Claims under attack; analytics to the rescue

Andrew Slotnick

The Advisory Board recently released its 2015 revenue cycle benchmark study, in which they uncovered a few startling trends in claims denials that further support the need for advanced analytics the help better manage claims denials and reduce cost.  Traditional denials management techniques aren’t enough.

Commercial denials as a percent of total denials rose 26%

This statistic is concerning of course for many reasons, but the one that stands out the most to me is pretty simple. When you look at the two categories, Medicare and Commercial; Medicare is a single payer with a single set of rules, whereas the ‘commercial’ category represents hundreds of unique requirements that providers must adhere to for full reimbursement. Expecting your revenue cycle staff to remain current with such requirements is becoming increasingly unrealistic and not sustainable. Analyzing claims prior to submission as well as after they have been initially denied can help administrators prevent initial denials and also to make reactionary corrections so that denials do not re occur. In today’s dynamic market, providers must be armed with technology to catch problems before they go out based on historical data (claims scrubbers) as well as technology to analyze claims once they have been initially denied to identify patters that are unexpected or the result of a rules change somewhere along the way that no single person or scrubber could have expected or identified.

Demographic/technical denials resulting in write-offs rose 100%.

These hurt, because most if not all of these denials are avoidable. My takeaway here is that there is likely a correlation between this increase and the increase in commercial denials, which is why it is so important to have technology solutions in place to catch these denials right away and then make changes to avoid them in the future. Many provider and hospital business offices take advantage of transaction editing systems and claims scrubbers but few have tapped into the value of denials analytics. Where advanced analytics can play a new role in denials management is by spotting patterns in denied claims, but without regard to published rules. What this means for administrators is that not only can denials patterns be picked up more quickly and holistically, but that the data can also be used to communicate more clearly with payers to explore opportunities for improvements.

The median success rate for appeal all denials is between 50-56%

Denials happen, unfortunately, but using information from denials proactively, to improve your clean claim rate and to win initial appeals, can help improve net collections and reduce denials overall. This information should also be shared with revenue cycle staff to magnify the importance of a clean claim rate. The ability to analyze denied claims and effectively identify patterns within denials is a critical tool in identifying the source of the problems.  Not only will it reduce the need for rework and decrease the time and effort on appeals, but advanced denials analytics will help diagnose problem areas in your revenue cycle and help identify fixes to process that will have a long-lasting impact to your receivables health.

Maintaining or even reducing cost is an eternal struggle for healthcare executives that are focused on improving operating margin in a volatile market. What this study published by The Advisory Board helps us understand is that with the right people, process, and technology investments denials management represents a great opportunity to improve net patient collections.

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