Thursday, September 15, 2011

Denial Management 101

Every medical practice experiences denied claims, however some experience a far greater number of denials than others.  The best performing practices can have denial percentages as low as 5%.  Other practices are seeing claims denied 25-30% of the time.  It is key to understand that once a Medicare claim is denied and appealed correctly, it will take at least 1-3 months before the provider receives payment.  In tough economic times, this cash flow delay is unacceptable for most every practice.  Healthcare professionals are always looking for ways to improve their billing performance.  The best way to improve billing performance is to prevent many of these denied claims before they happen.

For those that have been involved in physician billing for over 20 years, we know that there was once a time when claims were submitted to the payers and we subsequently received payments.  It used to be much less sophisticated than it is today.  An individual claim processor manually reviewed, processed, and paid every single claim.  Over the last two decades, much of that work is now being done by a computer.  Programs are written to make sure that the medical practice/medical billing service is "dotting their i's and crossing their t's".  If there is any doubt, they deny it.  They assume that most medical practices will not go through the trouble of following up on denied claims.  This saves the payers money.

To ensure that you, as a provider, are not leaving money on the table, it is vital to be proactive as to what the root of the denials is.  Keep track of how many claims are denied every month, identify the reasons for denials, and track your denial performance over time.

1:  Determine your Denial Percentage at the end of every month.
  1. Total # (and charge amount) of claims filed to a payer.
  2. Number (and dollar value) of denied line items.
  3. Calculate Percentage by dividing "number of denied line items" by the "total claims filed to payer"
This will enable you to track from month to month whether or not your practice is improving.  This should be tracked as a complete practice, as well as by individual provider, location, and by payer.  This will give you insight as to where and why problems may be occuring.

2:  Determine the main reasons for the claim denials.
  • Registration error
  • Charge entry error
  • Lack of referrals & Pre-authorizations
  • Insurance Company needs info from patient
  • Duplicates
  • Medical Necessity/CPT Code does not match ICD-9 Code
  • Documentation
  • Bundled/Non-covered  {ex)modifiers}
  • Credentialing
This information will enable your practice to understand why claims are being denied, and where on the job training needs to take place.

3.  Track your denial performance over time.

The details about your claims denials will allow you to focus your energy on the most frequent reasons that claims are being denied.  The provider/practice management staff will know the most efficient ways to address the problem if they know the root cause of the why claims are being denied.  Every time you reduce your denial rate you bring more money to the bottom line of your practice.  Not only do you get paid correctly and timely, you have eliminated all the labor hours involved in reworking denied claims.

Medical Billing Services & Solutions


  1. As much as three quarters of hospital staff are usually burdened with some sort of billing-related work in a traditional billing system. Opting for electronic medical billing solutions (ones that come with free EMR plans) that fit easily into the healthcare business' workflow are key to freeing up staff resources.
    Medical Billing Services

  2. Denial Management must be on high priority as almost every medical experiences the denial of claims. To reduce it one should carefully track the performance on timely basis. The providers of Medical billing services should know all the aspects of Denial Management.

  3. This is about a Denial management in healthcare. Analyzing the reasons for errors thereby aiding in further avoidance of those in the billing process is one of the best denial management strategies.An automated denial management system that can track the efficiency of follow-up resolution procedures will give hospitals an edge during contract negotiations.

  4. Thanks for sharing nice information. I like your post and the details you shared. Up to date and quite an informative post, I bookmarked your website. You may visit Mindful Billing Services .