Denials Are Costing You Money Right Now. Here’s How to Change That.

April 28, 2023 |
April 28, 2023

Healthcare organizations, we have a denials problem. And it’s getting worse by the day.

The cost of medical claim denials increased by a whopping 67% in 2022, according to a benchmarking analysis reported by HealthLeaders Media. The average health system experienced 110,000 claims denials last year alone.

While roughly 11% of all claims were denied—up nearly 8% from 2021—all regions aren’t created equal. In the Pacific U.S., for example, denial rates hit a staggering 17% of all claims, according to data from Change Healthcare.

What’s the cause? Rules from the Centers for Medicare and Medicaid Services (CMS) keep getting more complicated. Payers often have their own rules that don’t match up to CMS’ regulations. And most hospitals, health systems, and physician practices are so short on staff, they don’t even have the time to review their denied claims

As a result, denials have reached epidemic proportions. And they’re costing you money—lots of it! The HealthLeaders article reported that denials cost healthcare organizations 2.5% of their gross revenue in August 2022 alone.

Solving the denials crisis isn’t going to be easy. But with the right processes, people, and technology, organizations can take their Denials Management capabilities from reactive to proactive.


Processes: Strengthen Your Physician Education Efforts

Missing and low-quality documentation continue to be common root causes of denials. Documentation must support all aspects of coding and billing. That’s why it’s crucial for healthcare organizations to re-focus on clinician education programs, especially given the continuous changes to facility and professional coding systems and billing rules.

The last few years have brought unprecedented stress to providers and resulted in very little time for education. But this has resulted in a lack of focus on feedback and education related to documentation and coding. This has caused a lack of awareness of important documentation compliance changes. This has created added stress in the middle- and back-end of the revenue cycle.

With denials on the rise, organizations must reengage their providers immediately. One tip: Consider holding training sessions inside the physicians’ office so they can fully engage and not feel as if they’re pulled away from their work.


People: Leverage Medical Scribes

Your clinicians are already incredibly busy. And the reality is that they’ll always struggle to balance the time they spend on documentation with the time they spend on direct patient care. But adding medical scribes can help organizations bridge that gap and boost provider satisfaction.

Scribes focus 100% on documentation. That gives clinicians more time to focus on patient care and may lower physician burnout rates. Scribes are a great fit for organizations that are seeing increased denials due to missed documentation, chart completion backlogs, or lengthy delays in billing and reimbursement.

You don’t necessarily have to increase your organization’s headcount to take advantage of scribing. With virtual medical scribing from DeliverHealth, clinicians can access a trained scribe remotely from their iPhone. The scribe will listen to a patient encounter in real time, create a structured note, and upload it to your EHR. All the provider needs to do is review the note and sign off on it after the encounter.


Technology: Use Analytics to Track & Reduce Denial Rates

The late Peter Drucker, a visionary management consultant, is known for having said, “What gets measured gets managed.” Yet a full two-thirds of healthcare organizations don’t even know their denial rate.

This type of driving in the dark isn’t helping revenue cycle teams see clearly. To shed some light on the depth and breadth of the denials problem, organizations should invest in augmented intelligence-powered business analytics solutions.

A few key data points your Denial Management System should track regularly include the number of denied cases, reasons for denials, denials by payers, and top DRGs, CPT, and ICD codes involved in denials.

Many of today’s best-in-class coding solutions, such as those offered by DeliverHealth on the PerformPlatform, offer robust analytics that go far beyond what’s available within an organization’s EHR. They give you a real-time view of your organization’s coding successes and shortcomings so you can course-correct quickly and reduce revenue leakage.


Go from Reactive to Proactive

The evolution from a retrospective, audit-based approach to denials to a proactive Denials Management System won’t happen quickly for most organizations. But with so much at stake, there’s no time for delay.

You can start your journey by assembling a cross-functional Denials Management System team. My colleague Nikki Bucceri, Senior Manager of Coding Solutions, explains who should be on that team—and what the team should look for—in this blog post.

The sooner you begin to peel back the layers of the onion and shore up the processes, people, and technology behind medical claim denials, the faster you’ll regain lost revenue. Our team at DeliverHealth would love to help you get there. If you want to talk it out, email us and we’ll start the conversation.