Approximately 65% of denied claims are not reprocessed for resubmission (Zindl, 2021). Amongst the many challenges facing the healthcare industry, denied claims only continue to rise. Many denied claims are never resubmitted. What does that mean for providers, and what does this mean for the patient experience?
Claims denied and not resubmitted result in significant loss for the provider. Denied claims affect more than revenue — they also impact staffing resources. Proactive steps, like staff education, are necessary to decrease the number of denied claims. Education addresses root causes, and ongoing education addresses deficiencies as systems change or are updated.
What are common reasons for denied claims?
Claims denials occur for many reasons. Administrative and coding errors are the two most common types of errors resulting in denial.
Administrative errors include:
- Missing demographic information
- Eligibility errors
- Duplicate claims
- Exceeding the filing time limit
- Bundle payment
Coding errors include:
- Date inconsistencies
- Invalid code pairing
- Incorrect modifiers
- Lack of medical necessity
Additionally, documentation errors can negatively impact the administrative and coding processes. Any mistakes or erroneous information will appear on the claim form, and this can cause confusion, time lost to administrative burden, and a poor patient experience.
The financial impact on healthcare organizations
Loss of revenue is an alarming consequence of any activity. In claims denials, $1 of every $10 can be lost (Bowman et al., 2019). The cost to resubmit denied claims averages $25 per claim, with an estimated average for hospitals of $181 per claim (Poland & Harihara, 2022).
Claim denials cause revenue loss by several means, including excess labor costs of claims resubmission. Resolving denied claims is a lengthy process, resulting in excess cost and loss of revenue. In fact, this can be an organization's most time-consuming task. Administrative efforts of handling denied claims requires a significant amount of staff time.
The decreased revenue from denied claims makes it difficult for healthcare organizations to maintain financial obligations, such as paying staff and maintaining facilities. This calls for healthcare organizations to allocate resources to address the increased denied claims.
Strategy #1 – Proactive Training
The best approach to managing claims denials is a proactive approach. The key to a proactive approach is education. Knowledge of clean claim processing ensures accurate form submission on the first attempt, which is the goal of claims processing.
Staff education is essential to avoiding common billing errors resulting in denied claims. Billing education gives healthcare providers the skills and knowledge to code and bill accurately for medical services.
The success of such education programs hinges on the broadness of the curriculum. The program must cover all areas of the billing process. Topics to be covered should include but are not limited to:
- Medical terminology
- Coding
- Payer requirements
- Reimbursement process
- Bundle payments
- Accurate documentation
- Patient access
- Understanding health insurance and insurance follow-up
- Patient registration
- Medical necessity
Well-trained staff make a difference
An educated staff can improve the quality of claims submitted. The increased knowledge leads to clean claims or captured errors before submission, decreasing the loss of revenue and time.
Coding and billing education
Coding and billing education is necessary to create claims and resubmit denied claims. All staff involved in the billing process need to possess this knowledge.
Staff must also have the skills to manage those claims that payers deny. They should understand the rejection codes, the denial resolution process, and how to review claim forms.
Documentation improvement
Staff must learn the fundamentals. All staff must be on the same page. Capturing the necessary documentation and its accuracy is the responsibility of all staff, but even more so for the clinical document improvement (CDI) staff.
Pulling information from the databases managed by CDI personnel is crucial for accurate billing, just as is the accuracy of the information in the electronic health record (EHR) database. The goal of CDI is to minimize discrepancies in documentation. However, to do so, they need to have a solid knowledge base that can only come from quality documentation education programs.
Insurance regulations and compliance
Understanding the requirements of insurance providers and payers is necessary to stay compliant with claims processing. This includes knowledge of the verification process and how to educate patients about their financial responsibility for medical care. Verifying eligibility before a patient receives medical services clarifies how the claim can be processed.
When an organization adheres to payer-specific guidelines, payers deny fewer claims; however, staff must have a clear understanding of each payer’s coding guidelines.
Benefits of coding, billing, & documentation education
Educating staff on coding, billing, documentation, and payer requirements decreases the likelihood of denied claims. Capturing an error before submission improves the time to get paid, and organizations can reallocate billing office resources toward other administrative priorities.
The high cost of appealing denied claims points to a need for intervention. Proactively addressing the issue with staff education will decrease the cost of appeals.
Strategy #2 – The Informed Patient
An educated patient understands the role of insurance and their role in the financial responsibility of their medical services. Educating patients about their responsibilities minimizes confusion and contributes to timely payments.
When staff understand the payer requirements, they are in a better position to educate patients. Staff also know what information to collect from patients. Informing patients before visits the information required when they arrive for medical services allows staff to capture accurate information favorably.
