Denial Management: A Beginner's Guide to Preventing Denials

Denial Management in Healthcare

Maintaining a steady flow of revenue is crucial for any healthcare organization. Failure to keep track of revenue generation processes such as billing and claims processing could harm the organization’s financial stability and, in turn, compromise patient care. Denials represent an especially frustrating obstacle to revenue generation, causing payment delays and leading to uncompensated medical care.  

What is Denial Prevention and Management?

In healthcare, denial management involves analyzing and preventing claim denials made by insurance companies or other relevant payers. The purpose of this task is to minimize the possibility of an insurance company rejecting the provider’s reimbursement request so that they can maintain steady revenues. 

The Importance of Denial Prevention and Management 

Some healthcare professionals may view denial prevention and management as an arduous or unnecessary task. However, this couldn’t be further from the truth. Denied claims can cause payment delays that harm financial stability and operational efficiency. When denied claims are not challenged or addressed, they ultimately lead to revenue loss, which impacts the ability to invest in staff and technology that curates optimal patient care.

In the long term, high-quality denial management in healthcare settings can help providers collect the data they need to maintain accurate patient records and deliver premium personalized care services. As such, denial prevention will boost patient satisfaction and loyalty while increasing net revenue.

Common Causes of Denials in Healthcare

So, what are the most common causes of claims denials? Reasons healthcare professionals often encounter include:

Paperwork errors: Incomplete or incorrect documentation will often lead to denials. This could be in the form of a typo, and outdated home address, or incorrect patient information on file, for example. It’s also possible for the healthcare facility to accidentally submit an incorrect billing code or another piece of vital information. 

Lack of medical necessity: It’s often required that healthcare providers submit proof that the services they are providing are required for the patient’s care. In some cases, a claim denied on grounds of necessity may simply require healthcare providers to provide further details about the medical condition in question. For example, they may need to provide relevant test results supporting a diagnosis or proof that other treatments have not worked well in the past. 

Non-covered claims: Insurance providers offer different types and levels of coverage for patients. For example, few providers cover cosmetic treatments or those without FDA approval. Some patients are covered only by basic plans, including treatments detailed in the Affordable Care Act (ACA). The definition of an “essential benefit” under the ACA can differ between states – an issue that can cause confusion and lead to claim denials. 

Provider network problems: Some patients are only granted coverage for services offered by providers within their insurance plan’s provider network. Failure to select a provider within this network can lead to claim denials (note that exceptions may be made for emergency treatments).

Duplicate claims: Making more than one claim for a single treatment will lead to denials.

Timeliness issues: Failure to submit claims in line with an insurer’s policy will lead to denials.

The Denials Management Process 

Claim denial management in healthcare involves a series of tasks, including: 

• Denial analysis: Analyzing the details of every denial will help healthcare professionals identify the most common forms of denial. This job involves collecting information about providers, payers, and procedures typically involved with denials, as well as the types of mistakes that could lead to denials. 
• Root cause analysis: Understanding the causes of denials is vital for preventing further incidences. Reasons for claim denials could include missing data, lack of official authorization, unnecessary treatments, late submissions, coding errors, and more. 
• Preventive strategizing: Denial prevention involves careful strategizing to minimize avoidable denials through, for example, better collaboration between healthcare teams and more staff training. 
• Appeal administration: Claim denial management in healthcare settings often requires significant administrative work, including appealing denied claims. Appealing can help providers avoid financial losses caused by simple administrative errors.
• Process improvement: Effective denial prevention requires consistent and committed improvement processes that track reasons for claim denials and work to avoid as many denials as possible. 

Strategies for Effective Denial Prevention 

While every healthcare provider’s denial prevention strategy should be tailored to their individual needs, the following best practices will help every facility looking to protect revenue flows:

Enhancing documentation practices: Healthcare providers must ensure their documentation practices are robust and easy to follow, minimizing the possibility of incomplete or inaccurate data collection. Improvements could include reorganizing databases, standardizing document naming and filing processes, or automating data inputting operations. 

Implement robust claims scrubbing operations: Claims scrubbing refers to the process of checking claims before they’re submitted to an insurer, ensuring they’re accurate and aren’t missing any details. As well as preventing claims denials, this process will speed up payments and improve staff productivity by reducing administrative load. 

Training and educating staff: Training staff about the processes involved with denial prevention, as well as its importance, will help avoid unnecessary errors and enhance overall productivity. 

Strengthening payer relationships: Building relationships with payers will ensure lines of communication remain open and any issues or disputes are resolved quickly. 

Leveraging technology: RCM technology has helped many healthcare providers decrease their administrative burden by automating tedious and time consuming tasks. For example, investing in revenue cycle automation software can help healthcare providers identify patient eligibility for certain treatments, collect patient data, process payments, identify trends, and more.

Optimize Your Denial Management Process

If you’re looking to optimize your denial management strategy without adding to employee workloads, Adonis is here to help. We offer revenue cycle automation technology designed to help you recover and collect the revenue you deserve. Adonis Intelligence leverages AI and machine learning to alert you to denial trends, identify root-cause issues, detect underpayments, and more.

To find out more and get started, request a demo.