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Facts and stats that reveal why hospitals should automate their denial management process:

It is the era of confounding healthcare reforms. Hospitals across the country are worried about a huge spate in claim denials and revenue flow fluctuations as the industry transitions towards the value-based reimbursement model. It is uncharted territory and to face the challenges ahead, automating the way you handle and prevent denials is the way forward.

Here are statistics that prove the importance of automating the denial management process in 2019. And quotes, views, and opinions of healthcare thought leaders, revenue cycle management experts, and industry leaders.  

RCM Best Practices for Group Practices and Hospitals

The truth is in the numbers…

  • According to a report by the Advisory Board Company, a research organization, the fact is that 90% of denials are preventable and nearly 60% of these are recoverable. 44% of hospital executives use vendor solutions for managing denials
  • 31% of hospitals are still handling denials manually
  • 18% of hospitals use a home-grown tool
  • 7% are unsure 60% of respondents without a vendor-provided solution will purchase one in the next 7-12 months
  • According to the Healthy Hospital Revenue Cycle Index, approximately $262 billion in healthcare claims are initially denied — an estimated 9% of charge.
  • Over half of the respondents surveyed by RACMonitor reported paying more than $30 per account to resolve denials, with 38 percent paying more than $40. This points to an industry-wide opportunity to seek out and implement systems that will reduce this cost.
  • According to the American Medical Association’s (AMA) most recent health insurer report card, claim denial rates ranged from 0.54 percent to 2.64 percent for major private payers in 2013, while Medicare denied almost five percent of claims.
  • The survey showed that the majority of respondents are achieving between 60-90 percent appeal success rates
  •  The average automated claim denial from Medicare’s Recovery Audit Program was worth $714 in the second quarter of 2016, the American Hospital Association (AHA) reported. For complex denials that required medical record review, the average dollar amount per claim denial was $5,418.
  • While some claim denials could lead to significant healthcare revenue declines, the Medical Group Management Association (MGMA) found that approximately 65 percent of claim denials were never corrected and re-submitted to payers for reimbursement.
  • The average automated claim denial from Medicare’s Recovery Audit Program was worth $714 in the second quarter of 2016, the American Hospital Association (AHA) reported. For complex denials that required medical record review, the average dollar amount per claim denial was $5,418.
  • NextGen survey reveals more than eight percent still don’t leverage core RCM automation technology.
  • We asked practices to evaluate and rate their ability to follow up and resolve denials. Only 11.4 percent rated their practices “Excellent,” whereas, 52.3 percent of practices rated their ability as “Very Good,” 28 percent as “Average,” and 8.3 percent rated their denial resolution as “Below Average.”
  • More than 40 percent of participating practices report having one full-time employee (FTE) dedicated to claims denial management, whereas eight percent of reporting practices have seven or more FTEs dedicated to this effort. For practices surveyed that do outsource, 70 percent say their external billing provider handles denial resolution.
  • More than 70% of medical practices are outsourcing their denial and AR follow up tasks

Download your free copy of the denial management whitepaper from BillingParadise

Expert voices on denial management automation

Organizations have not automated denial management

Brendan FitzGerald“Given the complexities around submitting claims and the labor associated with managing denials, it came as a surprise that more organizations have not automated the denial management process through a vendor-provided solution,”

Brendan FitzGerald, HIMSS Analytics Director of Research.

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Free physicians from needless administrative tasks

Ardis Dee Hoven

“We must move toward an automated approach for processing medical claims that will save precious healthcare dollars and free physicians from needless administrative tasks that take time away from patient care.”

Ardis Dee Hoven, MD, president of the AMA, told Medical Economics in 2014

Know more about Ardis Dee Hoven Here

Claims management appears to be the next for vendor opportunity

Doug Brown“Claims management appears to be the next for vendor opportunity as ICD-10 effects begin to impact cash flow, followed by eligibility and benefits management,”

Doug Brown, Black Book’s Managing Partner.

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Lookout for outliers or trends that indicate shifts in payment

Karen EnglandRevenue cycle leaders must be on the lookout for outliers or trends that indicate shifts in payment or denial patterns,”

Karen England, MBA, CPC, Revenue Cycle Consultant at Ingenious Med, to RevCycleIntelligence.com last March.

Know more about Karen England Here

Experienced professionals share their recommendations to keep your denials in check

Tara Dwyer, vice president of audit operations at Xsolis, recommended hospitals prioritize claim denial appeals based on the clinical merit of individual cases.

Lyman Sornberger, vice president of client development at Charles J. Hilton and Associates law firm, provided three operational processes in revenue cycle management to respond to insurance claim denials.

These processes include informal and formal appeals. Lyman Sornberger said providers also may bring in a third-party healthcare attorney to respond to denials.

Bonus: Download your free copy of the Denial Analysis template

Conclusion:

Optimize your denial cycle, prevent revenue leaks and equip your revenue cycle teams for the changeover to value-based care, with the right set of tools. Putting the power of technology to use is the only way to ensure a financially stable 2019 for your hospital.

 


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I’m a multi-certified revenue cycle management professional and compliance officer with 20+ years of experience. I contribute articles to leading healthcare publications and journals. I am currently working as Senior Transition Manager, in BillingParadise headquartered at Diamond bar, California. BillingParadise offers Medical Billing Services that intersect perfectly with the EMR/Practice management system you use.BillingParadise has offices in New Jersey, New York, Florida, Georgia, Minnesota, and Texas.


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