.
Benefit Coverage
Denial: Managed care benefits vary from payor to payor, and claims can often be denied because the provider does not verify a patient’s home health benefits. This type of denial usually occurs after services are provided and the agency loses the ability to be compensated for their work.
Solution: More detailed eligibility verification during the intake process is the best way to overcome this type of denial. Also, coverage can change during the patient’s treatment so it’s always a good practice to re-verify eligibility especially with multiple episodes during a home health treatment.
Axxess partners with our clients to evaluate their claim denial rate and come up with billing strategies that will result in their claims getting paid faster. We offer free consultations where we review the rate of denials, the issues causing those denials, and the outstanding claims that we can help a client recover and much more.
We have a team of billing experts who have more than a hundred years of combined experience successfully billing Medicare and managed care claims. Axxess is fortunate to be one of only three software providers with a direct link to Medicare and we have partnerships with major clearinghouses to ensure our clients’ claims are submitted and paid faster. You can learn more about AxxessBilling and Recovery Services here.