Understanding Denial Management for Improved Financial Outcomes

Denial management is essential to any healthcare organization’s revenue cycle management (RCM). It can help ensure that healthcare providers receive the correct payments for services rendered. Knowing how to manage denials can help a healthcare organization reduce lost revenue due to unpaid claims. 

Healthcare providers can improve their revenue cycle and reduce denied claim costs by implementing denial management strategies.

This blog will cover everything from claim denials to appeals to help healthcare organizations get the money they deserve. This will be an excellent resource for anyone looking for tips and tricks to improve their denial management process. Or for those who want to stay on top of current industry news and trends.

What is Denial Management?

Denial management is a vital part of the healthcare reimbursement process. In the healthcare industry, it means finding, identifying, reviewing, and appealing denied medical claims in the right way.

Denial management aims to recover money from insurance companies that have declined to pay. This guarantees that healthcare providers receive accurate and fair compensation for the services they render.

Healthcare organizations must manage denials to avoid lost revenue, cash flow, and inefficient processes. Before sending requests to insurance companies, denials and claims must be thoroughly reviewed. It requires root cause analysis, error identification, and error prevention.

Denial management allows organizations to identify and take corrective action to prevent future denials. Its goal is to ensure that all claims are paid correctly and on time. 

Organizations must implement efficient denial management programs that focus on:

  • Identifying the most common reasons for denials
  • Creating processes for timely appeals, tracking, and analyzing denials and appeals
  • Training and educating staff on proper coding, documentation, billing, and policy changes
  • Establishing those processes to resolve denials and review and update policies
  • Implementing systems to investigate and rectify the root cause of denials

it is essential to have a team of experts to handle denials. Phoenix Virtual Solutions’ denial management and insurance collection specialists are knowledgeable and HIPAA-trained in coding, billing, and policy changes. They have access to an analytics tool that tracks denials and identifies trends. These can be advantages to improving the denial management process.

Also, denial management can help ensure that patients are satisfied. When denials are handled correctly, and on time, it can help keep good relationships with patients, reduce patient complaints, and improve customer service.

Overall, denial management is an integral part of the healthcare reimbursement process. It requires a comprehensive strategy to ensure maximum reimbursement and maintain positive patient relationships. By looking at their denial data regularly, organizations can spot trends and make changes to ensure they get the correct payments on time.

How Does Denial Management Work?

By using the IMMP process (Identify, Measure, Monitor, and Prevent), you can effectively manage denial rates and improve your financial performance and denial management process.

Step 1: Identify

Figuring out why claims were denied, such as wrong coding, not following payer guidelines, or incomplete documentation is part of the process.

1. Claim Submission

The first step is to submit a clean, accurate claim to the payer. It requires providing demographics, diagnosis, and procedure codes.

2. Denial Identification

The payer will review the claim after it is submitted and send a denial if it doesn’t meet their requirements. Most denials come with a reason code that says why the claim was turned down. This code is known as a “claims adjustment reason code” (CARC). This is then further elaborated with a remittance advice remark code or (RARC).

Step 2: Measure

Meanwhile, measuring means keeping track of the types and numbers of denials and figuring out why they happen.

1. Review and Analysis

After receiving the denial, reviewing and analyzing the reason code is important to determine the best action

2. Appeal

Then, send the payer a formal appeal if claim changes don’t fix the denial. It should include additional information and documentation to support the request.

3. Resolution

The payer or insurance company will decide if the denial should be overturned. If they overturn the denial, they will pay the claim. But if the claim is upheld, it will remain unpaid, and the process will start again with claim submission.

Step 3: Monitor

Monitoring entails tracking the progression of appeals and implementing corrective measures as needed. To ensure efficiency and resolve issues, monitor employees’ denial management workflow from time to time.

A remote virtual staff that specializes in denial management will help make a work list system, have all the resources needed, know the results, and know what happened with appeals and claims that were denied.

Step 4: Prevent

After gathering all the significant information for claim denial, the last step is to start a prevention campaign. 

Prevention involves taking proactive measures to ensure you can avoid any future denial. It allows you to look back at the denial management process and check whether there is a need to revise it, retrain your virtual staff, or manage workflows.

What are the Types of Denials?

The Differences Between Soft and Hard Denials

There are two primary categories for claim denials: soft and hard. Understanding the differences between these two denials is important for healthcare providers and patients to know how to handle claim denials best.

Soft Denials

It generally refers to claims denied with a request for additional information or documentation. That could be anything from extra paperwork to proof of payment.

Soft denials are often the result of a clerical error or lack of information. If the patient’s insurance paperwork is incomplete, the claim is still denied.

When that happens, it allows the patient or healthcare provider to provide the necessary information and resubmit the claim.

Hard Denials

Permanent denials are the ones that can’t be changed and often need the formal appeals process to be looked at again. For this reason, hard denials are usually more complicated. They may be due to incorrect coding, wrong information, or insurance policy exclusions.

In these situations, the doctor must file an appeal with the insurance company to get the decision to deny the claim looked at again. This process is often lengthy and more complicated than soft denials, and it can take several weeks or months to resolve.

