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May 18, 2016

How to Lower Your Claim Denial Rate

May 18, 2016

claim denial rate

Few things are more frustrating to a practice than having a claim denied by a payer. Denied claims result in delayed payments at best, and no payment at all at worst. Many practices don't know why certain claims are denied, or why their claim denial rate is as high as it is.

Fortunately, practices can positively impact the rate at which their claims are denied. While no practice always has a zero-percent denial rate – some claims will be denied for apparently no logical reason at all – it's possible to reduce denials. Many reasons for having a claim denied are avoidable, as we'll explore below.

Understand Your Current Rate of Denial

Before you can reduce your rate, you'll have to know what it is. A practice should know what percentage of claims get turned down by payers, so you can establish a baseline. Using this baseline, you can evaluate if what you're doing is working or not.

It's not enough to just know the rate, though. You need to track certain pieces of information about each denied claim, such as:

  • Payer
  • Reason for denial
  • The provider responsible
  • The location (if you have multiple locations)

The denial rate should be calculated over a particular period of time, such as a month, or three months, or six months. This should be evaluated each quarter to see if the rate is going up or down.

Figure Out Why Claims Are Being Denied

Tracking your claims as mentioned above can give you a very important piece of information: why your claims are being turned down.

If you know why, you can take steps to fix the problem. For example, it could be that you're missing the deadline for filing a claim. That's a very common reason. Or, it could be that there is incorrect information – such as an address or a modifier – that shoots down the claim. You could get hit by other reasons, such as the dreaded “lack of medical necessity” charge, or not having authorization to treat the patient (like being an out-of-network provider).

Whatever the reason, you'll need to know. For every reason, there are actionable steps your practice can take to resolve the issue and ensure it doesn't happen in the future.

Educate Your Staff

Most denied claims are a result of a lack of education and training for your staff. Fortunately, this is easily resolved.

Create a staff education program that covers:

  • All relevant policies for insurance coverage and eligibility by payer
  • How to properly fill out all forms
  • Accurate data entry
  • ICD-10 coding requirements
  • Collecting all the pertinent information from the patient
  • Billing for specialty

The more educated and trained your staff becomes, the lower your rate will ultimately be.

Hire a Third-Party Provider

One way many practices have lowered their claim denial rate is to hire a third-party coding and billing specialist. A revenue cycle management provider can help you identify flaws in your claims process and troubleshoot your process – and then take over the process entirely and operate it in a way that avoids errors. This results in higher claim acceptance rates and a stronger cash flow for your practice.

Focus on the above recommendations to lower your claim denial rate and increase payments for your practice.

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