A Closer Look at the Causes of Claim Denials Affecting Denial Management

Claim denials can be frustrating and time-consuming to a healthcare provider. But did you know that they can have a lasting impact on your organization’s reputation and staff morale?

This blog delves into the ripple effect of denials and how to address them efficiently. We will explore the different types and causes of denials and their consequences. We will also discuss strategies for avoiding and mitigating denials in claims denial management.

Why are There Denials in Healthcare?

Healthcare claim denials occur when a payer, such as an insurance company or government program like Medicare, rejects a healthcare provider’s request for reimbursement. Claim denials can happen for various reasons, ranging from simple mistakes to complex issues that require extensive documentation and appeals.

These denials can lead to financial losses, delayed payments, increased administrative costs, and decreased revenue for healthcare providers. It can also result in delayed or denied care for patients.

Importance of Studying the Impact of Denials on Healthcare Organizations

Denials can have far-reaching consequences. It can lead to revenue loss, increased costs, and a negative impact on patient care and staff morale. With this in mind, it is important to study the impact of claim denials
on healthcare organizations.

A recent post from American Medical Association describes the experience of Dr. Debra Patt, a specialist in breast cancer in Austin, on a prior authorization (PA) denial. An insurance company’s peer-to-peer (P2P) specialist contacted her while disembarking a plane. 

The purpose of the call was to discuss a necessary cancer treatment she prescribed for her patient. Despite providing extensive documentation and appeals, the denial remained in place. It caused the patient to face a four-week wait for a P2P consultation with the insurance company.

Dr. Patt expresses frustration with the PA process and argues that it creates unnecessary delays and barriers to care. She highlights that importance of advocacy for patients and physicians to push for more streamlined and patient-centered approaches to PA.

In a video podcast, Dr. Patt further discussed the life-and-death consequences that cancer patients could face due to the PA process imposed by insurance companies. She shared the stories of several patients without access to treatments, which resulted in disease progression and even death.

Dr. Patt calls for reforms to the PA process that prioritize patient needs and reduce administrative burdens for physicians. It shows that the PA process places an unnecessary burden on patients and physicians and can lead to delays in treatment and increased costs.

Types of Denials

Clinical Denials

Clinical denials occur when a payer determines that the treatment or procedure was not medically necessary or appropriate. This type of denial often results from a lack of supporting documentation or insufficient information provided by the provider.

Technical Denials

Technical denials occur when a payer denied a claim due to errors in coding or billing. These errors can include incorrect procedure codes, inaccurate diagnosis codes, or lack of required documentation.

Administrative Denials

Administrative denials occur when a payer denied a claim due to administrative issues. These include missing or incorrect patient information, incomplete or illegible forms, or untimely submission of claims.

Causes of Denials

Lack of Documentation

Incomplete or inadequate documentation can lead to clinical denials. Payers may deny claims if there is insufficient information to support the medical necessity of a treatment or procedure.

Coding Errors

Errors in coding can result in technical denials. These errors may include incorrect codes, incorrect modifiers, or upcoding, which is using a more complex code than necessary.

Billing Errors

Errors in billing can also result in technical denials. These errors may include incorrect patient information, incorrect payment amounts, or untimely submission of claims.

Medical Necessity

Payers may deny claims if they determine that a treatment or procedure was not medically necessary or appropriate. Providers must ensure that they are providing the appropriate level of care. There should be adequate documentation to support medical necessity.

Consequences of Denials

Financial Impact

Denials can result in significant financial losses for healthcare providers, including revenue loss and increased costs. When there are denied claims, providers must spend additional time and resources appealing the decision or correcting errors. This results in increased administrative costs.

Revenue Loss

Denials can also result in revenue loss for healthcare organizations. If they do not appeal or correct denied claims, they will lose revenue that is impossible to recover.

Effects on Patient Care

Denials can have a negative impact on patient care. When payers deny claims, providers may have to delay or cancel necessary treatments or procedures.

Operational Impact

Denials can also have operational impacts on healthcare organizations. Increased workload and reduced staff morale can result from the added administrative burden of appealing or correcting denied claims.

Reduced Staff Morale

Dealing with denials can be frustrating and time-consuming for healthcare providers. This can lead to reduced staff morale and lower job satisfaction, which can have a negative impact on the overall quality of care provided by the organization.

Damaged Reputation

Denials can also have a negative impact on the reputation of healthcare organizations. Patient may perceive denials as a sign of substandard care. It can also lead to a loss of trust and potentially damaging the organization’s reputation.

Strategies for Avoiding Denials

Conducting Regular Audits

Regular audits can help healthcare providers identify areas of weakness in their documentation, coding, and billing practices. By addressing these issues proactively, healthcare organizations can reduce the rate of denials and improve their financial and operational outcomes.

Educating Staff on Documentation

Proper documentation is essential for avoiding denials. Healthcare providers must ensure that training of staff on best practices for documentation. that they understand the importance of complete and accurate documentation.

Proper Coding and Billing Practices

Providers must ensure that they are using the correct codes and modifiers when submitting claims. They should also ensure that they are billing accurately and timely. They are also complying with all relevant regulations.

Utilizing Technology

Healthcare organizations can leverage technology to reduce the rate of denials. For example, they can use automated coding and billing systems to ensure accuracy and compliance. They can also use electronic health records to streamline documentation and reduce errors.

In a recent post, Medicare Advantage plans in the United States are increasingly using artificial intelligence (AI) to deny claims from healthcare providers. The plans use algorithms to analyze claims data and identify potential fraud or overbilling, which can result in claim denials.

Critics argue that the use of AI in this way can harm patients by denying them needed care. It can also disproportionately affect providers in low-income or rural areas.

Some experts suggested that AI still needs greater transparency and accountability. This ensures providers use it appropriately in the Medicare Advantage program.

Recently, an article stated that Experian Health had launched two new AI-powered products, ClaimStatusPlus and ClaimStatusPlus Premier. It aims to help healthcare providers recover lost revenue due to insurance claim denials. The company estimates that these products can recoup billions of dollars in lost revenue.

The products analyze claim data and use predictive analytics to identify the root causes of denials. It can also suggest actions to prevent future denials. ClaimStatusPlus Premier also offers real-time tracking and analysis of claim status updates.

Mitigating Denials

Correcting the Cause

Healthcare providers must identify the root cause of the denial and take corrective action when the payer denies a claim. This may involve correcting documentation errors, submitting additional information, or appealing the decision.

Appeal Process

Providers can appeal denied claims through the appropriate channels, such as with the payer or through an independent review organization. By appealing the decision, providers can potentially reverse the denial and recover lost revenue.

Negotiation with Payers

Healthcare organizations can also negotiate with payers to resolve denials and prevent future issues. This may involve negotiating payment rates or working with the payer to develop better documentation guidelines. It can also be collaborating on initiatives to reduce the rate of denials.


Final Thoughts

Overall, the impact of denials on healthcare organizations cannot be underestimated. Healthcare providers should take a proactive approach to denial management and work collaboratively with payers to prevent and resolve issues.

With concerted effort and focus on best practices, healthcare organizations can reduce the denial rates and provide better patient care. 

As they continue to face new challenges in the industry, including increasing regulatory pressures and changing reimbursement models, it is more important than ever to focus on denial management.

At Phoenix Virtual Solutions, we understand the challenges that healthcare organizations face in managing denials. 

Our Offshore Denial Management Specialists can help providers to recover lost revenue. They can identify and appeal denied insurance claims, as well as preventing future denials through improved documentation and administrative work.

Schedule an appointment today and let us help your organization succeed!

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