Common Types of Medical Billing Denials

Denials can come in many forms and have a wide range of implications. In the medical world, denials related to insurance claims can impact the patient’s care and financial well-being.

According to the 2013 National Health Insurer Report Card from the American Medical Association (AMA), the following are the most common types of denials:

1. Incomplete Submission

This is one type of denial management. It happens when the insurance company determines that the submission is incomplete or wrong. 

It can explicitly be the wrong form, missing information like a social security number or modifier, or other wrong information on the claim form.

2. Authorization or Pre-Certification Denial

These denials occur when the insurance company denies a request for services. The claim does not meet the specific prior authorization requirements in the insurance policy. 

Most of the time, it’s because the patient’s insurance plan does not cover the needed service or the insurance company thinks the service isn’t necessary.

3. Pre-Existing Condition Denial

At this point, it happens when the insurance company finds out that the patient already has a health problem and that the requested service is not medically necessary.

4. Non-Covered Service Denial

This happens when the insurance company figures out that the patient’s current plan doesn’t cover the requested service. It may include services beneficial to your health or medically necessary.

Verify the insurance by looking at the details to see if you are eligible or by calling the insurance company before you give the service or send in the claim.

5. Duplicate Claim Denial

This type of denial happens when the insurance company finds that the service or procedure being asked for has already been done. It could be on the same day by the same provider for the same patient.

6. Late Filing Denial

Insurance companies usually indicate a time limit for submitting claims. These denials happen when the insurance company decides that a claim wasn’t sent in within the time frame they set, such as 90 to 120 days. 

This filing deadline includes the time it takes to send in revised claims and go through either of the following two types of reviews:

  • Automated Review, where the system checks for coverage and mistakes, for example, improper coding and unmatched codes.
  •  Complex Review, where licensed medical professionals determine reasonable, necessary, and covered services.

7. Medical Necessity Denial

This denial occurs when the insurance company determines that the requested service is not medically necessary. The claim does not provide cost-effective patient care that needs appropriate levels. It could include explicitly experimental or unnecessary services.

8. Already Adjudicated Services Denial

This type of denial occurs when benefits for a procedure or service are already included in the allowance or payment for another procedure or service, or in a claim that has already been adjudicated, paid, or settled.

These most common types of denials can occur with insurance claims. At this point, it is integral to be aware of these denials and their potential and to understand what course of action to take if you receive a denial notice.

The appeals process can be time-consuming and complicated, so being prepared to appeal claim denials if necessary and understanding the reasons behind the denial can be helpful. 

No matter the type of denial, it is also important for insurance providers to properly explain the reason for the denial and provide a clear explanation of the appeals process. It helps ensure that the claimant understands their rights and can make an informed decision about how to move forward.

It also ensures that all necessary paperwork is complete and that claim submission is on time. Healthcare providers can help ensure that their claims are paid promptly and accurately by taking the time to understand the process.

Why Outsource Denial Management in Insurance Claims?

Outsourcing denial management in insurance claims can provide numerous benefits for insurance companies, healthcare providers, and patients. Denial management is, in fact, a complex process that involves understanding and analyzing complex medical and financial codes, regulations, and appeals processes.

Moreover, denial management means identifying, analyzing, and resolving billing errors that result in denials from insurance companies. By outsourcing this type of work to Phoenix Virtual Solutions, a reliable, HIPAA-compliant denial management company, doctors and insurance companies can benefit from the expertise of experienced and knowledgeable professionals in the field.

Save Time and Money

Outsourcing the denial management process can equally help insurance companies and physicians streamline their operations and focus on core business activities. Virtual assistants can reduce the time spent on administrative tasks by leveraging technology. 

Medical virtual assistants can provide timely notifications to healthcare providers upon receiving denials, ensuring that providers have the necessary information to take action quickly.

At the sIt can also help reduce the costs associated with billing errors and denials since they no longer have to hire and train medical billing professionals or purchase expensive software or systems to manage denials.

Provide Better and Quicker Healthcare Services

Furthermore, outsourcing this process can improve efficiency, accuracy, and compliance. Insurers and doctors can benefit from the expertise of outsourced virtual medical assistants, who can provide better and faster services.

Medical collection assistants can help find common reasons for denials, keep track of trends in denials, and quickly automate workflows to fix denials. They can also analyze and interpret payer data to give healthcare providers a better understanding of the denial process and where they can make improvements.

Improve Customer Service

Another advantage of outsourcing denial management is that it can improve customer service. Insurance companies can ensure that their clients are receiving the best services possible. It can also lead to improved patient satisfaction since handling the process becomes prompt and efficient.

Ensure Compliance with Various Regulations 

In addition to these benefits, outsourcing denial management to payment posting specialists can help insurance companies and doctors comply with various regulations. An experienced team of professionals ensures compliance.

Final Thoughts

Getting professional service support is a viable solution for denial management in healthcare. With the demand for high-quality healthcare services growing, offshore virtual assistants can help healthcare providers reach their business goals and help their patients in important ways.

Schedule a free consultation today to streamline your denial management process and sustain a successful medical business! 

So, stop worrying and start partnering with experienced healthcare denial management companies like Phoenix Virtual Solutions to help prevent future claim denials and implement proactive strategies.

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