The Importance of Patient Engagement, Claim Denial and Appeal Management

 Wayne Carter Claim Denial, Patient Eligibility, RCM
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Patient Engagement, Claim Denial & Appeal Management Importance

Revenue cycle management (RCM) for laboratories and pathology practices is constantly evolving in complexity. Payors introduce new and more rigid policies that make collecting reimbursement for services rendered increasingly difficult. In this edition, we will provide an in-depth view of the latest trends and offer a strategic approach to
automate critical tasks that save time and improve appeal success. Moreover, we will emphasize the importance of patient engagement in maximizing reimbursement and explore the impact of effective patient engagement tools on accelerating payments.

Importance of Patient Engagement in Maximizing Reimbursement:

Patient engagement is vital in facilitating reimbursement and maximizing cash collection. Patients expect transparency and ease of access to information from their healthcare encounters. Because many laboratory, pathology, and molecular diagnostic encounters are not directly patient-facing, patient engagement tools are essential, particularly when it comes to communicating claim denials and patient financial responsibility.

Effective use of patient engagement tools is known to accelerate payments. The customer data show a significant increase in patient payments received in the first 30 days of the billing cycle after integrating text messages and automated calls into the traditional patient billing process. In the scenario illustrated below, for example, A customer collected 26.6% more payments in the first 30 days after implementing a text message reminder between the first and second statements.

Prior to implementing text messages, the customer followed a traditional three-statement dunning cycle. As seen in the table below, more than forty percent (42.6%) of total payments received occurred after the first statement (within the first 29 days of the dunning cycle). More than one-third (34.8%) occurred after sending the second statement (between days 30-59 of the dunning cycle). More than one-fifth (22.6%) were received after sending the third and final statement (during days 60-90 of the dunning cycle).

A customer collected 26.6% more revenue in the first 30 days after implementing a text reminder between the first and second patient statements


Results of the traditional three-statement dunning approach:

Statement CycleStatement TypeNumber of DaysPercentage of Payments Received
1Paper Statement1-2942.46%
2Paper Statement30-5934.8%
3Paper Statement Final60-9022.6%

Once the customer added a text message between each statement, 21.3% of all patient payments were received after the first text message. An additional 11.7% of payments were received after the second text, preceding the final notice.

Results of the dunning cycle with text messaging integrated into the cycle:

Statement Cycle Statement Type Number of Days Percentage of Payments Received
1Paper Statement1-1947.9%
3Paper Statement29-4216.1%
5Paper Statement Final67-903.0%

The volume of payments received from patients in the first 30 days of the dunning cycle increased by 26.6%, dramatically accelerating the collection of patient payments. That shift was driven out of the traditional 60–90-day window, a dual result of adding text messages and shifting the timing of statement delivery.

Comparison of dunning cycle with and without text message integration:

Statement Cycle Period BeforeAfterIncrease/Decrease Percentage
Days 1-2942.6%69.2%26.6%
Days 30-5934.8%27.8%-7.0%
Days 60-9022.6%3.0%-19.6%

The convenience of text messaging allows patients to connect to the call center or to the automated Patient Portal, where a payment can be made immediately. In addition, customers can customize their dunning cycle, depending on how their specific patient population responds to texts, paper statements, and the timing between billing cycles. Studying the behaviors of patient interactions at the client level also empowers a more strategic approach to engagement and improves patient satisfaction.

Claim Denial Trends Drive Reduced Revenue and Higher Costs:

Not only do claim denials extend time in accounts receivable, contributing to bad debt on services already rendered, but they also require the most attention from staff—increasing the cost of billing. Hard claim denials, such as Medical Necessity, make up the most challenging revenue to collect, about 5-10% of total claim denials received.

In addition to creating delays and revenue loss, claim denials show how payors administer their policies—even when those policies are unpublished. They signal adjudication trends, such as when claim denials are managed with a Patient Responsibility (PR) code or Contractual Obligation (CO) code. Therefore, monitoring these trends is critical to understanding how once collectible revenue (i.e., PR claim denials) may no longer be collectible (i.e., CO claim denials), or vice versa.

Fundamentally, an effective revenue cycle management process is rooted in the ability to file clean claims to the degree that is possible. Improving those outcomes requires focus on the exceptions—the claim denials.

Patient Engagement

Implementing Claim Denial and Appeal Management Strategies:

To effectively manage claim denials and appeals, laboratories and pathology practices must establish robust claim denial and appeal management processes. This includes:

Claim Denial Analysis: Regularly analyze claim denial trends to identify patterns, common reasons for denials, and payor-specific issues. This analysis can help in targeting areas for improvement and developing strategies to prevent future claim denials.

Documentation and Coding: Ensure accurate and detailed documentation of services provided and use appropriate medical codes for accurate billing. This reduces the likelihood of denials due to coding errors or lack of supporting documentation.

Timely Appeals: Develop a streamlined process for filing appeals promptly and ensure that all required supporting documentation is included. Timely appeals increase the chances of overturning claim denials and recovering revenue.

Staff Training and Education: Provide training to billing and coding staff to stay updated on the latest coding guidelines and payor policies. Knowledgeable staff can help identify potential issues before claims are submitted, reducing the risk of denials.

Technology and Automation: Utilize technology solutions that automate denial management tasks, such as tracking denials, generating appeals, and providing real-time analytics. Automation improves efficiency, reduces manual errors, and allows for better tracking and analysis of claim denial trends.

Why it is important for effective denial, appeal management, and patient engagement :

Effective denial and appeal management, along with patient engagement, are crucial components of successful revenue cycle management in laboratories and pathology practices. Maximizing reimbursement requires a strategic approach that focuses on patient engagement tools to accelerate payments and reduce reliance on traditional billing cycles. Monitoring denial trends and implementing targeted strategies can minimize claim denials and maximize revenue collection. By adopting innovative technology solutions and staying proactive in adapting to industry changes, healthcare organizations can navigate the complexities of denial and appeal management, ultimately achieving sustainable financial success.

In the ever-evolving landscape of revenue cycle management for laboratories and pathology practices, staying updated on the latest trends and implementing innovative solutions will be vital for healthcare organizations to thrive in an increasingly challenging reimbursement environment. By prioritizing patient engagement and adopting effective denial and appeal management strategies, laboratories and pathology practices can optimize their revenue cycle, improve patient satisfaction, and enhance overall financial performance.

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Wayne Carter

I've been working in healthcare industry of the United States in various types of departments since 2013. Started my career from the bottom as a Accounts Receivable executive, Practice management team handler, Entire Practice Management and now I'm employed at BillingParadise as a Content Lead. Areas of Expertise: End-to-End Revenue Cycle Management, Content Writing, Digital Marketing, RCM applications and Software, Healthcare Business Development, Healthcare Sales, and Healthcare Automation.

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