Medical claim denials are a constant headache for healthcare providers in the complex and sometimes chaotic world of healthcare. These denials can result in substantial financial losses, with billions of dollars potentially at stake.
Addressing this issue is a top priority for healthcare organizations, but there are still some challenges that make it difficult to manage medical claims. According to Experian Health’s State of Claims 2022 survey, healthcare executives are grappling with insufficient data, analytics, and automation hindrances when it comes to managing medical claims.
So: what are the primary reasons behind these claim denials, and how can providers tackle them effectively?
Read along below as we delve into the top reasons for medical claim denials—and explore how automation and artificial intelligence (AI) can be game-changers in improving cash flow for healthcare providers.
Prior Authorizations
One of the causes of claim denials is the failure to obtain prior authorizations. These authorizations are agreements between healthcare providers and payers, ensuring that specific treatments or services are covered before they are administered to patients. However, navigating this process can be far from straightforward. Sometimes, treatment must commence before authorization is secured, and other times, only certain aspects of the treatment are authorized.
Staying on top of ever-changing payer policies is a challenging task for healthcare providers. They often find themselves juggling multiple payer portals to track authorization requests, which is not only time-consuming but also costly. In fact, the State of Claims 2022 survey revealed that authorizations are among the top three reasons for denials for 48% of respondents.
Automation offers a promising solution to this challenge. It can continuously monitor payer policy changes, alert staff to the need for prior authorization, gather essential documentation, and review authorization requests for accuracy. This significantly reduces the burden on staff and minimizes the risk of claims being submitted without proper authorizations, ensuring a smoother process and maximizing reimbursement.
Provider Eligibility
Provider eligibility is a significant factor in medical claim denials, and is one of the top three reasons for denials for nearly half of healthcare executives. When a provider is out-of-network or a service is not covered by the patient’s health plan, claim denials become a fairly pressing concern. To avoid these denials, providers must perform eligibility checks to confirm reimbursement eligibility.
However: this process often generates a mountain of work for patient access teams who have to scour payer websites and contact insurance agents for information. -But automation comes to the rescue again.
Eligibility verification software provides accurate data from over 890 payers, eliminating billing errors and preventing claims for uncovered services. This data is presented in a user-friendly dashboard format, ensuring that staff can access patient information consistently, regardless of the payer. This streamlined approach helps prevent avoidable denials, boosts revenue, and provides healthcare executives with the detailed reporting and analytics they desire.
Inaccurate Medical Coding
Inaccurate medical coding is another common culprit behind denied claims, as reported by 42% of healthcare executives. Even a small coding mishap can lead to a denial, causing payment delays and extra work for staff. With the complexity of thousands of coding terms, medical coders face an uphill battle to ensure accuracy.
Automation proves its worth once again by simplifying the coding process. Automated claims management solutions can reduce the manual workload by extracting relevant information from clinical charts and cross-referencing it with coding directories to ensure that claims are completed accurately. These solutions can also check for duplicate charges, missing fields, and ensure that patient information is free of errors, significantly reducing the risk of coding-related denials.
In a healthcare landscape where 35% of hospitals and health systems report losing $50 million or more due to denials, innovation in claims management and denials prevention is crucial.
The financial impact of claim denials can be substantial, especially when considering the added rework required. With ongoing labor shortages, healthcare providers simply cannot afford to waste valuable time on avoidable administrative tasks.
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