Stop Denials in Their Tracks: Get Paid the First Time by Health Care Insurers, #1

Kathy McCoy, MBA August 9th, 2012

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Expert Betsy Nicoletti advises that it’s important to establish a baseline for your claim denial rate.

Do you have a good handle on your claim denials? If you are like many practices, the actual rate of denials can be gray area in the black-and-white picture of your business’ health. But decreasing denials can pay huge dividends by increasing the flow of cash into the practice, lowering write offs and increasing productivity by helping staff do less re-work.

In order to help medical offices decrease denials and get paid the first time, Kareo sponsored a recent webinar by Betsy Nicoletti, M.S., CPC entitled Stop Denials in Their Tracks: Get Paid the First Time by Health Care Insurers. Betsy is a leading practice management and medical billing expert, as well as founder of codapedia.com. This blog will recap the first portion of Betsy’s presentation. The second half will follow in an upcoming blog.

Betsy offers a systematic process for understanding denials and minimizing them as much as possible. The first step focuses on measuring and monitoring your current denial rate. According to the Medical Group Management Association, the average denial rate in a practice is 7 – 9 %. Do you know where you are? It’s important to establish a baseline. You can do this by calculating how many claims have been submitted, then measure the number of denials as a percentage of your submitted claims.

Expert Betsy Nicoletti offers a systematic process for understanding denials and minimizing them as much as possible.

Understanding the reasons for denials is an important next step. Betsy suggests tracking this by reflecting the denial in your practice management system with a reason code and a “zero” dollar payment. Set up reason codes that are fairly specific, and start with broad categories. Some of the more common reasons for denials include:

  • Registration – The patient is not eligible, or the demographic info is incorrect
  • Authorization – There was no pre-authorization, or no referring physician
  • Coding – Modifiers, bundling,  or linking were applied incorrectly
  • Enrollment – The clinician is not enrolled in the health plan, or the files were set up incorrectly
  • Timely filing – Claims not filed within required time frames
  • Payer processing rules – Payers are not always right, and may not be following NCCI or CPT rules

Once you have entered a month’s worth of denials with associated codes, use a spreadsheet such as Excel to track the data. This makes it easier to monitor your denials and any trends by reason code. Start with your reports: what are the top reasons claims are denied? Select a few claims from the top three reasons and trace back the history. Understanding why your claims have been denied will help you create strategies for lowering your denial rate and bring more cash into the practice. Be consistent in tracking and be sure to use the same calculations month by month.

Remember, re-submitting  a claim without an understanding of why it was denied is a waste of energy. Learning the “whys” is critical to ensuring denials are not automatically written off. Our next blog on Betsy’s webinar will touch in more detail on the reasons for denials and how to fix them. If you would like to be put on our notification list for upcoming informative webinars such as this one, sign up now. You can also view our archived webinars to find more topics of interest to you. If you would like to learn more about Kareo’s innovative tools for streamlining your medical billing and collections, watch the demo.

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