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Preventing Claims Denials to Improve Healthcare Revenue Cycle Management

April 1, 2021
April 1, 2021

Up to 25% of claims are denied, according to research from the Government Accountability Office. In 2013, hospitals were underpaid for medical services by $51 billion, according to the American Medical Association. The average denial rate for Medicare patients in 2013 was 4.9%. Failed claims are among the most labor-intensive issues healthcare organizations are faced with today. If healthcare professionals do not watch claims closely, it is likely they will be unable to determine when an error or coding issue has led to the denial. As a result, revenue can be lost.

The Payer Goal is to Find Claim Errors

Scrubbers highlight claim errors so billers know what’s wrong. Incorrect codes are often chosen from the charge master due to inadequate education of clinical personnel who are entering the charges. Some of the most common issues found in hospital claim scrubbers are entering out-of-date ICD, CPT, and HCPCS codes; entering incorrect place of service or revenue codes; attaching conflicting or confusing modifiers on HCPCS or CPT codes; and entering the wrong number of digits for ICD 10, CPT, and HCPCS codes.

It’s Is Easy for Staff to Continue Making Costly Mistakes

“For example, a patient comes in with an order for a unilateral ultrasound of the breast for a suspicious lump. The ultrasound is performed, but the technician chooses a code from the charge master that was deleted in 2015. She was trained the year before by an expert in the department who created a cheat sheet of commonly used codes for popular procedures,” says Susan Gurzynski-Wells, Senior Product Manager, Revenue Cycle, HealthStream.

“If this error is not caught at the time of service, then a claim scrubber will flag the error and put the bill on hold. A report with all the failed claims will be generated and either a biller or an auditor will identify the error and correct it. But it shouldn’t end there: a critical next step is educating the department technician on the proper code,” believes Gurzynski-Wells.

Retrospective Claim Checking Is a Further Issue

Payer contracts are also a source of concern. More than 7% of claims are not paid correctly the first time or even subsequent times. An entire sector of the industry has evolved to examine claims retrospectively. They identify inaccurate payments and reconcile over-and underpayments. This results in an increase in administrative resolution time and an acceleration in the cost to collect. And even worse, payer-provider contracts and member relationships have grown even more complex under value-based care and alternative payment models. Instead of one schedule applying to every provider, contracts can contain a myriad of nuances tailored to specific providers.

More Effective Training May Be the Only Lasting Solution

In the opinion of Gurzynski-Wells, “Organizations can shift from rework to proactive correction. By training revenue cycle personnel to recognize and identify the origin of these patterns and providing education in the areas where those patterns originated, errors can be corrected before claims are submitted.”

Learn more about HealthStream solutions for improving revenue cycle, especially through training.