Track Denials to Increase Medical Practice Cash Flow

Having clear policies and processes for handling claims denials can affect your bottom line by improving your revenue cycle, decreasing staff costs, and increasing cash flow.

In too many circumstances, denials are either resubmitted or ignored without really considering the causes. I recently met with a client to review an accounts receivable that was below industry standards. As we discussed company processes, it became evident that they were not tracking the cause of claims denials. Instead, the staff continued month after month to pull up the denials and resubmit them. In many circumstances, the denials were ignored for months at a time because it was one of those tedious tasks that fell to the bottom of the list, and the staff had not been given good policies and processes to help guide them. As a result, ongoing revenue capture was not optimized and the practice wasted money on inefficient processes

Preventable errors resulting in denials can be traced to different functions within the practice. Were member and group numbers entered incorrectly? Were insurance cards unchecked or out of date? Was demographic information entered incorrectly or ignored? Were provided services coded incorrectly? Were charts completed in a timely manner? In the spirit of process improvement, we have learned time and time again that claims information needs to be accurate the first time to limit denials and the resulting negative financial impacts. Many of the errors that lead to denied claims can be prevented by identifying a process that staff can, and will be, expected to follow.

A company should assign staff to identify and document the reason for every denial as each is corrected and resubmitted. Most practice management systems can accommodate this reporting, and if you are utilizing electronic remittance advices, the denial reason may update automatically. If your practice management system cannot track this, set up a simple spreadsheet and track the reasons for denial (many practices use denial codes rather than words for easy entry and tracking).

After creating an effective tracking tool, regularly review and share these reports with supervisors and staff. Look for denials related to preventable errors such as patient intake, documentation, or when the claim was filed (timely filing). Look for trends and give immediate attention to those categories which have the greatest number of errors and dollars at risk.

Update processes and policies to eliminate the errors from recurring and provide adequate training for staff to make sure they understand what is expected and why it is important. Include periodic audits in those areas to verify improvements are being made. For example, if a clinic is seeing a large amount of denials due to patients not being enrolled in insurance, a new process for intake of the patients’ insurance information should be enacted. Subsequently, audits of patients’ accounts should be performed to confirm that insurance information was verified with the insurance company prior to the visit.

After corrections are made, continue to monitor denial rates to check improvement and determine additional opportunities. With consistent tracking, practices can diagnose the cause of the denials, make appropriate process and policy modifications, and reduce the number of easily preventable denials in the future. This can result in claims being paid faster, less time wasted on making corrections, lower totals in accounts receivable, and increased cash flow to the practice.

Dixon Davis is the vice president of practice management for AAPC. Dixon received his MBA/MHSA from Arizona State University. He has held senior leadership positions in healthcare administration in a variety of settings including independent practices, integrated health systems, and independent physician associations. E-mail him here.