Denials in healthcare are an ever-present, and ever-increasing, problem.
In 2022, denials made up more than 11% of claims.1 And, if left unchecked, they can severely impact an organization’s financial health — and future.
Between outdated technology and manual workflows, following up on denied claims is a drain on staff, time, and money. In fact, unresolved denials can create an average loss of up to 5% of net patient revenue.2 On top of that, denials are a constantly moving target due to new payer rules, patients switching medical plans, and other factors outside your control.
So, how do you ensure your organization is proactively preventing and managing denials? Start with four steps.
1. Know the most common causes of denials
Denials occur for any number of reasons, but many stem from errors or omissions in the following: registration errors, medical necessity, timely filing, pre-authorizations, duplication, additional information requested from the payer, or coding.
- Allocate time and resources to properly analyze your denial data.
- Once you have a clear understanding of the most common denials for your organization, prioritize areas for change.
- Examine your highest impact workflows, and apply technology to key areas.
2. Optimize workflows to prevent denials
The best way to combat denials is to prevent them. Revenue cycle processes for eligibility verification, prior authorization, and claim follow-up have huge downstream impacts on denial rates.
- Examine your eligibility verification, prior authorization, and claim statusing workflows.
- Study your top payers’ policies related to medical necessity.
- Proactively integrate rules within your EHR to address those details.
3. Build an automated denials process
A timely, comprehensive process is key to managing denials, and today, that has to include automation.
- Use software to identify appropriate coverage.
- Leverage predictive analytics to identify which denials are most likely to be successfully appealed.
- Use purpose-built automation to prioritize which denials to work first, efficiently route work, and even automate the appeal creation and submission process.
4. Track, report, and determine the root cause of denials
To continuously improve both denial prevention and denial management, tracking and reporting is crucial. To do it well, you must systematically capture the reasons for denials.
- Pay attention to all denials. Most are remitted electronically, but don’t ignore the ones that come in via direct correspondence with payers.
- Create a process that captures and reports the root causes of denials. Cataloging will enable you to monitor denials by type, frequency, value, and payer.
- Establish a team or workgroup to address denials and report on trends.
If you stick with this process, it will reveal critical opportunities to make your revenue cycle run more smoothly.
Ready to learn more about how to tackle denials? Get the latest research, tips, and tactics in this HFMA + Waystar report: Research + insights on denials in healthcare.
- Crowe RCA benchmarking analysis (2022)
- Journal of the American Health Information Management Association, Claim Denials: A Step-by-Step Approach to Resolution (2022)
Waystar delivers cloud-based technology that simplifies and unifies the healthcare revenue cycle—and brings more transparency to the patient experience.