Claim Denials: Have You Addressed This Elephant in Your Revenue Cycle Yet? 

Claim denials remain a persistent sore for health systems that continues to wear down the already strained revenue cycle management (RCM) leaders struggling to maintain revenue integrity. Amid staff shortages and burnout, they’re expected to keep denials at bay while keeping up with changing regulations and payer behavior. As an industry stakeholder, you couldn’t agree more that this “elephant in the room” pose a great deal of threat to not only the financial integrity of providers but also the value-based care model designed to maximize value for patients and providers alike.  

Despite several measures, many healthcare providers continue to witness the wrath of the denial beast on their bottom line due to their inability to tame its menace. With most of technical denials originating from the front-end and mid-cycle functions of eligibility verification, prior authorization, and medical coding and billing due to inaccurate information, poor compliance, and incorrect coding, providers need to prioritize RCM optimization to reduce such errors and prevent their hard-earned revenue from slipping through the cracks. 

Read on to know the industry trends and how you can successfully crack the code of denial management to turn denials into dollars.  

The Financial Wrath of Claim Denials 

A recent report by Syntellis and the American Hospital Association (AHA) reveals a 56% hike in Medicare Advantage denials between January 2022 and June 2023, highlighting the need for a more focused approach toward denial management.  

The 2023 Healthcare Financial Management Association (HFMA) Denials Management Research Summary Report, which surveyed 415 revenue cycle executives, found inefficient prior authorization and incorrect medical coding as the main causes of claim denials.  

Interestingly, claim denials were the top revenue cycle concern among providers in the 2022 Kaufman Hall survey too.  

RCM managers, despite addressing this elephant in the revenue cycle, have expressed their inability to tame it, signaling staff shortages and limited visibility into denial root causes behind that.  

The Economic and Emotional Erosion 

Over the last five years, unresolved claim denials have increased at an alarming rate of 20%, with health systems losing at least $500,000 annually to denials, driven by factors such as coding errors, incomplete documentation, and lack of compliance. Further adding to their burden are additional costs of reworking or appealing those denials, averaging $47.7 per Medicare Advantage (MA) denial claim and a whopping $63.76 per commercial denial, taking their total administrative cost burden to nearly $20 billion.  

Not just the bottom line, recurring claim denials contribute to staff burnout and impact their satisfaction too. With more denials, backlogs and long hours continue to stress and strain the existing workforce, adding to staff burnout and turnover. The cost of recruiting and training new RCM staff members further adds to the overall financial burden on health systems. Moreover, new members often tend to make more errors that result in denials. 

Perform or Perish  

Given the pressure to strategize denial management to keep themselves financially afloat, providers need to pay immediate attention to maintaining revenue integrity by optimizing their RCM processes. The good news – about 90% of the denials are preventable and around two-thirds are recoverable, if only efforts are put into understanding and fixing the root cause of claim denials with a well-thought-out revenue optimization strategy in place to streamline RCM.  

Why Prevention Beats Management  

As cliched as it may sound, the golden words “prevention is better than cure” continue to guide generations, asserting prevention will always bear more weight than cure, unlocking savings – time, resources, and, most importantly, money. And the best way to look at RCM optimization in today’s evolving healthcare landscape is by ensuring revenue integrity across all front-end, mid-cycle, and back-end processes and by following practices that prevent claim denials from happening in the first place.  

What earlier used to cost health systems their valuable time and resources for denial management can now be achieved with technologies like artificial intelligence (AI), automation, and analytics, which enable root cause analysis and denial prevention with targeted interventions at every stage of RCM.  

For instance, AI- and automation-powered workflows can now streamline manual, time-consuming, error-prone patient access processes by leveraging robotic process automation (RPA) bots for accurate, real-time eligibility checks and SOP-compliant documentation for prompt prior authorizations; boost mid-cycle accuracy and compliance with natural language processing (NLP)-guided coding; and simplify AR management with AI tools for high-value worklist prioritization and root cause analysis to accelerate reimbursements and reduce denials along the way.  

By equipping your organization with tech-enabled RCM solutions that offer expertise and technology hand in hand, you can improve your first pass resolution rate (FPRR) by sending out clean claims to payers for processing, thereby reducing the chances of rejections and denials requiring rework and appeals.  

Why a Trusted RCM Partner Matters  

With proven industry expertise of handling critical RCM challenges of claim denials and poor compliance, an RCM solutions provider like Jindal Healthcare can chart your path for financial success with tried-and-tested revenue cycle optimization strategies focusing on the following: 

Front-End Excellence 

With RPA bots performing eligibility checks in real-time, minimizing your time, effort, errors, and cost, and custom SOPs ensuring accurate, complete documentation for prompt prior authorizations, you can streamline patient access, reducing front-end denials that block your revenue. 

Mid-Cycle Precision 

With certified medical coders and billers leveraging advanced AI tools like NLP and machine learning (ML) for guided coding and root cause analysis for denial prevention, you can rest assured of mid-cycle accuracy, regulatory and payer compliance, and reduced claim denials. 

Back-End Optimization 

With tools like decision tree for working claims right the first time itself, as well as intelligent dashboards for KPI tracking and strategic decision-making, you can optimize your AR management, preventing denials and fast-tracking reimbursements.