Dangers of Hospital Claim Denial Rates Exceeding Beyond 10%:

 Tom Jenkins Billing & Collections, Medical Billing, Most Recent, Uncategorized

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Claim denial rates in hospitals are nearing all time high rates, flagging a requirement for better claim denial management techniques and technologies, a new survey reveals. The healthcare industry has seen a 20 percent increase in claim denial rates in the past five years, and the COVID-19 pandemic has just made it worse.

The study of 131 hospital CFOs conducted in April and May of 2021 which uncovered that 33% of hospital CFOs announced normal claim denial rates are 10% or more, a figure that shows hospitals are approaching a danger zone. Across the country, hospitals face normal claim denial rates somewhere in the range of 6 and 13 percent.

The public healthcare emergency justifiably redirected consideration from addressing this critical business issue, while the emergency isn’t completely eliminated a considerable lot of the hospitals and healthcare systems are prepared to pick back up the light to bring down claim denials and increment on recovery to more adequate degrees of performance.

Moreover, 31% of hospital CFOs reported average claim denial rates of 5% or less, while 20% reported average claim denial rates of 5 to 7 percent, and 16 percent revealed average claim denial rates of 8 to 10 percent.

Another recent analysis confirmed that hospitals saw claim denial rates to increase by 23% in 2021 alone. The analysis showed that claim denial rates upon initial submission expanded from 9% in 2016 and 10 percent in mid 2021 to a sum of 11% by the third quarter of 2021.

Furthermore the analysis shows that 85% of claim denial rates are avoidable. Further developed initiative and interaction enhancements with respect to clinical coding and billing are crucial to avoid claim denial rates. Apart from managing coding and billing effectively, educating your billing and coding staff by training them on a regular basis on updates and new guidelines will help prevent claim denial rates exceeding normal industry standard benchmarks.

Coding was a top concern for 32% of the survey’s respondents, while 30% reported that medical necessity acute IP was their top concern, 20 percent reported front-end issues as their top concern, and 18 percent revealed that their essential concern was clinical approval denials. Payers keep on denying claims, so offices and the income cycle group should zero in on finding and revising fundamental issues

The pandemic worsened the healthcare industry’s claim denial management systems paving way to misunderstanding of claim requirements and coding, creating confusion among the in-house hospital staff itself. Many Hospital CFOs reported this to be a great issue in the entire structure of the RCM processes they have. Unconventionality, increased responsibilities, and new prerequisites for claims identifying with COVID-19 created turmoil for some, income cycle pioneers. This disarray focuses on foundational issues and could clarify to some extent the consistent increment in claim denial rates since the beginning of the pandemic.

COVID-19 made hospitals and their leaders realize claim denial management techniques and technologies should be well researched and identify the rooms for improvement so that the in house RCM staff can be well aware of the critical condition their denial rates Extra education and staff training could empower better coding and billing capabilities, and updated technology such as BillingParadise home grown denial management help hospitals decrease significantly lesser number of claim denial percentages.

Using denial management systems like BillingParadise’s DMS tool will categorize the denials according to the remark codes and payers. It will help billing staff to identify why the denial keeps occurring and can remove these denials from the root so that the future claims are billed out correctly and reimbursement is received in less than 10-15 days. It is important to note that reimbursement rates and reports which provide the time taken for reimbursement for each insurance company also allows hospitals to be one step ahead to be prepared in resolving denials which are time sensitive as well. 

Additional information requested is one of the most worst denials in healthcare RCM. It does not allow the billing staff to pinpoint the exact denial reason and the time limit to revert them to payers are less than the time limits offered by these insurance for appealing the claim. So it is always wise that all hospital claim denials which require additional information must have an insurance correspondence which is received directly as a manual copy to the hospitals address.Hospitals are advised to scan these correspondence and attach it to the particular patients claim denial so that it can be worked as soon as possible and sent back to the insurance companies for reimbursement.

Hospitals can now use BillingParaidse’s eligibility and benefits verification automation platform and denial management system to streamline their claim handling processes and reduce denial rates below 5%. Schedule a demo with our experts to learn more

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Over 12 years of experience as an RCM specialist. I have hands-on experience in most parts of the RCM Cycle. Currently designated as Manager – Operations in BillingParadise based out in Diamond Bar, CA. We offer Billing services and Healthcare IT solutions which in turn will improve the cash inflow of the Hospitals and Clinics.

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