The registration process is the most common reason for denials (Arias, 2021). Ensuring this process follows payer requirements emphasizes the need to provide patient education.
Strategies for patient education
Successful patient education is a direct result of successful staff education. Staff must understand the information and have the tools necessary to educate patients.
When educating patients, it is best to use plain language they understand. Communicate with patients in their preferred language and facilitate language barriers such as language, loss of hearing, and reading ability.
If barriers exist, provide education in a way patients can learn. If they can read, provide documents in their preferred language. If they have difficulty hearing, use written materials.
Strategy #3 – Effective Documentation
Gathering accurate patient information is one of many steps in the process and is one of many pieces of information needed to be collected. Services provided to patients should be documented accurately.
Providers should also be educated to ensure they correctly identify their services. This information is used for coding and billing and can only be as accurate as the provider's documented information.
Strategy #4 – Collaborative Learning
Preventing claims denials requires all staff to be on board. That goes to say that collaboration within the organization is required to process clean claims, from collecting patient information to reimbursement.
Regulatory oversight is a part of the claims process that organizations cannot dismiss. Competency in this area ensures that staff process claims within regulations. Staff in all areas, coders, auditors, and managers should be competent in regulatory requirements and know where to locate such resources.
Key players in claims processing—registration, case management, financial services, nursing, health information management (HIM), physicians, coders, auditors, and managers should all collaborate to decrease the number of denied claims. Identifying resources and leveraging expertise to implement remedies for claims denials, including education.
Strategy #5 – Ongoing Education
Regulations and requirements are not static. Payers are constantly changing requirements in response to changing regulations. Staff must stay abreast of these changes to continue improving denied claims numbers.
Claim denials may improve by keeping all staff on the same page by providing continuous education. Identifying deficits in staff knowledge base can direct continuing education an organization needs.
By fostering a culture of learning and development, staff will embrace ongoing training. Continuing to educate themselves about recent changes in claims processing staff will be the piece of the puzzle that brings denied claims numbers down to manageable.
Strategy #6 – Technology and Data Drivers
It would be wrong not to utilize technology to help prevent claims denials. Technology can provide a significant impact on the decrease of claims denials. However, it has no value without a process and understanding of how to use the technology.
EHR and claims management software
Patient portals can be a resource for gathering current patient information. Assuming the information is up-to-date, applying it to the claims process can eliminate documentation errors.
A once time-consuming task can be more manageable using this and other technological resources. Ensuring all staff are aware of the technology available and how to use it can lessen the burden of locating accurate information.
Data-driven insights to identify trends and root causes
Identifying the root cause of claims denials is necessary to direct an education program. Utilizing metrics data derived from technology gives a snapshot of current processes and where there are deficiencies. Therefore, based on this analysis, education can be implemented in any area.
Serving as a base for education, testing and reports are a vital technology in developing an education program. Having a clear purpose for training ensures clear and attainable goals.
Strategy #7 – Expect Obstacles
Implementing any education program has its challenges. Some challenges and obstacles may be:
- Employee buy-in
- Lack of staff
- Keeping up-to-date
- Patient education
Employees must understand the importance of accurate claims submissions and value that education can help ensure accuracy. When employees value the program, they are more likely to participate.
The claims submission processes may be staff intensive. Stealing staff away from processing claims for education will further delay the submission process.
The ever-changing world of insurance claims can make it hard to have accurate education programs. Staying abreast of all new changes and adjustments for all payers is necessary.
Patients are a part of the process. They may need education about the requirements of their insurance. This burden can fall on the provider. Therefore, staff need also to be teachers.
Strategy #8 – Overcoming Challenges
There are obstacles in the implementation of any new program or process. Planning for the obstacles and having strategies ready to address them ease the difficulty they may pose.
Emphasize the importance of accurate claim submission and how staff education can address this issue. Meanwhile, ensure the program is accurate by staying abreast of industry changes.
Education should be presented in plain language for staff and patients. Present complex concepts in easy terms—support information with visual aids, like diagrams, videos, and brochures.
Making the training accessible and efficient minimizes interruptions in staff work when there are staffing shortages.
Partnering with HealthStream means you have an ally supporting your reimbursement needs while you work to minimize your denied claims. With 90% of denied claims avoidable, your organization can continue to grow as an industry leader and role model for successful reimbursement programs through implementation of HealthStream’s revenue cycle system.
HealthStream’s adaptive and comprehensive education develops staff competence with courseware supporting their needs from the moment a patient arrives. With personalized training, interactive games, and engaging video tools, HealthStream’s revenue cycle education solutions help you optimize reimbursement from start to finish.