Medical billing denial by definition is “refusal of payment for healthcare services by the insurance company."
It’s a constant obstacle while running a healthcare facility. Get this:
Denial rates are as high as 15-20% for most hospitals filing their first billing claims.
On average reworking a claim costs $25,
And reworking a claim has a success rate of 55-98%.
That’s why many successful practices choose outsourced medical billing services because billing and claims processing is difficult to sort out and can quickly snowball to the point where you end up losing a great chunk of revenue. Claims have to be appealed or reworked. This issue has only been exacerbated by the recent pandemic: it has been reported that medical billing denials are steadily rising. Hospitals are receiving an increased number of denial claims by clients.
The silver lining in such a circumstance is that medical billing denials are avoidable. We’ve prepared 5 reasons as to why Billing Denials happen from our experience serving the SF Bay Area with data backed by the 2013 American Medical Association National Health Insurer Report Card:
Top 5 Reasons For Billing Denials
We categorize billing denials into two:
Irreversible denials or "hard denials"
Reversible denials are also called "soft denials”
Hard denials result in loss of revenue and cannot be appealed. Whereas soft denials, if reworked and sent with additional information, can be corrected.
1. Insufficient Information
A lack of information or leaving a field blank can result in claim denial. Incorrect plan code, no Social Security number, demographic and technical errors can result in 61% denials in the initial billing whereas 42% denials in write-offs.
2. Resubmitting a Claim
Resubmitting the same claims, also called duplicates, is one of the major reasons for claim denials. Submitting the claim again for the same encounter, on the same date, for the same services provided by the same personnel are the causes for claim denials.
3. Settled Services
Claims are denied when the benefits of services provided are included in a different service.
4. Payment Coverage
There may be procedures that aren't covered by a patient's insurance plan. The best way to avoid any Medical Billing Denials is to contact the insurance company and ask for their plan details.
5. Time Limit for Claim Submission
Payers may have a certain deadline with their claims. The time duration includes any rework for claims, in a digitalized system correcting any coding errors. Lastly, a complex which includes licensed medical professionals deeming a service provided as essential.
Correcting claim denials can lead to missing deadlines. Staff should be alerted after a certain number of days when a deadline is approaching.
The toll it takes reworking medical denial claims can result in a loss of revenue in the cash flow cycle. Solely relying on this cycle is uncertain as profits are unpredictable. A refined method to navigate such a situation would be actively researching and analyzing the bulk of causes, leading to denied medical billing claims. Such practices help in avoiding denial before it can occur.
A good game plan to combat the discrepancies in billing denials can reduce denial rates and create substantial improvements in your organization's billing guidelines. A good billing denial rate ranges from 5-10%, however top-performing hospitals have as low as 4% denial rate.
The best course would be to outsource to a proficient revenue cycle management expert. Horizon Revenue Solutions are exemplary in dealing with Medical Billing Claims. Horizon Solutions is qualified in helping with medical billings, tracking trends, flagging denial causes, and eliminating them. Contact us today for a quote.