Tackling Rising Denial Rates in 2023
Claim denial’s hold on the revenue cycle
An astonishing 90% of a healthcare system’s missed revenue opportunities comes from denials, according to Healthcare IT News. Even though denials represent only 10 – 20 percent of claims, they have a major impact on a healthcare system’s cash flow. The Healthcare Financial Management Association (HFMA) reports that annually, as much as $262 billion is denied across healthcare organizations. This translates on average to $5 million denied per provider.
Not only are denials costly for healthcare systems, but denial rates have been steadily increasing. Fierce Healthcare reports a 20% + increase in claim denials over recent years, noting that already climbing denial rates were exasperated by the pandemic. With one-third of providers reporting that their denial rates exceed the “denials danger zone” of 10%, having a system in place to stop denials before they start is the hallmark of any thriving healthcare system.
Why are denials increasing?
Climbing denial rates have been one of the biggest challenges for hospitals and healthcare systems in recent years. The Medical Group Management Association (MGMA) attributes the rise in denials to:
- Lack of resources
- Staff attrition and training
- Increasing denial backlog
- Substandard technology
Getting to the root of denials
Seeking the cause behind the rising rates is the first step to gaining control and plugging cash flow leaks caused by unpaid denials. The American Health Information Management Association (AHIMA) estimates as many as 60 % of returned claims are never resubmitted and remain unpaid. According to the HFMA, most healthcare system’s denials are rooted in:
Lack of interoperability
- A disjointed system of processes and workflows produces inefficiencies. Manual fax data entry and upgrades to electronic health record (EHR) systems can all create a backlog for departments, but efficient claim management can be unlocked by merging these disparate processes and workflows into one centralized system.
Complex claims processing
- The American Medical Association (AMA) has estimated that claims processing inefficiencies cost healthcare organizations between $21 billion and $210 billion per year, making clear the value of every dollar owed. Eliminating inefficiencies and streamlining workflows permits clinicians to spend more time with patients, ultimately increasing patient flow.
Culprits hidden in plain sight
- Many healthcare systems lack basic visibility into denials data. This inability makes diagnosing the cause difficult and denial prevention nearly impossible.
Preventing denials before they start
MGMA reports three of the top four causes for denials occur at the front end of the revenue cycle and are preventable if practices are proactive in:
- Ensuring patient pre-registration and registration information is accurate
- Confirming chargemaster charges are current and correct
- Verifying billing software and claim edits are up-to-date
- Documenting rejections received on appropriate reports to ensure timely implementation of corrections
Automation in the front end can help prevent denials
Modernizing the claims process and introducing automation into the front end of the revenue cycle may be key to solving many of these challenges. Innovative solutions that streamline workflows and use automation to track, correct, and resubmit denied claims can save time and money. With Fierce Healthcare reporting that healthcare organizations spend $350 billion annually on processes that are still manual, automation would remove administrative burdens while increasing accuracy and speed.
The power of artificial intelligence in preventing denied claims
Med City News reports that Artificial Intelligence (AI) will be the true game changer in healthcare, explaining that AI provides the power of automation but “adds predictive capabilities, ongoing learning, and insights necessary to proactively prevent claims from being denied before they are even submitted.” AI can also speed up and prioritize work while leveraging “advanced analytics to uncover actionable insights from a health system’s own data to optimize claims management across the revenue cycle.”
Investing in a better future
Completely eliminating denials for healthcare organizations may be impossible but taking steps towards preventing them can save a significant amount of money. In 2023, an investment in automation and/or AI can help prevent denials, lessen the burden on overworked staff, reduce errors, and increase revenue.
Interested in learning more about the possibilities of automation and AI in healthcare? Vyne Medical’s healthcare-specific solutions can capture, automate, manage, and exchange interactions with patients, payers and providers. With our help in the front end, you are more prepared to prevent and combat denials. Contact us to learn more on how we can help you achieve your goals.
American College of Healthcare Executives | American College of … https://www.ache.org/-/media/ache/about-ache/corporate-partners/the_change_healthcare_2020-revenue_cycle_denials_index.pdf.
Considine, Jason. “State of Denial and the Power of Ai.” MedCity News, 21 June 2022, https://medcitynews.com/2022/06/state-of-denial-and-the-power-of-ai/.
Muoio, Dave. “Hospitals’ Claims Denial Rates Rose to New Heights during COVID-19, Executives Report.” Fierce Healthcare, 9 June 2021, https://www.fiercehealthcare.com/hospitals/hospitals-claims-denial-rates-rose-to-new-heights-during-covid-19-executives-report.
Reiner, Glen. “Success in Proactive Denials Management and Prevention.” HFMA, 16 Dec. 2022, https://www.hfma.org/revenue-cycle/denials-management/61778/#footnotes.
Renfrow, Jacqueline. “90% Of Claim Denials Are Avoidable with Help of Tech Tools.” Fierce Healthcare, 10 Apr. 2019, https://www.fiercehealthcare.com/payer/waystar-90-claim-denials-are-avoidable-help-technology.
Staff, Admin. “Claims Denials: A Step-by-Step Approach to Resolution.” Journal of AHIMA, Journal of AHIMA, 30 Jan. 2023, https://journal.ahima.org/page/claims-denials-a-step-by-step-approach-to-resolution.
“Visibility Key to Efficient Revenue Cycle Management.” Healthcare IT News, 6 Oct. 2010, https://www.healthcareitnews.com/news/visibility-key-efficient-revenue-cycle-management.