Most rejected insurance claims are due to human error or skipped steps in established work processes.
High claim-rejection rates in a medical practice are very costly on several fronts.The average denial rate for most practices ranges from 5% to 10%, according to the Medical Group Management Association. For a small practice that submits 2,000 claims per month with a 7% denial rate, that is 140 denied claims per month. To put a finer point on it, if each claim is $100 this equals $14,000 a month in denied charges.
Not only are claim rejections expensive because incoming cash flow has slowed, but each denial has additional costs associated with it to rework and resubmit the claim.
Indeed, a strong revenue cycle management (RCM) module as part of your EHR will go a long way in supporting proper workflows, as well as improved financial outcomes and other efficiencies.
There are several tried and true ways to reduce claim rejection and enhance cash flow:
- Obtain patient pre-authorization. It is ideal to complete this step prior to the patient’s appointment to confirm with the patient’s insurance company that the anticipated service, treatment or is deemed medically necessary.
- Determine the patient’s insurance eligibility and verify benefits. A RCM software solution automates and speeds this process so it can be electronically checked over secure channels. Automation of this process could save front-desk employees a lot of time by reducing phone wait times or having to access each insurers’ portal manually for verification.
- Collect Patient Co-Payments. Collecting co-payments from the patient up front during check-in – through the patient portal prior to the visit or at the front desk during check-in – reduces the need to bill and collect from the patient after the office visit. This not only saves on administrative labor, paper and postage, it also enhances cash flow and reduces revenue aging.
[For more tips on how to reduce overhead costs, see this month guide, “THE BALANCING ACT: Shoring Up Overhead Costs While Driving Revenue”.
- Submit insurance claims correctly. RCM software can help identify and flag human errors made in the process so that claims can be swiftly corrected and resubmitted.
- Verify insurance payments are posted. Once the claim is submitted, reviewed and payment is posted by the insurance company, the RCM system will generate invoices for any balances due from the patient. This is where many practices leave money on the table, failing to bill patients for balances due. [Be sure to check your state laws for balance billing as it is not permitted in some states].
So, if you are not sure how high your claim rejection rate is, roll up your sleeves and delve into it to ensure your practice is not leaving money on the table.
Keep in mind that a practice can either deploy its own RCM software or outsource revenue and billing management to a third party. No matter which course you choose, the best practices are fundamentally the same and should be carefully tracked.