Denied Claims Means Denied Revenue – Part 2


The Kaiser Family Foundation recently reviewed CMS data from 2017 and discovered that 18% of in-network claims were denied by issuers that year.[1] But that numbered varied from as little as 1% to as much as 40%. The research also found that less than one-half of one percent of consumers appealed a denied claim, and when they did, issuers overturned only 14%.

Besides the impact on a provider’s bottom line, denied claims can keep patients from getting the care they need. And that can reduce outcomes, patient satisfaction scores, and reimbursement—further amplifying the negative effect of denials.

Fortunately, there are ways to prevent denials in the first place, as well as opportunities to improve the appeals process to ensure you’re recovering every penny you’re owed. This is especially important with Medicare Advantage Organizations since they deny an inordinate number of claims only to overturn them upon appeal.[2]

Following are five opportunities to reduce denials and mitigate the impact they can have on your bottom line.

Amp up your eligibility verification efforts. Some of the top reasons claims are denied are that the patient wasn’t covered for the service, coverage was terminated, or the provider was out of network. Without checking for that information on every patient, providers inadvertently delay payment and reduce cashflow. Once they receive the denial from the payer, they have to go back to the patient to try to collect the amount due. And when patients receive an unexpected bill for a service they thought was covered, it can damage patient satisfaction and loyalty.

However, if the eligibility information was known prior to the date of service, the provider could have asked the patient to pay at that time or could have made arrangements for payment over time. Unfortunately, once a patient leaves without paying, providers are less likely to collect the full amount owed. The cost to collect goes up, as does the potential for write-offs. Verifying eligibility before the patient’s appointment is also essential for identifying the need for pre-authorization.

Streamline the appeals process. Many providers choose to rework only denials over a certain dollar amount. They assume the time and effort needed to appeal smaller amounts isn’t worth it. But most people wouldn’t take this approach in their personal lives with their own finances. If a department store short-changed you by even $5, you would demand the money.

Fortunately, technology can help streamline the appeals process so providers can collect every dollar they’re owed. The best technology solutions are those that provide more comprehensive denial information, so staff has to spend less time researching the issues. Things like appeal letter templates can help simplify the process. Technology can also help by allowing managers to assign tasks to specific staff members, which improves denial appeal workflow efficiencies.

Another way to streamline the appeals process is to create standardized workflows for specific types of denials, such as out-of-network denials or missing documentation denials.

Leverage analytics. Providers should run EOB and denial reports each day to get a quick glimpse into denials. In this way, providers can review reason codes, which can alert them to problematic trends such as payers that deny more claims. When this happens, it could be that the payer has specific technical requirements that the staff isn’t aware of. Reviewing those requirements with staff can help avoid those denials in the future. Analytics may also uncover issues with coders, in which case, additional education can help reduce errors.

Clean up your claims. Claims that are submitted with missing or incomplete information, or that have outdated CPT codes are typically issues with staff training. CPT and ICD-10 codes change often, and billers need to review the changes frequently to reduce denials and delayed reimbursement.

Review your payer contracts. While this suggestion doesn’t have anything to do with denials, it can help ensure your contract terms are consistent with current market rates. Sometimes payers fail to implement your negotiated fee schedules. Unless you review the contract, you’ll never know. You may be getting only a fraction of the amount agreed to. This can be especially problematic with Medicare.

The Bottom Line

It’s true you may not be able to avoid denials altogether. But there are many opportunities to substantially reduce them and to mitigate their impact. With the increase in patient self-pay and reduced reimbursements, providers need every dollar they’re owed. Dismissing denials as a necessary evil can inhibit a provider’s ability to achieve optimal financial performance.